Hon David Parker
Minister of Energy
Minister responsible for Climate Change issues

1 March 2007

Speech notes

Sustainability and the electricity sector

Address to the Parliamentary Commissioner for the Environment forum
7pm, Wellington Town Hall

Thank you for inviting me to this event tonight. It's a pleasure to be involved in celebrating the 20-year anniversary of the office of the Commissioner's existence.

During today's forum discussions, you have been looking back at what's changed and what's been achieved over those two decades. Tomorrow you'll be looking forward to the future – one that contains many environmental challenges, but that will also benefit from a world that is, I believe, much more convinced of the intrinsic need to safeguard our environment, if we are to also sustain our economy and our way of life.

I hope you'll agree that one of the signs of progress is the way environmental and sustainability issues have moved up the political agenda.

From my own experience I can tell you that climate change policy a year ago was an uphill battle. The debates got caught up in whether it even existed, rather than what we should do about it. Just over a year ago there was not the support in the House for a carbon tax. A proposed agricultural research levy met a similar fate.
But now, businesses and communities are clamouring for action, and even opposition politicians are falling over themselves to declare a heartfelt and long-standing concern about climate change.

As for this Labour-led government - we believe that a clean, green environment is of such fundamental importance to us as New Zealanders, that it is high on our priority list.

It's part of this government's ethos that sustainability - in all areas - is the only sensible approach to take. It makes sense for Labour's three priority areas of economic transformation, families young and old, and national identity.

 A sustainable economy means one that is strong, resilient, outward-looking and entrepreneurial.
 Sustainable families means education, housing, healthcare, and childcare are accessible and affordable, and there is state support for our elderly when they retire.
 Sustainable national identity means maintaining and fostering our cultural uniqueness, so that New Zealanders are strong and confident in who they are and where they come from.

We believe that environmental sustainability is integral to all three of those government priorities.

 A healthy environment means our exports are of a high standard and produced efficiently. It also means we can take advantage of marketing opportunities derived from our clean green reputation.
 A healthy environment with clean air and water means our families stay healthy and we can enjoy the marvellous recreational opportunities available in our national parks, beaches, rivers and lakes.
 A healthy environment is linked to who we are. It is the land that unites and inspires us as New Zealanders, and it is our relatively untouched landscapes that fill us with collective pride.

As you know, the Prime Minister has raised the bar – suggesting that New Zealand become the first country that is truly sustainable. And that New Zealand should aspire to be carbon neutral.

The government is going to make sure its own house is in order, by reducing the carbon footprint of its 34 core public service agencies.
The Prime Minister has announced that by 2012, six agencies will be carbon neutral.

I'd like to speak briefly about some further initiatives underway that will move us along that path, especially in my portfolios of energy and climate change.

As you all know, climate change is one of the greatest environmental and economic challenges we face as a nation, and of course as a globe. It's expected to result in increasing temperatures, rising sea levels and more extreme weather events like floods and droughts.
Our biologically based production is vulnerable, as is our trade. It's in our interests to act, and for the world to act.

Some argue that our country's total emissions are low relative to a country like China, and therefore our efforts will make little difference to total worldwide emissions. However our per capita carbon emissions are high; much higher than those of the average Chinese. We are seen in the world as a leader on environmental issues – such as the nuclear debate – and therefore it is important we set that same example in the arena of climate change. We must act to reduce our greenhouse gas emissions, and we must inspire others to do likewise.

Right now we are consulting on a range of energy and climate change discussion papers, that affect a range of sectors, from energy generation, to transport, forestry and agriculture.

In the electricity sector, our desire is that all new generation is renewable, except security of supply is threatened. This principle guides our thinking and our policy work, and its effect is already being felt.
Contact Energy has announced it will be deferring the construction of a new gas fired plant, which would have produced more carbon emissions, and will in preference be investing 2 billion dollars in wind and geothermal projects.

These are heartening developments, and we are confident that we will see thermal emissions reducing as more renewables are developed – our data shows there is significant renewable capacity still available, at a price lower than thermal - even without a price on carbon. Therefore, this makes economic sense as well as sense for climate change.

But for renewable energy to play a pivotal role in our energy supply, we need to make sure enough of the best and most appropriate sites are consented. We are proposing to use the RMA processes already in place to call in sets of applications, to better assess them. This does not change the environmental and legal principles applied to applicants and objectors, but it does change the process.

