Electricity (Renewable Preference) Amendment Bill

CHRIS HIPKINS (Labour—Rimutaka) Link to this

I move, That the Electricity (Renewable Preference) Amendment Bill be now read a first time. At the appropriate time I hope to move that the bill be referred to the Local Government and Environment Committee for consideration. This bill creates a preference for renewable electricity generation. It reintroduces a 10-year restriction on new baseload fossil fuel thermal electricity generation capacity, except where an exemption may be appropriate—for example, to ensure security of supply. The bill reflects New Zealand’s commitment to addressing climate change.

Renewable energy is integral to New Zealand’s future, it is integral to our international reputation, and it is integral to our own sense of national identity. Throughout the world, New Zealanders can be proud that a large proportion of our electricity already comes from renewable sources. However, we need to acknowledge that in recent decades New Zealand’s proportion of electricity from renewable sources has diminished relative to that from non-renewable sources. In 1974, 83 percent of our electricity was generated through renewable sources. In 2008 that figure had reduced to only 65 percent, and in times of peak demand it is even lower. Growth in demand for electricity has largely been met by tapping into non-renewable thermal sources, such as coal and gas, and that is unsustainable for our future. During the Labour-led Government’s term in office, it took a number of steps to address these issues, including the introduction of an emissions trading scheme, the establishment of the Electricity Commission, and a number of energy-efficiency initiatives. However, much more still needs to be done.

Towards the end of the Labour Government’s term in office it introduced a restriction on new thermal baseload power stations, which was unfortunately repealed when the National Government took office. This bill reinstates that restriction, and sends a very clear message to New Zealanders and to the world. It sends a message that New Zealand is indeed a clean and green country that lives up to its “100% Pure New Zealand” brand and does not just talk about it. It sends a message that New Zealand is committed to being a world leader in the development of newer and cleaner energy sources. It sends a message that New Zealand is committed to the future, and that we are not interested in just exploiting the planet’s resources for our immediate gratification, without a thought for the needs of future generations. Most important, it sends a message that when New Zealanders stand on the world stage and talk about our commitment to addressing climate change, we actually mean it.

This bill addresses New Zealand’s essential commitment to tackling climate change by increasing renewable generation, leading to lower carbon emission rates. Contrary to some claims, this bill does not jeopardise the security of New Zealand’s electricity supply. It provides several exemptions, including new non-renewable plants in the event of a power crisis, generation plants that produce recyclable heat through the process of co-generation, plants using a combination of renewable and non-renewable energy sources, and thermal plants that temporarily replace all of or part of another thermal plant, so that security of supply is not threatened.

The bill also allows more efficient thermal generators to be developed in order to retire less efficient ones. It stops thermal power companies from undercutting renewable generators and closing out future renewable generation options. Finally, it will help to address the issue of rising household electricity prices, because renewable power is cheaper to run—much cheaper to run than gas, coal, and oil—and is likely to become significantly more so as the price for those non-renewable energy sources continues to increase.

In the debate about emissions trading and climate change, much attention has been focused on the impact of Government policies on household prices—and quite rightly so. A commitment to renewable energy demonstrates that we are committed to keeping power prices down in the medium to longer term. Renewable energy is cheaper; even if it takes a bit longer to get off the ground in the long term, it is cheaper. Reliance on gas and coal enables non-renewable energy providers to set a high market price, and encouraging more renewable electricity generation will help us to bring prices down or, at the very least, keep them at a stable level.

We need look no further than at the Māui field for an example of how price increases in the past have occurred as a result of the running down of thermal energy sources. When the price cap on the Māui gas field was lifted, the price of electricity in New Zealand went up substantially. The depletion of the Māui gas field has been one of the major drivers in the significant increase in electricity costs that New Zealanders have faced over the past decade. If New Zealand had addressed its reliance on thermal power a decade ago, power prices might not have risen quite as dramatically or steeply as they have. It is time for us to get serious about reducing our reliance on non-renewable energy sources, and about placing a much heavier emphasis on renewable electricity.

It is happening around the world already. New Zealand prides itself around the world as being “100% Pure New Zealand”, yet the brand we are so proud of risks being tarnished as we are left behind by other countries. Denmark started to address this issue more than a decade ago. In 1990 the Danish Government set out to address its carbon emission rate, and to establish more efficient ways to use energy. The Government did that by converting many of its coal and natural gas-fired plants into co-generators during the 1990s. It moved towards converting the remaining district heating plants to being fuelled by other sources, such as straw, woodchips, and other biofuels. Today Denmark has one of the most extensive co-generation systems in Europe. What is more, by 2030 Denmark’s reliance on coal will have decreased from 54 percent to only 6 percent. That country has gotten serious about addressing the challenge of renewable energy.

