Speech to the Wind Energy Conference
Speech to the Wind Energy Conference 2000 Jeanette Fitzsimons Green Party Co-leader 25 May
It is with great pleasure that I take this opportunity to speak to you this afternoon. You have had a very intense day of being 'talked at' and I trust your patience and attentiveness will stretch for another session.
Clearly the political context in which this conference takes places has changed significantly from that of last year's conference. NZ has been sorely lacking any substantive environmental leadership for too long. You now have a Government that has already signalled a greater commitment to environmental issues, and I applaud them for that, and you have a Green Party uniquely placed to ensure that commitment is upheld and to push our own agenda of getting NZ on to a truly sustainable path.
You have heard from two Ministers today. Pete Hodgson outlined the key issues that will face the wind industry this year while Marian Hobbs addressed the implications of the Resource Management Act.
Several political development have been referred to today which should give reason for a sense of hope, though not necessarily optimism. These are: the Electricity Inquiry, the passing of the Energy Efficiency and Conservation Act, Kyoto, and carbon charges. I will return to these later in this speech.
But I think that it is important that we recognise that there are twin missiles bearing down on us all which will hit in next decade
The first is oil depletion - ignored by almost everyone since the flurry of the seventies, but about to become a reality. While oil discovery data is generally obfuscated by the reporting policies of the petroleum industry, driven by commercial approaches to public information, it is now becoming known that discovery peaked 30 years ago and all 'discovery curves' are now flattening. For each four barrels we use world wide we are now discovering only one.
The corresponding production peak is nearly upon us. According to Campbell from 2001 to 2008 production will plateau with higher prices (around US$30 per barrel) resulting from reduced production in countries such as Norway. From 2008 production will begin to decline at around 3% per year.
This accords well with information I was given by Shell Oil 18 months ago, that internationally they are working on the assumption that sometime between 2005 and 2010 demand for oil will exceed the capacity of the world's wells to supply.
The co-incidence between these dates and the start of the first Kyoto budget period in 2008 must be more than co-incidence. There is no chance of NZ reaching its Kyoto commitment, on the present track and new measures must be put in place.
The effect of this double whammy will be both to increase the price of wind's main competitor and to increase the need for wind power. But waiting for those market signals to do it will involve huge disruption, economic, social and environmental, because by then there will be insufficient time for markets to respond.
The responses that are needed to both oil depletion and climate change are the same - more energy efficiency and more renewables.
Let's look first at the Energy Efficiency and Conservation Act which I steered over its final hurdle a fortnight ago. What will it do for wind?
* The Act gives the Minister of Energy a duty to promote renewables, monitor them, report on them, provide information on them.
* EECA now has a mandate to pursue renewables and is the main agency the Minister will use to carry out these obligations.
* The National Energy Efficiency and Conservation Strategy, which is to be prepared by April 2001, must state targets for renewables and means to achieve them.
These are legally binding requirements and the Minister can be taken to judicial review if he/she does not comply. I am gald to say the current Minister has accepted these obligations willingly.
It is also very encouraging to see a "New Renewables" category for the EECA awards this year - which was won by largest wind farm in southern hemisphere, the Tararua Wind Farm. May I repeat my congratulations to them.
NZ has an excellent wind resource, and there are opportunities in development, manufacturing and export if we act soon, even though we are well behind two 'power surges' in wind technology and development in the US and Europe.
So what are the obstacles and how can we remove them?
Fossil fuels and carbon charges
Fossil fuels have achieved their dominance and maintain that position by being subsidised for the resulting environmental, health, and social disruption. One response to this is to begin to implement the 'polluter pays principle'. The need for environmental pricing, such as the introduction of a carbon tax will be considered within the taxation review. However, as the Minister has pointed out, carbon charges will not become a reality until after next election if the Govt has its way. Furthermore, it is critical that the taxation review takes a more integrated approach and includes an ecological tax reform that shifts the burden of tax from goods such as work and enterprise to bads such as waste and pollution. The Greens will be arguing this vigorously in the tax review, as well as continuing to press for a carbon charge, offset by raising the threshold of tax free income, during this term.
