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A Strategy For New Zealand's Energy Future

Hon Pete Hodgson Speech Notes

[Address at the launch of the draft National Energy Efficiency and Conservation Strategy, Parliament Buildings, Wellington.]

New Zealand¡¦s use of energy is wasteful, polluting and expensive.

That's blunt, but true.

It's also no surprise, given the lack of attention we have paid in this country to energy efficiency.

We are predicted to use 13 percent more energy in 2012 than we do now. But unless we get smarter about what we do with it, we¡¦ll still be throwing a lot of it away.

Energy inefficiency is money down the drain. The Draft National Energy efficiency and Conservation Strategy, which I¡¦m launching here today, is not some indulgence for environmental goody-two-shoes. It¡¦s about bottom-line common sense.

Most New Zealand businesses could cut their energy costs by 20 to 30 percent through cost-effective energy efficiency measures.

More efficient driving could save individual motorists around $300 a year on fuel for an average vehicle.

Just under half of the average household power bill is for water heating, but hot water cylinders waste on average 40 percent of the energy they consume.

And poor insulation means New Zealand homes are often colder than the World Health Organisation recommends.

But we can re-write these facts. If we start using energy more efficiently, we¡¦re better off. It really is that simple.

So how do we do it? Or more precisely, what can a Government do to change the energy habits of a nation?

For starters we can show leadership.

We can do that by setting an example, which is why we have already committed the core public service to a 15 percent improvement in its energy efficiency by 2005.

And we can do it by developing a strategy like this one, which looks across the whole economy to find out where the gains can be made, then considers what will help secure those gains.

The benefits are long-term. Making energy efficiency, energy conservation and renewable energy into mainstream solutions is the way to a sustainable energy future.

It won¡¦t be a sacrifice. It will be good business. Sustainable energy use is part of international moves to develop environmentally sustainable economies. The latest ¡§Management¡¨ magazine says that shift will create new employment opportunities for 14 million people world-wide.

This is an area of opportunity for our innovation system. New technology is going to be a crucial source of improvement in energy efficiency. So throughout the draft strategy there is an emphasis on supporting technological best practice.

Smarter energy use and supply lie at the heart of the strategy, which sets out five goals:

„h to reduce carbon dioxide emissions;
„h to reduce the local environmental impacts of energy production and use;
„h to improve economic productivity;
„h to promote industry development;
„h to improve economic resilience, by reducing energy supply disruptions and price shocks, and;
„h to reduce energy deprivation, by enabling all households to get adequate energy services.

In short, the draft strategy is about developing an energy sector that will support a dynamic economy and improve the quality of our lives.

It proposes two targets: a 20 percent improvement in energy efficiency by 2012 and a defined increase in renewable energy supply.

A 20 percent improvement in energy efficiency will be a challenge, but a realistic one.

The natural rate of improvement is up to 1 percent a year. We'll need to double that.

To reach that target, the draft strategy proposes a wide range of measures, across all sectors of the economy.

It proposes programmes for central government, local government, the building sector, industry and agriculture, transport and the energy supply sector.

All the programmes have three key principles in common.

The first is that institutional priorities and systems need to work for sustainable energy use. That means businesses and government agencies must adopt and apply energy efficiency priorities.

The second is that energy efficient options, choices and technologies need to be encouraged.

The third is that people must have the resources they need to take action. That means knowledge, skills and financial resources.

The programmes based on these principles include education, training, facilitation, pricing and new standards. There are commitment programmes and, where appropriate, financial incentives.

I won't go through the draft strategy and recite them all. But I'll mention some examples from one sector.

I'll choose a hard one ¡V transport. It presents one of the biggest challenges.

Transport accounts for 40% of our consumer energy use. We fly a lot and we have the third highest car ownership rate in the world.

There is only one person in the vehicle for many car trips in New Zealand. One third of all car trips are less than 2 kilometres.

Our existing energy use patterns are deeply entrenched. Our habits, cities, roads and vehicles impose some powerful constraints on the growth of energy efficiency.

But we can re-write some of these facts too.

We can reduce demand for travel by encouraging attractive alternatives, such as teleworking and ridesharing, and by promoting more energy efficient urban design.