As a result of this scheme, Denmark is now considered a world leader in renewable energy—a massive transformation. In 1991 only 3 percent of Denmark’s electricity supply was renewable; by 2004 that figure had already risen to 25 percent, which shows the difference that can be made if a country is really serious about addressing this issue. Other Governments have caught wind of this, and have also been adopting similar initiatives, including the Governments of many American states. Participating states and provinces include California, Montana, New Mexico, Oregon, Utah, Washington, British Columbia, Ontario, and Quebec.

The purpose of the Western Climate Initiative is to identify, evaluate, and implement ways to collectively reduce greenhouse gas emissions in that region. It requires partners to set an overall regional goal to reduce emissions, and to develop market-based, multi-sector mechanisms to help achieve that goal. California has enshrined similar legislation to that which is proposed in this bill. In 2006 Senate Bill 1368 was introduced to limit long-term investment in baseload generation by the state’s utilities. Power plants must now meet an emissions performance standard. Washington has followed with the same approach as California, prohibiting coal plants whose emissions would exceed those of natural gas plants. In 2007 Ontario’s Government committed to phasing out all coal generation in that province by 2014.

New Zealand trades on its “clean, green” brand. We attract thousands of tourists here every year because of it. Our export dairy and agricultural industries rely on our “clean, green” brand for access to their markets overseas. That brand is reinforced or undermined by the decisions that we take in this Parliament. As I have demonstrated, other countries and other Governments around the world—be they at local or national level—are dealing with this issue systematically and in quite a significant way. New Zealand simply cannot afford to be following other countries; we need to be at the forefront of this debate.

This bill does not remove incentives for exploration in the oil and gas industry; it recognises that New Zealand needs to move to a much greater focus on renewables for our future energy supply, and that we cannot continue to rely on non-renewable sources for our energy future. I urge all parties in Parliament to give this bill the opportunity of consideration by a select committee. I am aware that when a similar measure was passed by the previous Government, one of the National Party’s criticisms was that people did not have the opportunity to have a say or have their submissions heard. National members have an opportunity to remedy that concern right now by voting for this bill to go to a select committee, so that everyone can have a say—so the public can have a say, and, yes, so the industry and those who will be affected by this legislation can have a say. I look forward to the debate; I look forward to the contributions that other parties will make to this debate.

The time for us to get serious about renewable energy is well and truly here. We cannot continue to rely on thermal electricity generation for all of our future demand; we need to place a much greater focus on renewable energy. I commend this bill to the House.

Hon NATHAN GUY (Minister of Internal Affairs) Link to this

I wish to make a contribution on the Electricity (Renewable Preference) Amendment Bill in the name of Chris Hipkins. National has some concerns about the bill, and I will outline the reasons for those concerns.

Let us consider New Zealand’s electricity market, which is designed so that generators invest in the cheapest new electricity generation projects. We all know that that approach maximises efficiency and produces the lowest cost increases for consumers, which is very, very important. The ban on thermal electricity generation that was passed by the previous Labour Government was a very blunt and unnecessary instrument. For that reason, all the major electricity generators were opposed to the ban, along with all major lobby groups, which is an important point.

I think the member is trying to re-introduce something that nobody really wants. The definition of “fossil fuel” in new section 62C, in clause 5, defines it as “(a) natural gas: (b) coal …: (c) petroleum: (d) any refined petroleum product: (e) any other obligation fuel …”. We would consider banning those electricity generation sources to be very restrictive when we think about how this country, from time to time, relies on thermal generation. Coal and gas-fired plants generate about one-quarter to one-third, depending on the time of year, of our electricity. During the winter months of 2008—and I am not sure whether the member in charge of the bill has looked back as far as that—coal and gas-fired plants were at times supplying over 50 percent of New Zealand’s electricity needs. We obviously had had a very dry autumn, which we are not having at the moment.

The member will be pleased to know that a lot of electricity is being generated from a renewable source as we speak, with the lakes being full in the South Island. Just recently, as you will be aware, Mr Assistant Speaker Roy, we have had deluges of rain down south, where a lot of the hydro lakes are, followed by snow. So it is looking pretty good for renewable sources of generation through this period.

Of course, new gas plants like e3p in Huntly, which I visited during its construction, are highly efficient and produce relatively low levels of carbon emissions. It would be foolish for the Government, I believe, to close off the option of more plants like e3p, if the gas is available, if the electricity system needs bolstering, and if the plant is economic.

The proposal of this bill is to block investment in new generation that could displace more inefficient and more carbon-emitting existing generation. An example is that the thermal ban blocks the building of new, efficient gas turbines in Huntly. One of the perverse outcomes of this bill could be even greater carbon emissions. In the short time that the thermal ban was in place in 2008, petroleum explorers and investors shied away from New Zealand because they had less opportunity to offset their exploration risks and costs against gas sales to new gas-fired plants. The ban also sent a clear message to the petroleum industry that New Zealand was not interested in exploring its hydrocarbon potential. This Government has made expanding the petroleum sector a priority, so it makes little sense in our minds to reinstate the ban.

