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Security of supply is paramount

Media Statement 11 April 2007

Energy Strategy has right goal, but security of supply is paramount

In its submission to the draft New Zealand Energy Strategy, Genesis Energy welcomes the Government’s goal to address carbon emissions from the energy sector, but says the transition path must be achievable without risking security of supply. The submission, released today, also says price impacts to consumers must also be managed carefully over time.

Genesis Energy Chief Executive Murray Jackson says the company supports emissions reductions and he agrees that action is clearly needed on climate-related issues facing New Zealand and the world.

“However, Genesis Energy considers the transition path set out in the draft NZES is too aggressive. It could create supply risks and have significant price impacts over a relatively short timeframe. We believe that the complex nature of the electricity market requires a more cautious but progressive approach to lowering emissions,” he said. Genesis Energy supports the Government’s goals to address carbon emissions from the energy sector, but believes that while the government’s climate change policy might start with the electricity sector it must reach other sectors such as transport and agriculture and it should also take into account policy measures undertaken by New Zealand’s major trading partners.

A future electricity emissions profile for the country set out in the draft NZES implies an aggressive reduction in thermal generation – commencing with the virtual removal of Huntly Power Station around 2015. However, to replace a 1000MW baseload station would require an ambitious development of renewable generation on a transmission grid that is years away from being upgraded to carry additional load.

In its submission – entitled Target 2030 – to the draft NZES, Genesis Energy has put forward an alternative strategy with a realistic timeline for reducing carbon dioxide emissions. It believes the Government’s goal of a low emission energy system can be reached by 2030.

This Target 2030 can be reached by implementing a combination of actions: a carbon price with a “cap and trade regime”; retirement of the Huntly Power Station over the course of its economic life; and a market-led development of new gas, wind, hydro and geo-thermal generation.

Ends

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