We recognise that while wind energy has much to recommend it, it's not without its environmental impacts. The Parliamentary Commissioner for the Environment has commented on these, in a report titled "Wind power, people and place" released late last year. It looked at ways to improve community and public perception of wind farms, and has provided valuable feedback to us as we develop our policies.

Likewise, another PCE report ("Get smart, think small") on the efficient use and generation of electricity at the household level has been a timely contribution. We recognise the merits of promoting smaller scale electricity and heat generation, and encouraging households and communities to generate their own energy and where possible feed back into the grid.

In the area of transport, we need to take action, to curb a projected 35 percent growth in transport greenhouse gas emissions by 2030 under business as usual.
In the not too distant future, I look forward to seeing electric powered cars, run on electricity from renewable sources. We are setting up a research panel to consider ways to bring forward the use of this kind of technology in New Zealand.

More immediately on the transport front, we have already set a target for biofuels sales, which will require oil companies to include this renewable fuel in their stocks. Already we're seeing New Zealand farmers, businesses and entrepreneurs considering how they can get into this new market, and I've been briefed on some exciting research.

The government is also looking at how to devolve the cost of greenhouse gas emissions into the economy. This will create incentives for individuals and business to reduce their emissions.
We will likely begin with the energy generation sector – perhaps with emissions trading – but longer term, I expect we will head towards emissions trading across the economy. This kind of regime is appearing around the world, and may prove to be the most efficient way of reducing greenhouse gas emissions, as it encourages businesses to find least-cost solutions.

This is where the world is heading, and it is therefore in New Zealand's interests to keep abreast of change, for trade as well as environmental reasons. There are many opportunities as well as challenges arising from climate change – for example in new technology, and in high value markets that favour low-carbon goods.

And in a world where carbon is likely to carry a cost, New Zealand is well-placed. Because of our abundant renewable energy sources, we produce a lower proportion of emissions in the generation of our electricity than almost anyone else in the world.
The transition to a low emissions economy is therefore likely to be cheaper in New Zealand, especially in electricity and transport fuels, than just about any other developed country in the world.

The policies we are advocating will see greenhouse gas emissions from energy production go down for the first time since industrialisation.

The area of agriculture presents more challenges, but there are ways forward. One of our policy principles is that all sectors must play a part in reducing emissions; bearing in mind it is more difficult for some than others.

We are proposing incentives for farmers to use nitrogen fertilisers more judiciously, and to use nitrogen-inhibitors, which reduce nitrous oxide emissions.
Research into breeding and stock feed has already made some progress in reducing nitrous oxide and methane emissions, and we support further work in this area.

Farmers can also play a role on the other side of the carbon balance sheet, by planting trees or growing biofuels, which will reduce transport emissions.

In forestry, we have put forward a range of options to discourage deforestation and encourage new forests, which we are seeking feedback on. We have already devolved carbon credits for new permanent forests. We are proposing to do the same for our production forests.

Deforestation is a serious problem. It accounts for around a fifth of the world's carbon dioxide emissions, and at current forecasts, it could cost New Zealand taxpayers more than 600 million dollars in the first Kyoto commitment period.
So we must take action, and we are trying to arrive at a package of initiatives that will spread costs and opportunities fairly across forest owners and the taxpayer.

It's worth noting that many of the proposals we put forward will have wider benefits for the wider environment aside from climate change, and save us money into the bargain.

Nitrogen-inhibitors will reduce nitrogen run-off into streams and lakes. Forestry on erosion-prone land will also help water quality, and create and maintain ecosystems. Regulations for the car industry will improve general air quality. Energy efficiency measures will make our homes more comfortable and keep our families healthier. Encouraging walking and cycling keep us fitter and reduce the health problems associated with obesity. It's clear that many of these policies make sense to do anyway. The fact they help tackle climate change is a welcome by-product.

That then is a brief race through government climate change policy. I have left many things out, which indicates the breadth of our approach. There is no one silver bullet answer to the problem – many departments and agencies are involved, and likewise, many sectors of our community must respond for this to work.

There are battles ahead – I am under no illusion. But I believe there is appetite for a new way of doing things, and it's my hope that climate change ends up being a catalyst for change and progress in many areas of the environment.

I'd like to commend and thank the office of the Parliamentary Commissioner for the Environment for the role it's played in advancing environmental sustainability. I have especially appreciated the valuable contribution made by Dr Morgan Williams and I look forward to working with his successor Dr Jan Wright.

ENDS

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