The National Government has a very aspirational target of 90 percent of our electricity being generated from renewable sources by 2025. It is interesting to note, and I am sure the member in charge of the bill is aware, that 73 percent of electricity generated in New Zealand in the 2009 calendar year, which had the highest level of renewable generation since 2004, was primarily due to the hydro lake levels, and increased geothermal and wind generation.

I think it is also important to make a comment about the wind generation projects that are currently under way. I am sure the member is aware that Meridian Energy’s Project West Wind out in the hills behind Wellington will generate 143 megawatts when it is online. There is also Mighty River Power’s 132-megawatt Nga Awa Purua geothermal station, and back in December 2008 Mighty River Power’s 100-megawatt Kawerau geothermal station came on stream.

To conclude, National cannot support this bill this evening. We believe there needs to be a practical balance of energy generation, and this bill is too restrictive.

CHARLES CHAUVEL (Labour) Link to this

Over the past 18 months I have worked as Labour’s energy spokesperson. I relinquished that role yesterday to my colleague Nanaia Mahuta, whom I wish all the best in the role. I also wish Chris Hipkins well in his role as the associate energy spokesperson, because he is continuing in that role, and he has done an excellent job. If anybody needed any evidence of his energy and commitment to the portfolio, they would need to look no further than the work he has done to get the Electricity (Renewable Preference) Amendment Bill introduced to the House.

I will deal with some of the myths that were plentiful in the speech we have just heard, because what the Minister of Internal Affairs did not understand—it is pretty obvious—is that the bill applies only to baseload generation, and does not apply to any generation that is as efficient as renewable generation. So the two examples that the Minister used in his speech were simply not caught by the legislation that has been proposed by my colleague. That shows the poor level of analysis on that side of the House that has gone into the thinking behind the decision to oppose this legislation.

This bill reintroduces the 10-year restriction that Labour enacted as part of its emissions trading scheme in 2008. I chaired the Finance and Expenditure Committee that heard submissions on that legislation. It is quite clear to me that, having heard the industry, in particular, on the legislation, the restriction is the only meaningful way to ensure that the Government will give preference to renewable energy sources. The scrapping of that preference under urgency by the Government within a month or so of its coming into office was eloquent testament to its disregard for New Zealand’s environment.

We back this bill because we understand the need for New Zealand to maximise our existing renewable energy advantage. Already we derive between two-thirds and three-quarters of our electricity generation from renewable sources, and whether it is two-thirds or three-quarters depends on the time of the year, whether we are talking about baseload or peaking capacity, which are clearly concepts that the Minister is not familiar with.

I was proud to have been a director at Meridian Energy when that company made a decision to go 100-percent renewable, and when it made a commitment to build the Te Āpiti Wind Farm, the West Wind project, and others. It is great to see other companies going into renewable generation, for example Mighty River Power going into the geothermal business in a big way, and others looking at concepts like tidal power. Those technologies represent the pathway towards getting to 90-percent baseload generation and beyond. They show that in the area of electricity generation we can have the growth we need in generation capacity while enhancing our environment.

It is a tragedy that Gerry Brownlee appears to have shelved the New Zealand Energy Strategy, because that document very carefully sets out the pathway by which we would achieve the 90-percent target by 2025, by retiring inefficient, old, fossil-fuelled plants.

PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this

I rise to speak in opposition to this Electricity (Renewable Preference) Amendment Bill. The reason I oppose it is that it reinstates the ban on the thermal generation of electricity that was enacted by the previous Labour Government in 2008. National, as the incoming Government, repealed that measure in December 2008. In a case of a bill such as this, it is almost a waste of this House’s time and a waste of the energy of the people in the House. The Opposition is trying to reinstate legislation that was repealed by the current Government.

If we look at the purpose of the bill, we see that it intends to reduce the impact of fossil-fuelled thermal electricity generation on climate change by creating a preference for renewable electricity generation through the implementation of a 10-year restriction on new baseload fossil fuel and thermal electricity generation. In order to achieve that, the bill makes the connection of new thermal generation plant above 10 megawatts for which an exemption has not been granted a criminal offence.

I support all the reasons that the honourable Minister Nathan Guy has outlined in his speech as to why National members oppose this bill. It is quite simple: the ban is an unnecessary intervention in the electricity market. It is unnecessary, because within the current framework—and we have supported the emissions trading scheme that the previous Labour Government had passed under its administration, with some adjustments—environmental effects are taken into account through putting a price on carbon in the emissions trading scheme. We are proceeding with the emissions trading scheme, and the price signals sent through that scheme incentivise renewable energy projects relative to the price of carbon.

