30 March 2006

Energy efficiency strategy to be replaced

Energy Minister Trevor Mallard and Government Spokesperson on Energy Efficiency Jeanette Fitzsimons today announced that the four-year-old National Energy Efficiency and Conservation Strategy (NEECS) will be replaced.

"Cabinet this week agreed to replace the first National Energy Efficiency and Conservation Strategy which was set in September 2001 and laid the foundations for developing a sustainable energy system," Trevor Mallard said.

"That original strategy provided us with a solid base to build on. It has delivered some energy efficiency gains, but not at a sufficient rate to meet New Zealand's current and future needs.

"The world has changed in the last five years. In particular, we need to respond more effectively to the challenges and risks associated with energy security and climate change and environmental sustainability. If we want to take significant steps towards a truly sustainable energy system that fosters economic growth and promotes a healthy society, we need to develop a new strategy that delivers more," Trevor Mallard said.

Government Spokesperson on Energy Efficiency and Green Party leader Jeanette Fitzsimons said the growth in total energy demand meant that the overall percentage of renewable energy was decreasing, and this issue had to be addressed in the new strategy.

"The benefits of improved energy choices are still there, waiting to be captured. The Energy Efficiency and Conservation Authority (EECA) will lead development of a new strategy that better enables the whole of New Zealand to realise those benefits.

"The new strategy will pursue energy efficiency and renewable energy more aggressively and will aim to put New Zealand on a faster course to a sustainable energy system.

"The Energy Efficiency and Conservation Authority (EECA) will draw on input from stakeholders, international best practice, domestic success stories and lessons from the implementation of the first strategy to inform future policy direction," Jeanette Fitzsimons said.

The new National Energy Efficiency and Conservation Strategy will form an integral part of the National Energy Strategy - for which terms of reference are currently being drafted.

Together with climate change policy, these pieces of work will form a whole of government approach providing direction and leadership for the energy sector.

The new National Energy Efficiency and Conservation Strategy is expected to be finalised by March 2007.

EECA has conducted a review of the 2001 National Energy Efficiency and Conservation Strategy (NEECS), to inform decisions on whether it should be replaced. The review findings are summarised below.

Questions and Answers

What is the National Energy Efficiency and Conservation Strategy? The National Energy Efficiency and Conservation Strategy (NEECS) sets the agenda for government programmes to promote greater energy efficiency and renewable energy update across the economy. Released by the Minister of Energy on 27 September 2001, the current strategy focuses on two national targets:

* A 20 percent improvement in energy efficiency by 2012; and

* Increasing New Zealand's renewable energy supply to provide a further 30 petajoules of consumer energy by 2012.

The current strategy drives numerous initiatives, across government, to improve energy efficiency and promote renewable energy. Although EECA is not solely responsible for implementing it, the strategy also drives EECA's own activities and programmes in the government, energy supply, industry, buildings and appliances and transport sectors.

Has the 2001 National Energy Efficiency and Conservation Strategy been reviewed? EECA has conducted a review of the National Energy Efficiency and Conservation Strategy (NEECS), which has been in place since September 2001. The review involved a stock take of progress with the strategy's action plans, an assessment of the current situation, a scan of international best practice, and a broad evaluation of the potential for improvements in the way New Zealand pursues improvements in energy efficiency and increasing renewable energy supply. This helped to inform EECA's recommendation to the Minister of Energy to replace the current strategy.

For a copy of the Situation Assessment report that resulted from this review see www.eeca.govt.nz

What did the review find? The review found that the strategy's action plans have generally been implemented as intended and are contributing to the social, economic and environmental goals, but needs to be strengthened.

The original strategy laid the foundations, and removed barriers to the uptake of energy efficiency and renewable energy. New Zealand is now in a good position to build on these foundations.

So far, we have seen only very modest improvements in energy efficiency. To reach the existing national target would require an improvement of 2.5 percent per year, which is greater than international best practice at 2 percent. New Zealand is currently tracking at a rate of improvement of between 0.5 percent and 1 percent per year.

We currently have an additional 4 petajoules (PJ) of energy coming from renewable sources each year, enough to put us on track to achieve the strategy's national renewable energy target of an additional 30PJ by 2012. However, the overall demand for energy keeps increasing, so the percentage coming from renewable sources is actually decreasing. This has a lot to do with the rapid increase in use of transport fuels.

Why is the National Energy Efficiency and Conservation Strategy being replaced now? The current strategy has been in place for over four years. New Zealand's energy situation has changed considerably in that time, as has the global energy scene. Government has also learned from its experience in working under the existing strategy. All in all, replacement is considered necessary and timely.

In passing the Act, Parliament also recognised that a National Energy Efficiency and Conservation Strategy would need regular reassessment. The Act provides for the Minister of Energy to replace the Strategy, if necessary, after 5 years.

Who will be involved in preparing a new strategy? EECA will lead the preparation of a new strategy, working closely with other government departments and agencies, including the Ministries of Economic Development, Environment, and Transport.

Stakeholders, including the public, will be consulted during development of the new strategy. The Energy Efficiency and Conservation Act 2000 explicitly requires EECA, in developing a draft, to seek comments from representatives of industry and commerce, environmental and community organisations, Maori organisations, local authorities and the Parliamentary Commissioner for the Environment. The resulting draft strategy must then be publicly notified for written submissions. EECA will take these submissions into account and prepare a final strategy for government consideration and decisions.

What does the National Energy Efficiency and Conservation Strategy cover? Legally it must set out the government's policies on promotion of energy efficiency, energy conservation and use of renewable sources of energy. It also has to include objectives, targets, and describe how these, and the policies, are to be achieved.

There is an open mind on what the possible improvements on the current strategy might be, including whether the targets should change.

How does a replacement National Energy Efficiency and Conservation Strategy fit with the planned development of a National Energy Strategy? The government announced last year that it would develop a National Energy Strategy to provide long-term direction and leadership to put New Zealand firmly on the path to an energy system that supports economic development, and is environmentally responsible. It will build on work done by the Ministry of Economic Development on sustainable energy.

The National Energy Strategy will be the umbrella strategy that will incorporate the National Energy Efficiency and Conservation Strategy. Both the National Energy Efficiency and Conservation Strategy and the National Energy Strategy will need to be consistent with the strategic framework established for climate change policy, which has implications for the energy sector.

Both strategies will need to recognise, and be consistent with the other. It is likely that both will push for more aggressive uptake of energy efficiency and renewable energy.

Terms of reference for the National Energy Strategy are currently being drafted by the Ministry of Economic Development, and will be released for comment in the near future.

How can I keep tabs on this? EECA is keen to keep all interested parties informed. If you would like to be added to a contact list for this project, please email neecsreview@eeca.govt.nz

ENDS

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