We can increase the use of eco-efficient vehicles, with lower emissions from cleaner fuels.

Emission standards for new vehicles and emission rules for the existing vehicle fleet are already being developed. The draft strategy would add energy efficiency standards for new and used imported vehicles.

Supporting measures could include fuel efficiency labelling and public sector leadership in the use of eco-efficient vehicles.

The draft strategy also proposes more support for low energy transport options such as walking, cycling, and public transport.

The major responsibilities there lie with roading authorities and local bodies. But the Government could facilitate more investment in public transport, make sure we have a supportive national transport strategy and help fund trials of new initiatives favouring pedestrians and cyclists.

We could also identify ways to recognise the energy efficiency advantages of rail and sea transport, and ensure that road use is properly priced. That would mean looking at congestion pricing, and changing road pricing to reflect the full costs of road use, including environmental impacts.

Finally the draft strategy suggests we invest in information and education on energy efficient transport. That could include raising drivers' awareness of fuel economy and efficient driving, and providing commercial fleet managers with similar useful information.

There are plenty more specific measures proposed for the other sectors I have mentioned.

But I want to say something now about the other target in the draft strategy, which is a defined increase in renewable energy supply by 2012.

The increase is not quantified in the draft, because we want to take advice and submissions on that. But the emphasis on renewable energy is strong and clear.

Abundant hydro, geothermal and biomass resources already give New Zealand one of the highest rates of use of renewable energy in the developed world. Other renewables, such as wind and solar, present huge opportunities.

But New Zealand has been relatively slow to explore new renewable technologies.

The share of our electricity provided by hydro generation dropped from 73 percent in 1990 to 64 percent in 1999. In part that is due to the weather, but we have increasingly used fossil fuels, especially gas, to meet increased demand.

There is plenty of scope for improvement. The costs of renewable energy are reducing as technologies develop and economies of scale are achieved.

Internationally the cost of electricity from wind has halved over the last decade. With encouragement, other renewable energy technologies can also become more cost-effective.

One of the chief environmental gains from increased use of renewables is reduced greenhouse gas emissions. And that brings me to the global dimension of the draft strategy, which is climate change.

Unless we change our energy use habits significantly, New Zealand will continue to use more and more carbon dioxide -emitting fossil fuel sources such as oil, gas and coal.

Our energy use already accounts for more than 80 percent of our carbon dioxide emissions. By 2012, our energy demand is set to push those emissions to 45 percent over 1990 levels.

Earlier this month the Intergovernmental Panel on Climate Change reported on the possibilities for action to address climate change.

Its remarkable finding was that energy efficiency technologies and practices make up more than half of potential global emissions reductions.

More than half.

Let's be clear about the significance of that. Energy efficiency initiatives are not a token step towards addressing the problem of climate change. They offer real, substantial progress in reducing greenhouse gas emissions.

If we can achieve the draft strategy's target of 20 percent improvement in energy efficiency, we could cut as much as 50 percent off the excess of New Zealand¡¦s greenhouse gas emissions over our Kyoto Protocol target.

New Zealand's response to climate change will have to reach wider and go further than energy efficiency and renewable energy. But dealing to half the necessary reduction in emissions would be a very good start.

There is even the prospect, if we¡¦re smart, of meeting our climate change obligations with overall benefits, not costs.

The sums done so far on the draft strategy suggest that it would pay for itself handsomely over time, while delivering carbon dioxide reductions.

If we go further and seize the business opportunities in sustainable energy technology, we will truly be in a winning position.

That's something to aim for.

I want to acknowledge the presence of Jeanette Fitzsimons and thank her for her contribution, particularly for her role in the passage last year of the legislation that made this strategy happen.

This is the first time New Zealand has had such a strategy. When I say that to overseas visitors they just shake their heads. The Greens and the Government will continue, I am sure, to work together closely on this issue.

The draft strategy is open until the first of June for comment and debate. We want the public and interested parties to help with the fine tuning.

If the draft needs change we want people to tell us straight, tell us why and tell us how.

Background material is available from the Energy Efficiency and Conservation Authority or their website. Explanatory workshops and meetings will be held in April and May.

The final strategy will be published by 1 October this year.

And not a moment too soon.


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