As Minister Nathan Guy has alluded, this bill is a blunt and unnecessary instrument for the development of electricity in this country. The ban also puts the security of supply at risk. The Minister referred to the 2008 calendar year, in which the levels of the hydro lakes were abnormally low. During that winter of discontent—and with the glimmer of hope in November 2008, when our Government took shape—over 50 percent of New Zealand’s electricity needs were provided by gas and coal plants. We have to bear that in mind.

It is not only that, but having a ban does not even create environmentally sound outcomes. The Minister, again, referred to the fact that a ban blocks investment in new generation that could displace more inefficient and more carbon-emitting existing generation.

The ban also disincentivised oil and gas exploration. During the short time in which the previous legislation was in place, petroleum explorers and investors shied away from New Zealand. We know that, the public knows that, the market knows that, and this bill does not acknowledge that.

I, along with the honourable Minister, oppose this bill. Thank you.

Dr KENNEDY GRAHAM (Green) Link to this

I rise to support the Electricity (Renewable Preference) Amendment Bill, and I commend Chris Hipkins for his initiative in bringing it forward in this House. The bill has—or at least the issues underlying this bill have—I think, had a strange, if not a tortured, history in this House. Of course, the ancestral legislation is to be found in the 1992 United Nations Framework Convention on Climate Change, and its derivative, the 1997 Kyoto Protocol, but the direct parentage of this bill is found in the Climate Change Response Act 2002. The bill that is before us essentially began life only 2 years ago, in the previous Labour Government’s Climate Change (Emissions Trading and Renewable Preference) Bill. That legislation, of course, introduced both the emissions trading scheme and the original ban for 10 years on thermal power plants. That legislation was killed in its infancy, after being in force for only 1 year, by the Electricity (Renewable Preference) Repeal Bill, which was introduced and enacted by the current Government. Now, 1 year after the premature death of Labour’s legislation, Labour seeks its reincarnation in the form of this Electricity (Renewable Preference) Amendment Bill.

So, essentially, this is a see-saw political game, of the kind that we see so often between the two major parties. The bill seeks as much to score political points as to strike at a common underlying consensus, which is necessary for us to proceed substantively with addressing the overwhelming magnitude of the climate change problem. We need to ask ourselves about the kind of policy that underlies this kind of vacillation in the House. The answer is ideological differences. Both major parties—in fact, all parties in this House except ACT, which is becoming increasingly schizoid on the subject—acknowledge that climate change is a reality and acknowledge the need for action to be taken to combat it. But the differences between the parties on this issue immediately appear.

National claims that the market is sufficient to combat the effects of climate change, and that the price signal it sends out is sufficient. Nathan Guy speaks about this bill being a blunt and unnecessary instrument. He is wrong. He is wrong to think that we can rely on the price signal available through the market alone, and this Government is certainly wrong if it thinks that the current moderated emissions trading scheme is a good enough signal. But, on that basis, the Government opposes any kind of interventionist policy, such as a ban on thermal generation plants. In addition, the Government is worried about security of supply, and it wants new thermal plants to be built to underpin supply. It disregards the fact that those plants impede the switch to a low-carbon economy, which it claims to want to see occurring.

For its part, Labour believes that the emissions trading scheme and the ban on thermal generation will be sufficient, and in that it is closer to the mark. Chris Hipkins says the bill would reaffirm New Zealand’s commitment to climate change and turn New Zealand back into a world leader. With respect to him, I think that might be stretching matters a trifle. None the less, it certainly would be closer to the mark than anything that the current Government in any way achieves.

For our part, in the Green Party we differ from Labour in the sense that we believe climate change is not just another problem that can be solved through more strenuous efforts at mitigation and adaptation within the prevailing economic model. We say the overdeveloped world of the North, including Australasia, cannot and should not wish to continue with economic growth. Instead, we seek an economy that attains an optimal scale, rather than eternal growth. At that optimal scale, we will find a dynamic equilibrium within an ecosystem, rather than a necrotic production process that ignores the natural resource base at the pre-productive end, and the waste disposal challenge at the post-productive end.

But having said that, I reiterate that the Green Party will support this bill, despite our reservations over the weakness of some of the clauses in the 2007 bill. We will support the current version simply because it is better than the status quo. Thank you.

DAVID GARRETT (ACT) Link to this

In a very short call on the Electricity (Renewable Preference) Amendment Bill, I will start by saying that, contrary to the picture painted of us by the party of the previous speaker, Kennedy Graham, and other parties, we in the ACT Party are in favour of green solutions to problems. But we are in favour of smart green solutions to problems.

An example of how complicated the position can be is biofuels. Five or 6 or not many more years ago, biofuels were the greatest thing since sliced bread—almost literally. Here we are, 5 or 6 years later, having discovered that first-generation biofuels led to starvation or, at least, very severe food shortages, because food crops were being used to generate them. So, the first green solution that comes along is not always the smartest. We will always be in favour of the smartest solution.

