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Harry Duynhoven: Lignite Symposium - Invercargill

Hon. Harry Duynhoven Speech

Lignite Symposium - Invercargill

Thank you very much for the opportunity to speak at this symposium. I would like to thank Dr George Hooper and Venture Southland for making this possible. I would also like to acknowledge the presence of several overseas guests.

2004 was a significant year in terms of changes to the energy sector. Change often brings opportunities - in particular, rising natural gas and oil prices have prompted many to take a fresh look at the potential role for other fuels, such as coal. It is appropriate that this symposium is being held in Invercargill, because if new technology can mean that lignite stacks up - both environmentally and economically - this is a significant opportunity for Southland region.

But before I talk about coal I would like to digress slightly by noting the similarities between Southland and my electorate of Taranaki:

a. A strong rural basis that features significant growth in the dairy sector,

b. Both provinces have significant energy resources,

c. Both areas have large scale engineering infrastructure and a skilled labour force available and are experienced and,

d. The people and organisations like Venture Southland have a progressive attitude towards projects and business in general. This is clearly demonstrated by Venture Southland supporting this symposium.

Petroleum has driven rapid development of the energy sector in Taranaki, the economic growth and wider benefits derived from this growth have added considerable wealth to my electorate and to New Zealand. I'm sure the development of Southland's energy resources could yield similar benefits at both regional and national levels.

One of Southland's major energy resources is, of course, lignite - the reason we are gathered today. I'm aware that there has been some confusion about the government's attitude to coal. Of particular concern is the view that government does not want coal resources developed. This is incorrect, and I'd like to explain this in a little more detail.

The government's objectives for the energy sector emphasise energy efficiency and security of supply with increasing focus on renewables.

These objectives sit alongside the government's principles for sustainable development. The government's policies and objectives seek to create certainty and security around New Zealand's energy future for both consumers and industry.

Amongst difficult energy issues facing this government, the effect of C02 on the Earth's climate is perhaps the most serious. On a global scale this affects some 85% of all primary energy supply. New Zealand is no exception as we consume oil gas and coal to power our economy therefore it is necessary to address our energy challenges in the context of managing greenhouse gas emissions.

The global economy is moving into a carbon constrained future. Restrictions globally on emissions will increase with time. This is necessary if the world is to avoid the more disastrous potential impacts of climate change. Therefore it is in New Zealand's strategic interests to be ready for this future. Being clean and green will be a competitive advantage not just from a branding perspective, but also directly in terms of costs.

However, this does not mean we will not develop our hydrocarbon resources. Our climate change policies simply mean that the costs to the environment of our energy choices will begin to be taken into account, through a carbon tax. If projects are economically feasible with the environmental costs factored in, and they are able pass the relevant local authority's consent process, then there is no reason why they shouldn't proceed.

Over the past 12 months the energy debate has revolved around understanding the impact of declining Maui reserves and the options to replace this primary fuel. We have all seen the graphs and heard various proponents of solutions talk about the various pros and cons of each option. However, the focus has largely been on the combustion of fuel - burning gas - coal - importing LNG/CNG. By comparison very little has been said about the application of energy efficient technologies - demand side management and the management of C02. It is pleasing to see this symposium addresses many of these issues at a pragmatic, technical and economic level.

To date, New Zealand has developed technologies around increasing energy efficiency in various processing industries and in most cases this technology has brought about significant reductions in production costs. However, by comparison the technology applied at the "fuels" end of the business has not kept pace.

I mentioned earlier that change often brings opportunity. One such opportunity may be the use of coal and lignite at the "fuels" end of business. For most people coal and lignite resources are associated with stoking fires, however, these resources hold considerable value in their chemical make up, and simple combustion may not be the best use of these resources. In Southland, there may be a case for lignite, based around gasification. It will be interesting to see how the technology and economics of this stack up.

To conclude, advanced coal technologies have the potential to offer significant economic and environmental benefits. These factors are consistent with government's overall direction for future energy supply. The key will be how quickly the costs can be brought down to a level competitive with New Zealand's other options. I will be following this field with interest and suggest the time may well be approaching for the development of Southland's energy resources.


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