6. Hon Dr NICK SMITH (National—Nelson) Link to this
to the Minister responsible for Climate Change Issues
Is he satisfied that the analysis behind the emissions trading scheme and proposals to reduce greenhouse gas emissions in the New Zealand Energy Strategy is realistic?
Hon DAVID PARKER (Minister responsible for Climate Change Issues) Link to this
Yes, I am. Work across these policy areas is well integrated. The emissions trading scheme has been reviewed by independent economics consultancy Infometrics Ltd and came up trumps. New Zealand has a competitive advantage in renewables, and the Labour-led Government is going to seize that opportunity.
Hon Dr Nick Smith Link to this
Why does the Energy Strategy provide for growth in electricity to 2025 of just 9 percent, or an annual growth of just 0.4 percent per year, when growth in the use of power has consistently grown at 2 percent per annum for the last 20 years, and when he is proposing hundreds of thousands of new electric cars?
I do not think the strategy does say that. It may say that for the next couple of years there is not expected to be a high rate of addition of capacity, but that could, of course, be because we have added a bit more than 500 megawatts of capacity this year, which is more than 3 years’ demand growth. I am advised that electricity demand is expected to increase by between 15 and 20 percent to 2025, equating to between 1.3 and 1.5 percent compounding growth per annum. This is lower than recent historical trends of up to 2 percent per annum, but that difference reflects the gains expected from efficiency as a consequence of the National Energy Efficiency and Conservation Strategy and the Electricity Commission’s expanded electricity efficiency work programme.
Hon Marian HobbsIs the Minister confident that the domestic emissions reduction amount signalled in the independent Infometrics study can be realised?
Yes, absolutely. Without counting emission reductions from avoided deforestation, which will be substantial, and without counting reduction opportunities in agriculture from the likes of nitrification inhibitors, which will at least be significant and could also be substantial—even without taking those into account—the Infometrics model predicted a $25 per tonne of carbon dioxide scenario, which is a 25 percent drop in the country’s deficit. I also make the point that it ran its $25 per tonne scenario not as a prediction that that would be the figure, but because if it used any other lower figure—assumed price of carbon—it could not get any discernable effect on economic growth.
Hon Dr Nick Smith Link to this
Why should New Zealanders believe the Minister’s reassurances that the Government’s latest energy efficiency strategy will achieve some dramatic drops in electricity use to 75 percent, as well as sufficient power for hundreds of thousands of electric cars, when his Government’s earlier 2001 strategy achieved less than a fifth of the gains it promised, and when it contributed to the 2002 bungle over New Zealand’s Kyoto balance and to the two power crises that were experienced earlier in the term of this Government?
The member is well aware that the main reason that electricity-related greenhouse gas emissions increased was as a consequence of Māui Gas running out and Huntly switching from gas to coal, thereby increasing emissions. In terms of my confidence as to New Zealand doing better in energy efficiency, I refer the member to the KEMA study that has been released this week on the website of the Electricity Commission. It shows, with the best cost-benefit analysis this country has ever had, that very affordable reductions in electricity usage are available in all sectors. Of course, the levy-making powers that the Electricity Commission now has, in addition to the extra funding that has been put into this through budgets through the Energy Efficiency and Conservation Authority, mean that the projects that are necessary to bring forward those savings will, in fact, happen. On that last point, I note that requests for proposals on some very significant proposals are going out this week from the Electricity Commission.
Peter BrownIs the Minister aware that there are some real and genuine concerns in sectors of our society that the Energy Strategy announced by the Government will have an adverse effect on the exploration for gas and, possibly, oil; if that is the intention, will he confirm that; if not, what will he say to those people to allay their fears?
The first point I would make is in respect of the major exploration work that is expected in the next few years in the Great South Basin. None of that is occasioned by New Zealand demand. I spoke with the chief executives of two of the major oil companies involved down there before the tender rounds, and they confirmed to me that their interest is stimulated by the potential size of those resources for export markets, not for the New Zealand market. In respect of the New Zealand market for gas, it is an unavoidable reality that if we have more focus on renewables, we have less focus on thermal alternatives. It is two sides of the same coin. However, having said that, I point out that we will still have a dependence on gas in industry and in electricity generation to a significant extent for years to come. That, in itself, will be a market.
Jeanette Fitzsimons Link to this
Is the Minister satisfied that a realistic way of incentivising agriculture to reduce its emissions is to exempt it completely from any price on carbon until 2013 and rely on voluntary action, given the sector’s complete failure to get anywhere near the targets it agreed to with the Government in the 2004 memorandum of understanding?
A number of reasons are behind the Government’s proposed decision in respect of that, including a signed agreement with the industry that we thought we would be accused of breaching if we imposed a price-based measure before the end of 2012. However, I do not accept the proposition that there is no incentive on the agricultural sector to reduce its emissions in the meantime. The proposed level of allowance, or grandparenting of emission rights, on 1 January 2013 is 90 percent of 2005 emissions. If the emissions increase above 90 percent of 2005 emissions between now and then, the sector will be paying for them. So there is an incentive for the sector to start reducing its emissions from now.
Hon Dr Nick Smith Link to this
How many Eveready batteries will New Zealand need to import to power the huge fleet of electric cars the Minister is proposing, when over the same period he is proposing reductions in per capita electricity use?
If the member cares to look at the information in the Energy Strategy, he will see that the time period over which electric vehicles are expected to enter the fleet is still some years away. The member seems to be of a party that says we should not try to do anything until it has already been done. On this side of the House we think that occasionally we should lead and give a bit of direction in areas that will obviously be in New Zealand’s economic interest. This is one of those areas. I have no doubt that history will prove us right.
Hon Dr Nick Smith Link to this
How is it realistic for New Zealand to be a world leader in electric vehicles, when in March this year the Ministry of Transport advised: “The first generation of electric vehicles will have limited application to New Zealand.”, and when the only initiative in the strategy to achieve the goal of 1.4 million electric cars is to form an advisory committee?
Of course, the first generation of electric cars is already with us in the world, and it is obvious that they are not in New Zealand. So we are not relying upon that first generation of electric vehicles. We do already have some high-end fully electric vehicles in the sports car market. In addition to that, I say to the member that clever though the engineering students are at the University of Waikato to build a fully electric vehicle this year in New Zealand, I suggest that if they can do it now, then in the next few years the Japanese car industry might be able to too.
Hon Dr Nick Smith Link to this
Why should anyone believe his Government’s strategy for New Zealand to lead the world in new-car technologies, when the record of this Government is that our car fleet has got older every year over the last 8 years and is the dirtiest and the noisiest in the OECD and one of the least efficient; or has his Government become so desperate for re-election that it will say anything to anybody because it knows it will never have to implement it?
The member would have that status quo continue. We actually want to change it. The other point I would make is that New Zealand is not talking about pretending to be the developer of all this technology. We are just saying we want to be one of the first countries to widely deploy it, and in that we have some advantages. They include our low-cost electricity, our renewable electricity, and the fact that we do not have a domestic car industry based on internal combustion motor production to protect.