There is no doubt, as other speakers on both sides of the House have said, that there is great potential in this country for tidal generation, wind generation, and geothermal power. But, sadly, the nimby syndrome is seen in all of those alternatives. I live not far from the shores of the Kaipara Harbour, coincidentally, very near the proposed thermal power station and a little bit further from the proposed tidal generation station at the mouth of the Kaipara Harbour. There are nimbies in both areas. Those living on the land object to the power station because it will be lit up like a Christmas tree, make noise, and emit greenhouse gases, supposedly, and those opposed to the—one would have thought—benign, environmentally friendly tidal power station say that it will interfere with snapper-spawning grounds and what have you. So there are always complications. It is never as simple as we would like it to appear.

But I have always found it amusing that the one thing the Green Party members here never discuss—and they are unique in the green political world, so far as I am aware—is their attitude to nuclear power. In my far distant youth I demonstrated against nuclear weapons and nuclear propulsion being brought into this country, and I think I might do so again, but it has come to the stage, 25 years later, that I realise that maybe, just maybe, we will have to look at it. The Greens in Europe are enthusiastic advocates of nuclear power. The Greens in New Zealand—

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Tēnā koe, kia ora tātau katoa e te Whare kua hui mai i tēnei pō. Pēnei i ētahi o ngā mea kōrero i te pō nei e tautoko ake i te āhuatanga o te hiahia o te Whare ki te tiaki pai i te taiao, i a Ranginui e tū me Papatūānuku e takoto nei.

[Greetings to you, and to us all, the House, who have gathered here tonight. Like those who have already spoken tonight, I endorse the wish of the House to protect the environment, the great sky before us, and mother Earth lying here.]

Keeping our natural resources healthy, and investing in the good health of our environment, as other members of the House have talked about tonight, is a priority for our party as well. We promote the development of renewable energy resources, including geothermal, hydro, wave, wind, and solar energy. We do this to protect and preserve limited resources, such as oil, gas, and coal. We support the intention to develop further renewable electricity generation, rather than relying on fossil fuels. Pēnei tāku kōrero nei, me kāti ake tātau i a Papatūānuku. Kia kaua e waiho a ia hai mea whakatūkinohia e te pīrau, ā, ka mutu, te waiho ake mā te moni anō rā a Papatūānuku e whakahaere. Kāo, kāore mātau e whakaae atu ki tērā.

[My word is this: we must close ranks on mother Earth. Do not leave her there, putrid, a victim of contaminants, and administered by the dollar. No, we will not allow that.]

Enthusiasm for alternative sources of energy is evident in many Māori communities. Solar heating for marae, the construction of wind turbines, a commitment to energy efficiency, and other strategies are being developed and they are coming up alongside developments like healthier kai on marae. They are major developments that our marae are seeing the benefits of. I roto i a au, in my electorate, I know that the Māori research unit of the National Institute of Water and Atmospheric Research, Te Kūwaha, invested a lot of time working with mana whenua in Waihī, near Lake Taupō, the home of the Hon Georgina te Heuheu, in an effort to improve access to power and energy efficiency. After initial assessments of energy needs and available energy sources, they set out with a range of small-scale renewable energy systems, including solar hot-water systems and photovoltaic cells. E ai ki taku mōhio nei, tērā pea e tekau mā rima, e rua tekau ngā whare kai reira; ko te marae, ko te whare puni, ko te whare kai me te kōhanga reo. Katoa o ēnei kai te pūtake me kī o tēna o ngā kāinga, o ngā rau kāinga noa o tērā takiwā.

[According to what I know, perhaps 15 to 20 houses are included, namely the marae, the main house of the marae, the whare kai, and the kōhanga reo. All of these are at the root of it, all of those homes, the hundred or so homes of that district.]

Te Kūwaha went in there, boots and all, looking for evidence of standard efficiency measures, such as ceiling and underfloor insulation, thermostat settings, and insulation of hot-water cylinders, lighting appliances, heating, curtains, dampness, and mould. As a result, a large chiller and a hot-water cylinder for the communal showers were identified as inefficient power users, and indeed several houses were in need of hot-water systems. With the support of the Energy Efficiency and Conservation Authority, they formed the retrofit team, who were extensively trained. They provided income to the community, and this was an incredibly useful learning environment for whānau to understand the basic principles of heating, indoor air quality, and home energy management.

As well as that, they installed a 720-watt photovoltaic system on the whare kai, which would help to offset the chiller load that was early identified as a problem. That is just one community, starting small, and making a big difference to the challenge to reduce our dependency on oil.

Nā, kai tērā pito me kī, arā anō a Tūaropaki nō ngā iwi o ngā hapū o Mōkai, ko Ngāti Parekaawa tērā, Ngāti Te Kōhera, Ngāti Wairangi, Ngāti Whaitā, Ngāti Moekino, Ngāti Haa, Ngāti Tarakaiahi.