Energy efficiency, distributed renewables and fuel cell technology all have the potential to reduce demand on the grid. Current pricing charges for "maximum pipe size" and gives no credit for embedded generation.
The argument for this is that people need to pay for the right to have security of supply when the wind isn't blowing. This is a fair point, but fails to recognise the potential for more distributed generation generally to take the pressure off the grid. And from a national perspective, of course, the wind is usually blowing somewhere.
This issue needs to be worked through closely with Government. Arguably present pricing means that the existing grid is guaranteed a return, at least until fuel cell technology develops a little further. There is a strong argument that in the absence of a carbon charge some other incentives for renewable generation is needed. We could look at giving some credit for embedded renewables in the transmission pricing structure.
3/ Max Bradford's lines/energy split stopped 500 MW potential wind projects in their tracks. As I said at your last conference, lines companies are the ideal entity to build wind generation for reasons of capital backing and scale. I believe there is a need to remove the cap to allow lines companies to own 'new' renewables generation to allow this sunrise industry to get above the horizon and recognise the value of embedded generation.
Our wholesale market reforms were sold on the basis of increased efficiency in determining merit order of dispatch of power stations. In fact what they have done is eliminated any long-term planning, created more barriers for energy efficiency and led to fossil fuels being burned while water spills. It's just too easy to "game" the market. Sadly all this was anticipated. I am hopeful that the present government will take a more balanced view of things.
The wholesale market is not kind to ideas about distributed generation. In the longer term we will need a fundamental rethink about how to design electricity industry institutions so that they do not bias the whole system towards large power stations and a massive grid. This is after all the way of "think big" hydro and fossil fuels rather than a network of small renewable sources.
There are some who see wind farms as blots on the landscape and fight them just as we have fought synfuel plants and large dams. The answer is not to remove public participation for wind farms, but to get the public consultation right at the very start, just as we have been advising think big proponents to do for years.
Just like any new development, don't assume public support. Consult early over the site, the design, and be flexible to the extent that you can. Getting the support of the local community will be a bonus that will far outweigh the effort. Remember that just because it's renewable doesn't mean it has no effects - remember the Clyde dam.
The Local Government and Environment Select Committee has adopted my suggestion for an inquiry into the role of local government in reducing greenhouse gas emissions. I invite you all to participate in this inquiry, and suggest you may like to submit some good ideas on how district councils can provide democratically for wind in their plan, allowing full community consultation on siting and conditions before any specific proposals arrive, thus reducing the costs for everyone on individual projects.
No long term thinking in govt
There is a desperate need for stronger government leadership in changing attitudes; which could be demonstrated through a government purchasing policy favouring sustainably produced goods and services throughout the public sector, as well as "green" electricity. We also need mandatory renewables quotas for energy supply companies and you may wish to explore this option in your input to the Energy Efficiency and Conservation Strategy.
Among some, wind has a bad press as small, expensive, intermittent, and noisy. But among others it is perceived as a friendly technology.
It is important that there is greater recognition of the potential for renewables to provide greater independence from oil & multinationals, for the public to understand that renewables such as wind energy are greenhouse friendly, that we take a pride in new technology and invest in the research necessary to benefit from NZ's natural advantage.
Where to Next?
I hope the debate about ratification of the Kyoto Protocol will lead to debate about the measures we need to comply with it. Without that, ratification would be a sham.
I am crossing my fingers the Electricity Inquiry will tackle the hard issues I've mentioned rather than just price regulation of lines companies.
There is an opportunity to give substance to the inclusion of the term "sustainable economic development" in the Economic Development (Industry New Zealand and Ministry of Economic Development) Bill to ensure that the large fund that has been created does address the ecological implications of economic development and supports sunrise ecologically sustainable industries rather than, say, more coal mines.
In other words, there is a lot to do!