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Contact welcomes draft energy strategy

11 December 2006

Contact welcomes draft energy strategy

Contact Energy today welcomed the release of the Government’s draft New Zealand Energy Strategy, saying the company supported the intent of the document to develop solutions to the climate change challenge.

Contact Chief Executive, David Baldwin, said Contact shared the increasing public concern over climate change, and was committed to helping develop solutions to reduce New Zealand’s greenhouse gas emissions.

Mr Baldwin said Contact’s balanced generation portfolio positioned the company well to operate in a carbon-constrained environment.

“We have 50 per cent of our generation in renewable hydro and geothermal plant, and have well-developed investment plans targeting new wind, geothermal and hydro generation,” he said.

“The bulk of the remaining 50 per cent is provided through modern, high efficiency combined cycle gas-fired power stations which, through recent efficiency upgrades, have had their carbon dioxide emissions cut by around 120,000 tonnes per annum.”

Mr Baldwin said it was important that, in trying to reduce the energy generation sector’s emissions profile, the development of modern, efficient thermal generation was not prohibited from displacing old, inefficient thermal plant.

“Last winter demonstrated that New Zealand needs flexible thermal generation to back up our hydro and wind system. We must make that thermal generation as clean as possible, and that means enabling the sector to replace old and inefficient plant with high efficiency and relatively low emission thermal generation.

“If we approach the issue of reducing emissions from across the electricity generation sector it is possible to replace old and inefficient thermal plant with modern, low-emission thermal generation; both increasing New Zealand’s energy security and cutting emissions from the sector,” he said.

Mr Baldwin said Contact accepted that the world was entering a carbon-constrained era and that a price on carbon was inevitable.

“We encourage the Government, and the rest of Parliament, to support the idea of an economy-wide carbon charge, and the establishment of a carbon trading market, sooner rather than later.

“Not only would this increase investment certainty across the economy, but would also encourage the market to provide innovative solutions we need to reduce all emissions, rather than on a sector by sector basis.

“We believe the market is best equipped to provide the new solutions we need to combat climate change, and our submissions to this strategy will be in favour of market-based mechanisms.”

Mr Baldwin said the Government has signalled its interest in the early development of emissions trading for the electricity generation sector. If that were to be a step towards an economy-wide trading mechanism, Contact would be interested in further exploring how that idea might work.

Mr Baldwin said he was particularly pleased that the draft New Zealand Energy Strategy had reviewed the electricity market and found the current arrangements to be “fundamentally sound”.

Mr Baldwin said Contact would continue to participate fully in the consultation process around the draft strategy and was hopeful of contributing towards a new regime which encourages sustainability, efficiency and emissions reductions.


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