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Speech: Shaw - On low emissions economy

4 March 2018
Downstream Energy sector speech on low emissions economy

Hon James Shaw
Climate Change
DOWNSTREAM – 14 March Sky City Convention Centre Akld
Kia ora koutou, ata marie
Nga mihi nui ki a koutou

Well, good morning! And thank you for the rare opportunity to perform a double-act with Dr Megan Woods, my colleague, the Minister of Energy and Resources.
Those of you who I have met over the years may have heard me say before that my first professional job was at a wee outfit called the Electricity Corporation of New Zealand, back when there was such a thing.

When I was there we erected New Zealand’s first every wind turbine on Brooklyn Hill in Wellington.

At the time, a number of Wellingtonians objected. But eventually, amid public polarisation and debate, it got built.

Fast forward twenty-mumble years, when the turbine was completely worn out, 85% of Wellingtonians said they wanted it replaced.

No one was going to take away ‘our’ wind turbine. It had become a part of the city, and a part of the skyline.

And now we have a new one, which cost half as much money to build and yet generates four times as much electricity as the original.

A lot has changed in the last few decades.

But I want to talk today about the changes coming in the next few decades.

The Prime Minister has now famously referred to climate change as the nuclear free moment of our generation.

And I am the lucky chappie tasked – along with Dr Woods and others – with laying out the architecture of how we become a net-zero emissions economy by the year 2050.

A thirty-year economic transformation and, I believe, the greatest economic opportunity in at least a generation.

Every country on Earth is obliged, under the Paris Agreement, to reach net zero emissions in the second half of this century.

And according to the work undertaken by Vivid Economics for the cross-parliamentary climate change group GLOBE NZ, we are able to do this by 2050.
Our view is that, because we can, we should.

As a comparatively wealthy OECD country we have the opportunity to lead the world in the fight against catastrophic climate change – and that leadership position is what creates economic opportunity for New Zealand.

Your sector is at the heart of that.

We are incredibly lucky to already be at around 80-85 percent renewable electricity generation.

We are blessed with abundant renewable and clean energy resources in New Zealand.

Although, as you know, when we include transport and industrial process heat in the energy landscape, it’s quite a different picture.

Minister Woods, and our colleague Julie Anne Genter, the Associate Transport Minister, are putting a lot of effort into shifting the dial in those areas in particular, where some of the greatest transformations will happen to meet our 2050 goal.

Those areas, and of course other sectors of our economy, like agriculture.
We’re all in this together and every sector needs to play its part in this transformation.

It’s a transformation that will turn New Zealand into a nation which utilises and manages its resources sustainably, cost effectively, and responsibly to meet our obligations to reduce greenhouse gas emissions.

It’s a transformation that aims to ensure we continue to enjoy that world class quality of life well into the next Century and beyond, and to share that with more New Zealanders.
Thirty-odd years ago another government put in place the architecture for an economic transformation.

Some of what they did was necessary, some of it visionary and progressive, but some of it left communities reeling.

As a country, we’re still dealing with the consequences today.

So we want to make sure that the coming transition is just and that it is effective.

We do not want the kind of economic transformation that our country saw in the 80s and 90s, which left communities and families in shock and did not support them to adjust.

But at the same time, it needs to be effective, because a just transition cannot be an excuse to slow down or dilute the changes that are coming.

Done properly, a well-managed shift to clean, renewable energy will ensure that sector can be profitable, can be prosperous, can be sustainable and can be resilient through the back half of the 21st Century and beyond.

Our goal is to build up the energy sector, to future-proof it – along with the other important sectors in our economy.

The legislative centre-piece of this thirty year transition is the Zero Carbon Act, which I’ll be introducing into Parliament in September or October this year.

The Zero Carbon Act does two things, primarily. It’ll put into law the goal of becoming a net-zero emissions economy and it’ll establish a politically independent Climate Commission to guide us down the pathway to get there.

The purpose of the Zero Carbon Act is to provide the long-term predictability and stable policy environment that industry needs in order to be able to make the kind of significant investment decisions that, so far, are being withheld because of the lack of such a clear operating environment.

At the moment, we’re gathering the evidence base from the Productivity Commission, the Biological Emissions Working Group, and the second report of the Climate Change Adaptation Technical Working Group.

We’re also conducting new economic modelling about the costs and benefits to the economy of the transition.

