Address To BusinessNZ Energy Council Breakfast
Hon Simon Bridges
Minister of Energy and Resources
Sustainable Business Council and BusinessNZ Energy Council Breakfast
Today countries around the world are facing the same energy challenge – we want to continue to grow our economies and help our people to prosper, but we need to reduce our carbon emissions and respond to climate change.
At the moment, the world is in a transition phase towards a low carbon future.
In the US, President Obama speaks of an “all of the above” policy on energy. That is also what we have here in New Zealand – a mixed and balanced approach to our energy future.
This Government takes a balanced approach to climate change – playing our part while avoiding imposing excess costs on households and businesses.
We are the only country, outside the EU, to have a comprehensive emissions trading scheme.
And we take leadership roles in areas where we can make the greatest contribution on a global scale.
For example, New Zealand’s expertise in agriculture has given us the chance to develop the world-leading initiative, the Global Research Alliance on agricultural greenhouse gases.
The Alliance has over 30 member countries, including most of the world’s major agricultural emitters.
New Zealand is also actively working towards a binding agreement under the Convention Framework, which accounts for 85 per cent of global emissions and includes many of the major economies , including the US, China, India and Russia.
Domestically, from a Government perspective, there are at least three options available to reduce carbon emissions.
We can set a price on carbon.
We can invest in technology and research to help us use and manage energy in smarter ways.
Or we can promote greater uptake of energy efficiency initiatives.
It’s this third option that I want to focus on today.
Energy efficiency has long been recognised as having a major role in a more sustainable energy system. It reduces emissions, improves business productivity and saves money.
The Energy Efficiency and Conservation Authority (EECA) estimate that New Zealand firms could unlock $1.6 billion in annual savings through improved energy management.
The potential of energy efficiency remains largely untapped.
In many cases, the main barrier preventing people taking action is a lack of awareness and information.
By increasing awareness we can show that success and economic growth doesn’t have to mean consuming more energy.
In New Zealand, our biggest opportunities to reduce our carbon emissions lie in the energy sector.
We already have a great story to tell in the electricity space.
Our renewable generation is already at 75 per cent, and we’re aiming for a target of 90 per cent of electricity generation from renewables by 2025.
Energy efficiency in electricity is important, but we simply can’t make the same gains as we can in more carbon-intensive parts of the energy picture.
About 42 per cent of New Zealand’s carbon emissions are from energy use. Transport, industrial heat and the heating of commercial buildings are responsible for three quarters of that.
I have been working with EECA to look at energy efficiency initiatives to help improve our productivity and reduce emissions in these areas.
Today I would like to announce three initiatives which could become stepping stones to New Zealand’s low emissions future.
Improving the energy efficiency of meat and dairy plant
The first initiative I would like to talk about today is focused on industrial heat in the meat and dairy sector.
Meat and dairy plants are the biggest users of industrial heat, which they use to process milk and meat. More than half of the approximately 200 plants nationwide use coal-fired boilers.
We want to demonstrate that energy efficiency will improve the bottom line of meat and dairy plant so there’s a clear pathway for improving productivity and reducing emissions.
Under this initiative, EECA will contract industry experts to work with meat and dairy plant operators to identify energy savings within their business.
This could be through improvements to heat recovery processes, boiler tuning, or where economic, fuel switching, for example, from coal to wood.
They will then work with operators to develop business cases or feasibility studies.
Overall, businesses are expected to see on-going savings up to $700,000 in energy costs each year – which is about $70,000 per site over the expected life of the improvements.
It will also save an estimated 7,000 tonnes of carbon each year, which is equivalent to taking up to 2,000 cars off the road.
As a country, New Zealand benefits when meat and dairy heat plants reduce their energy costs, bolster their international reputation in terms of carbon impact, and mitigate their wider environmental impact.
Renewable Heat Hub
On the issue of industrial heat there is another area with potential.
New Zealand’s forestry sector has significant quantities of wood that would otherwise go to waste and there are real opportunities to turn this into heat.
However, it is difficult for regions to develop a renewable resource without businesses committed to using it. It is also difficult to persuade industrial and commercial heat users to switch to renewables without an assured supply.
While I am not making an announcement on this particular subject today, I did want to signal that EECA is currently exploring the feasibility of solving this issue by creating a network of supply and demand through a renewable heat hub.
As well as energy efficiency gains and reductions in carbon dioxide emissions, this type of project could offer security of energy supply and reduced costs for industrial and commercial heat users.
Expansion of Heavy Vehicle Fuel Efficiency Programme
Turning now to transport, our size, and the significant distances between our towns, cities and ports, mean the roading network is vital for us all.
From furniture to office stationary, food and clothing, heavy vehicles play a part in moving nearly everything we need.
The cost of freight is built into the retail price of goods, so the amount of fuel used by the heavy vehicle fleet affects everyone.
The heavy vehicle sector consumes about 20 per cent of all transport energy - about one billion litres of diesel per annum - and there is potential for fleet operators to save up to 15 per cent of their fuel use.
Yet, many fleet operators are not aware they can make significant savings through fuel efficiency.
There is also a clear correlation between fuel efficiency and safety for heavy vehicle fleets – driving smoothly and efficiently saves lives.
Under the second initiative, EECA will work in partnership with three road transport associations to train small to medium-sized heavy transport fleet operators to implement long-term fuel savings plans.
The initiative will train 150 fleets over three years and builds on EECA’s current heavy vehicle fuel efficiency programme.
The programme is expected to save up to one millions litres in diesel each year. It will save around 7,500 tonnes of carbon each year, which is equivalent to the annual amount of carbon stored in a 400 hectare New Zealand pine forest.
Fuel Efficient Tyres
Heavy vehicles fleets are not the only area of transport where we can make a difference. Private vehicle owners can also save money and play a role in reducing carbon emissions.
Private vehicles are responsible for about 10 per cent of New Zealand’s greenhouse gas emissions and increased uptake of fuel efficient tyres presents an opportunity to reduce emissions at a national level.
Using fuel efficient tyres is like saving up to 10 cents a litre every time you drive – you go further on the same amount of fuel.
But despite these benefits EECA research shows that the majority of vehicle owners are still unaware of them.
The third initiative will see EECA wok in partnership with industry to run an information campaign to increase the level of uptake of these tyres.
This simple switch will save 2.5 million litres of fuel each year and around 6000 tonnes of carbon, which is the equivalent of taking around 1,900 cars off the road.
For an average driver it means they can expect to save about $150 in fuel over the lifetime of the tyres, over and above the additional cost to buy them.
Energy is integral to our lives. The Government’s mixed and balanced approach is making the most of all of New Zealand’s energy opportunities.
And, here today, I hope I have outlined some good opportunities to help us in our transition to a low carbon future.
The Government is investing $3.8 million in these three initiatives – they are estimated to save around 20,000 tonnes of carbon emissions each year.
As I have said, these initiatives are modest. However I am confident they can help provide a catalyst toward energy efficiency and carbon saving in other regions and sectors.
I invite those of you today to consider how you might support EECA in rolling out these projects, and to think about opportunities for other new low-carbon, high-productivity projects within your industry or sector.