[Now, at the other end, there is Tūaropaki, an amalgamation of the tribes and subtribes of Mōkai, namely Ngāti Parekaawa, Ngāti Te Kōhera, Ngāti Wairangi, Ngāti Whaitā, Ngāti Moekino, Ngāti Haa, and Ngāti Tarakaiahi.]

The trust’s wholly owned subsidiary, Tūaropaki Power Co. Ltd, was established in 1994 for the sole purpose of generating and marketing electricity from the Mōkai geothermal resource. Mōkai is now New Zealand’s largest privately developed geothermal project, and is solely owned by tangata whenua.

Nā, ki taku mōhio, te mea nui o tēnei rā e pēnei ana, e te kau mā whā pai hēneti me kī mō te hiko ka puta mai i te New Zealand geothermal energy, ā, kua whakatuaruahia, kua piki haere tēnei mai i te tau 2005.

[Now, to my knowledge, the most important thing today is that 14 percent, shall we say, of the power from New Zealand geothermal energy is renewable energy, and has been climbing since 2005.]

Another initiative in the mighty Waiariki electorate was announced just over a month ago, with resource consents approved for the construction and operation of Ngā Tamariki geothermal power station, as the honourable Minister referred to earlier. The consent application for the proposed power station north-east of Taupō was lodged by the Rotokawa Joint Venture Ltd, a commercial partnership between Mighty River Power and Tauhara North No. 2 Trust. Once commissioned in 2013, it is believed that the Ngā Tamariki will create enough geothermal electricity to power half a million households. The initiatives of our iwi, and our enthusiasm for renewable energy, give us every reason to support this bill, which aims to restrict the building of new oil, coal, and gas-fired plants, and to instead promote greater use of renewable energy. We will support this bill at first reading.

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) Link to this

I support Chris Hipkins for introducing the Electricity (Renewable Preference) Amendment Bill as a measure to foster and encourage renewable energy sources. It is no coincidence that it is introduced on the same day that President Barack Obama made his live televised address calling on Americans to accept that the world is running out of places to drill for oil. Americans are facing a huge environmental battle trying to contain the oil spill in the Gulf of Mexico. Although we in Aotearoa New Zealand do not face the same kind of disaster as the United States does, we do have the same challenge: to move aggressively towards renewable sources of energy generation, to reduce our carbon emissions, and to provide greater cost benefits to consumers in time. Simply put, it is the right thing to do, but we have to take action, rather than thinking that, in time, it will be an inevitable outcome. This bill clearly moves in that direction, and I hope that Parliament will see the benefit of sending the bill to a select committee to hear the views of New Zealanders, which is an important part of this whole process. I am really disappointed that National has stopped the bill at the starting post without really seeing what the will of other New Zealanders is on this particular matter. I am sure it is very important to them all.

I listened carefully to the contribution of the Hon Nathan Guy and found it remarkable that nearly in the same breath as stating that his Government was committed to 90 percent renewable electricity generation by 2025, he said that his Government will not support this bill and will vote it down. It is a shame. A softly, softly approach offers no leadership on the matter, and it confirms that the Government lacks the vision and ambition to demonstrate Aotearoa New Zealand’s commitment to preserving our unique environment while promoting better, more efficient, and, in time, more affordable energy solutions from renewable resources. Peseta Sam Lotu-Iiga struggled to convince members on this side of the House that he had a coherent argument to justify National’s opposition to the bill. He struggled with the whole argument, and he was not convincing, at all.

National needs to recognise that climate change does not have a silver bullet to address the compounding affects of carbon on our environment. Each step towards reducing carbon emissions—preferring renewable energy sources and investing in innovative clean technology—adds up to solid steps forward. But National refuses to take that step. This bill is just one part of that picture, and National should support it to select committee at the very minimum.

It is important to stress that no attempt has been made by the current Minister of Energy and Resources to review the Energy Strategy, at the same time as he and members of his Government continue to promote the target of 90 percent renewable electricity generation by 2025. But there are a lot of questions that have emerged from that lack of action. How will it be achieved? I ask the Minister to please explain that. What steps is he taking to ensure that the target of 90 percent renewable electricity will be reached by 2025? For as long as Charles Chauvel has held this particular spokesperson role, no answer has been forthcoming, whatsoever.