Then in June of this year we’ll be asking for your input into the design of the Bill.

For example, what exactly do we mean when we say a net-zero emissions economy? And what will be the precise powers and functions of the Climate Commission?
The Zero Carbon Act should pass in mid-2019, setting our long term emissions target in law and establishing an independent Climate Commission to drive the transition to net zero emissions.

In parallel to all of that, we are also already working on the next stage of the Emissions Trading Scheme review.

This will put some meat on the bones of the in-principle decisions the previous Government made around things like the current $25 fixed price option, and aligning ETS unit supply with our emissions reduction targets.

Basically, what do we need to do to make the ETS do what it’s supposed to do, which is reduce greenhouse gas emissions?

Now, in parallel to these two big legislative reforms, we also want to make some progress in some key areas of the economy.

And because we don’t want to wait until the middle of 2019 to get stuck in them, we’re also going to set up an Interim Climate Committee, to start to look at those issues.

That Interim Committee won’t have decision-making power, but it will get started on two pressing questions.

Firstly, whether or not agriculture should be included in an Emissions Trading Scheme and, if it is, how should it be included?

If it isn’t, what is a better way to reduce net agricultural emissions?
And what effect does it have on our economy overall if we keep some sectors excluded from paying for their climate pollution?

Secondly, how we can achieve 100% renewable electricity.

Yes, I know, some people in this room are sceptical.

And I know why. When we start talking about those last vital percentage gains to get to 100 per cent total renewables we are talking about potentially significant cost challenges.

And we need to be as mindful of affordability and security of supply as we are about the need to reduce our greenhouse gas emissions.

If it was easy or simple, we’d have done it already. But I want you to know that this government is committed and that we want to know from you what you think it’ll take to get there.

Yes, we will need to settle on decisions and solutions… but those decisions and solutions need to be based on sound evidence, consultation and discussion – like the discussion that’s no doubt going to take place here.

These kinds of discussions will help inform the decision-making by the Interim Climate Change Committee, which will then pass on its advice to the Climate Change Commission.

I know the energy sector needs long-term stability and certainty to make investments in the types of technology and infrastructure that will lay the tracks to our 100% renewable goal.

The whole point of the Zero Carbon Act is to provide the kind of stability and certainty you’ll need.

Because leaders in the electricity sector are already certain change is going to change the way people access, use and pay for their power.

A couple of weeks ago there was an interesting podcast from Radio New Zealand that featured Dr Keith Turner, the former head of Meridian Energy, and Neil Barclay, the current Meridian boss.

They were asked to look into the future and say what they thought New Zealand’s electricity system would look like 10 or 15 years from now.

Dr Turner’s vision was more smart applications, smart data use and a lot of new technologies; principally around batteries and solar power.

Neil Barclay shared that vision but also sees an electricity sector in New Zealand that will be far more efficient. And, in his words, there will certainly be more renewables.

I couldn’t agree more with both of them.

New Zealand’s electricity industry is fundamental to our wealth AND our welfare.
Reliability, affordability, and security of supply are paramount to households and businesses alike.

What also now needs to be at the forefront of thinking, both in New Zealand’s energy sector and from us in government, is how those demands of reliability, affordability, and security of supply can be delivered in a low emissions, sustainable way.

I know that you in the energy sector have already been thinking about that for some time.

I’m here to give you my commitment – as Minister for Climate Change – to work hard with my colleagues in government, like Dr Megan Woods, to ensure we politicians apply a new focus to our thinking on those challenges too.

It needs to start now.

Every dollar invested today in fossil fuels is a dollar that is not invested in wind, solar, or geothermal.
Every dollar spent building a new power plant is a dollar not spent retrofitting old buildings to make them more efficient.
Every dollar spent extracting oil and gas is a dollar not spent building fast charging infrastructure for electric cars.
We are living in a carbon constrained world.
We simply cannot allow our emissions to keep rising.
The time for investment in last century’s fuels is over.
Our goal of 100% renewable electricity is a bit like that first Wellington wind turbine.
To begin with, some people oppose it.
They say it’s unnecessary, it’s unproven, it’s expensive.
But like the tourists who flock to the top of Brooklyn Hill to see it every day, the rest of the world will look to us when we do achieve the goal of 100% renewables, or even, frankly, when we get really close.
And when we achieve that goal, I bet no one will look back.
No reira, tena koutou katoa

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