Energy Management Association of NZ Conference
Thank you for the opportunity to speak at the Energy Management Association's conference this morning.
And congratulations on your 25th anniversary.
I was at a dairy farmers’ forum in the Waikato yesterday.
Former ANZ Chief Economist, Cameron Bagrie, also spoke there and he made the point that we face an exponential pace of change in this Fourth Industrial Revolution.
Cameron talked about the need to be innovative, adaptable and flexible if we hope to deal with the disruptions that will come with this change.
As an illustration, he mentioned the telcos, like Spark.
Born out of the New Zealand Postal service, then split into Telecom New Zealand in 1987, it’s focus was connecting and fixing your phone landline.
I wonder how many in this room still have a landline.
Now, trading as Spark, it offers cell-phone services, broadband services and on-demand entertainment.
Telecommunications ain’t what they used to be and they won’t look much like they do now by 2025, let alone in a net zero emissions world in 2050.
Cameron offered his belief that the electricity sector will undergo similar change.
I’m not telling you anything you don’t already know.
And I certainly hope you’ll share your thoughts with the new Interim Climate Change Committee when it starts consultations later in the year on how we get to 100% renewable electricity generation.
And I hope you’ll contribute to our consultations around the Zero Carbon Bill starting in the next few weeks.
And I am sure you’ll be an interested party in the consultation work that’s also happening in the next few months around a re-designed Emissions Training Scheme that actually leads to a reduction in emissions.
You are key players across these three key areas of work.
So let’s deal with electricity generation, since that’s one of the two big questions the Interim Climate Change Committee’s going to be investigating.
The frequent warning I get when talking about New Zealand going from 80% or 85% renewable generation to 100% by 2035, is that the last 5% or so of renewable generation will be the most difficult and potentially the most expensive.
My concern is that, while I’m not professing to be an expert - like you – I wonder if we risk limiting our vision and ambition by assuming the limits of technologies today will still limit us in the years ahead.
Are we applying today’s or even yesterday’s thinking about massive central infrastructure hubs for generation that distribute across complex, expensive infrastructure networks to our homes and businesses?
And are we saying 100% renewables will be extremely difficult because we’re basing that thinking on current limitations around storage technologies, or existing electricity pricing mechanisms?
Another concern raised - when you talk about how increasing our electric vehicles fleet to reduce transport energy emissions - is that electricity generation won’t cope?
Now, I’m not dismissing those concerns, I’m just saying that these new challenges will require new and different thinking to address them.
Under our current, centralised generation system, maybe a surge in demand from things like electric vehicles will be difficult to supply.
But the electricity generation landscape will change.
As renewable options become more viable and more varied, generation can become less centralised.
More can be produced at points of demand and can be more adaptable to demand.
As Murrary Sherwin and his colleagues at the Productivity Commission have pointed out in their recent draft report on the transition to a Low-Emissions Economy:
“Rapid technological development is allowing more responsive management of electricity demand and integration of distributed energy resources (such as solar power and batteries) into the system.”
Then there’s the efficiency aspect of the overall equation.
Increasingly efficient energy use can, at least partly, off-set the demand side.
It’s already been happening.
While production has grown in some sectors in recent years, electricity consumption has actually gone down.
We’re seeing an uncoupling; a conscious uncoupling - as it was put by Gwenyth Paltrow, because we have been consciously improving energy efficiency as an economy for over 25 years now.
Better productivity no longer necessarily means extra energy requirements.
Smarter technologies will continue to help that demand side of the equation.
And for what we still need to generate and consume, as Murray and the Productivity Commission have pointed out, New Zealand has abundant unused sources of renewable energy.
Particularly wind-power, where technologies have become more efficient and more economical.
There are also our geothermal reserves, which, yes, still produce some emissions but at much lower levels than fossil fuel options.
So, let’s talk about our fossil fuel options.
If you listen to our political opponents those fossil fuel options no longer exist.
As I’m sure those of you here understand, that is not the case.
Burning fossil fuels are not the future.
We have more known reserves than the world can safely burn now.
We have to wean ourselves off them.
But we’re not going cold turkey.
All this Government is doing, is saying the focus on alternative energy options needs to start now and transition over the next 30 years.
We’re laying out a 30 year timeline for New Zealand to move from forms of energy that have helped place this Planet’s sustainability under threat to clean energy production.
It’s going to need organisations like E-MANZ to help equip businesses with some of the skills they need to substantially reduce emissions.
They’ll need the kind of expertise your CEO, Mike Hopkins, has previously talked about to up their knowledge of carbon mitigation.
I support Mike’s suggestion that businesses need to think about providing professional pathways in energy and carbon management.
I greatly appreciate the work organisations like the Energy Management Association are doing.
I know you will continue your good work and, once again, encourage you to bring your expertise to the consultations that are either underway – like the electricity pricing review, or soon to get underway with the Zero Carbon Bill, the Emissions Trading Scheme, and the Interim Climate Change Committee.
You have a critical role to play in helping us draft one of the boldest plans New Zealand has undertaken in at least a generation.
It’s why we need to start now to give us the time to formulate the plan which will be the basis of a more economically viable, more environmentally sustainable, and more resilient energy sector that can fuel New Zealand’s needs well into the next Century and beyond.
Thank you. Tena koutou katoa.