I listened carefully to the contribution of Te Ururoa Flavell and the fact that the Māori Party will support this bill. We are pleased to receive that support. We only regret that he could not convince his National mates to support it as well, because we know that the opportunity to have that discussion and receive feedback would be a positive one. I note also that he cited a number of opportunities where Māori have actively been involved in renewable generation, like Tuarōpaki Trust, and, in my own area, Taharoa C Block, which wants to see wind-farm generation along the West Coast. In fact, Māori are identifying that they want to actively partner in that type of opportunity because it is good for the environment, it can be good for business, and it can be good in terms of returning benefit back to tribal members. They are no dum-dums these days. They can see that the opportunities in this area are extensive. They can see that it is win-win from an economic, an environmental, and, in some respects, a cultural viewpoint, and they want to be a part of it. But when we look at the opportunity that this bill provides to move forward, we do not see any support from the Government on the matter.

This bill is a good step forward. Once again, I commend Chris Hipkins, his endless stock of energy, and his desire to see a greater emphasis on renewable energy sources. Nō reira, ki a koutou katoa, tēnā koutou.

JONATHAN YOUNG (National—New Plymouth) Link to this

I congratulate the previous speaker, Nanaia Mahuta, on her appointment as energy spokesperson and I congratulate the member across the House Chris Hipkins on his tenacity in bringing the Electricity (Renewable Preference) Amendment Bill forward. Surely he is the “Energizer MP”.

I make it clear that we are all heading in the same direction in terms of wanting to see renewable energy increase in its supply to generators. Our commitment is that by 2025 we will have 90 percent renewable energy. I think our area of disagreement is the mechanism by which that happens. The Labour Party wants to bring back the ban, just like it brought back the bus. We prefer, through the emissions trading scheme, to bring a financial mechanism that will make renewable energy increasingly the energy source of choice as we see the cost of fossil fuels increase around the world.

I think that Mr Hipkins may be incorrect in saying that the attitude out there in the market place is not averse to his suggestion in this bill. Certainly, if the comments that came through in early 2008 stand true today—and I do not see why they would not, because there is such similarity in the situation—he is not correct. We know, for example, that Todd energy, one of our major exploration companies, said that the then Labour Government’s planned 10-year ban on gas-fired baseload power stations was ill-conceived—that was its opinion. It posed risks of much higher power prices. It went on to say that it would bring damage to the gas sector.

It is very interesting because although members may dispute that it brought a slow-down of gas exploration, it was noticeable, particularly around my neck of the woods in New Plymouth, that generators started to look for alternate gas supplies when they thought that the gas supply in New Zealand was going to diminish. Contact Energy and Genesis at that particular point in time looked at importing gas. Interestingly enough they looked at liquefied natural gas (LNG), which is happening more and more around the world as people are hungry for energy. If members have done their research they will know that LNG—in terms of the process used to liquefy it, transport it, and then regasify it—creates a carbon footprint equivalent to coal. So it is interesting to see that when the Labour Government’s moratorium came into place generators in this country were looking to replace a diminishing supply of gas with gas from overseas that had an increased footprint of 40 percent.

Hon DAVID PARKER (Labour) Link to this

I rise to speak in support of the Electricity (Renewable Preference) Amendment Bill. There is no doubt that the world has a problem with climate change. It is caused primarily by the burning of fossil fuels. The two biggest sources of fossil-fuel burning in the world are burning fossil fuels for electricity generation and the use of oil in cars. If we want to reduce greenhouse gas emissions in the world, then we have to reduce them from those two sources. If a country like New Zealand cannot do well in respect of reducing the source from our electricity generation, then I ask who can. We are one of the most richly endowed countries in the world with regard to renewable electricity. Indeed, there was a phase in New Zealand’s history when we already had 90 percent of our electricity coming from renewables. We went backwards after that, because we did not understand back then the threat of climate change, and we had discovered an enormous pool of gas in the Māui gasfield. As a consequence of that, in the years following the development of Māui Gas our percentage of renewables went back to under 60 percent of renewables, when it was at it lowest.

The Labour Government turned that situation round. We turned the energy settings of this country round, and we set the country on a course heading back to having 90 percent renewables by 2025. It was the Labour-led Government that did that; it was the National-led Government that opposed every meaningful step that we took along that path. It opposed having proper emissions pricing in electricity and other sectors of the economy; it is still wavering on having proper emissions pricing in agriculture, despite the sound economic theory behind that; and now it is refusing to ensure that we reach the target of 90 percent renewables in electricity by 2025.

Why is this important? It is important for exactly the reasons that were enunciated by the previous speaker, Jonathan Young, but they were misunderstood by him. The price point difference between gas and renewables is very close. The New Zealand gas market is a closed gas market. It is not connected to other markets. If we do not burn the gas that fuel companies find or explore for in New Zealand, we do not sell it. The sellers of gas will price their gas at below the cost of renewables, and they will forestall the development of renewables if they are not prevented from doing so. Gas is increasingly a by-product of oil exploration and it will be priced lower than renewables. New Zealand needs to build between 115 and 130 megawatts of new renewable generation capacity every year between now and 2025 in order to reach that 90 percent target. It is not a big ask. But if a 400 megawatt gas-fired power station is built and it has a lifetime of 30 to 50 years, that is 3 years of demand growth that is not there for renewables.

We know that our renewables are cost-competitive. We know that geothermal and wind are already cost-competitive, because they are being built. But they could be undercut marginally by gas, and what is National’s response to that? Well, Gerry Brownlee, the Minister of Energy and Resources, said this week that the big development in energy this year is the gasification of coal in the Waikato. Does that not show to National members that there is a very real risk that that gas will be priced at marginally below the cost of geothermal energy and that it will close out renewables? Our greenhouse gas emissions will go up. We will be further exposed to the cost of those emissions as a country. We will then have an even more difficult choice as to how much of the cost of emissions should be faced in the agriculture sector, which is another area that has been avoided by the Government.

CHRIS HIPKINS (Labour—Rimutaka) Link to this

I will respond to many of the comments raised by Government members, but before I do so I will extend particular thanks to Charles Chauvel, my senior colleague who assisted me in the drafting of this Electricity (Renewable Preference) Amendment Bill, and in bringing it forward to the House. I also thank Nanaia Mahuta, the new Labour energy spokesperson, whom I am very much looking forward to working with, and David Parker, the previous Minister of Energy, who I think brought a very coherent focus to the energy and climate change portfolios.

That coherent focus is something that the current Government is woefully lacking in. There is no coherent focus in the current Government’s approach to dealing with climate change, energy, and environmental issues. They all go hand in hand, yet we have Gerry Brownlee saying that he will release a new New Zealand energy strategy, which he has been promising ever since he first became the Minister of Energy and Resources, but which we have still seen absolutely no sign of.

Nick Smith is running around the world, with Tim Groser in tow, saying that New Zealand is committed to addressing the challenge of climate change, yet Gerry Brownlee is back at home, going in the opposite direction. He is leaping up and down, waving his arms, and saying: “Come and drill here. Come and drill here. Come and explore the fossil fuels that we have in New Zealand.”, which is in total contradiction to the Government’s purported commitment to addressing the challenges posed by climate change. It is absolutely bizarre that at a time when the whole world is watching and waiting to see what is going on with the BP oil well that is gushing out oil in the Gulf of Mexico, Gerry Brownlee is waving his hands furiously in the air, trying to encourage people to come and drill exactly those types of holes here in New Zealand—before we even know how to plug them if something goes wrong.

I will respond specifically to comments raised by National speakers. Jonathan Young, in particular, said that we needed to build more gas-fired power plants so that we could then encourage more exploration to find more gas to power those power plants. That is absolutely ridiculous. It is a totally circular argument to say that if we want more renewable energy, we need to build more gas-fired power plants. That is simply ridiculous. It is simply ridiculous. The argument goes around in circles and it barely needs any further rebuttal than that.

Nathan Guy clearly demonstrated that he had not actually read the bill, because he tried to claim that it would prevent generators from replacing non-renewables with more efficient non-renewables, but in fact that is not the case. The bill clearly states that there are exemptions in the bill relating to that. It would not have taken him very long to read the bill through and ascertain that fact. This bill applies to baseload only; it does not restrict more efficient energy, contrary to what National members claim. Nathan Guy said that in 2009 we had the highest percentage of renewable energy for some time. That could have something to do with the fact that over the previous 5 years or so, the previous Labour Government had done a lot to encourage the uptake of more renewable energy sources. In 2008, the last year that Labour was in Government, 426 megawatts of new renewable energy was added, and that well outstripped the growth in demand in that year. A lot more renewable energy was brought in under Labour’s watch than was needed to meet the increase in demand.

National talks about being committed to the 90 percent renewable energy target as being an aspirational goal. Aspiration for National is a bit like one of those things that they say when they do not really want to do something, but they know that it is popular and that they still want to have the photo opportunity so that John Key can smile and wave. Those members will just commit to that target as an aspirational target, despite the fact that all of their policies and all of the things that they are doing are actually going entirely in the other direction. They will just call it aspirational and, therefore, that gets them out of actually having to do anything about it. It is a bit like their aspirational goal to catch up with Australia, despite the fact that they are already dramatically pushing New Zealand in the other direction.

The oil and gas exploration companies, of course, would have expressed their reservations about this legislation when it was first introduced to Parliament in 2008. It did not stop them from continuing on. Of course they are going to talk about something that is against their financial interests. I appreciate that this bill is potentially against their financial interests, to some extent, but the original bill did not stop them from being in New Zealand.

This bill is not a complete solution; it is part of an overall picture. It is part of an overall commitment to dealing with the challenges of climate change, and to paving a New Zealand energy future that is sustainable and that thinks of future generations. It does not set up a position for future generations whereby they are reliant on energy sources that will run out and leave them with much higher electricity prices than we pay today, when they could have an energy future that is based on renewable energy sources. I commend this bill to the House.