Speech to the Japan New Zealand Business Council

Energy and Environment Plenary

I’d like to start by acknowledging:

• Mr Kiyotaka Shindo - Chairman of Oji Holdings, Chairman of the Japanese delegation and Mrs Miyako Shindo
• Mr Ian Kennedy - Chairman of the New Zealand delegation and Mrs Setsuko Kennedy.
• His Excellency Mr Toshihisa Takata - Ambassador of Japan to New Zealand
• His Excellency Mr Stephen Payton - Ambassador of New Zealand to Japan
• Mr Ichitaro Noguchi – Mayor of Goto City, Nagasaki Prefecture

Welcome and context

It’s a real honour to be here today to speak to you on how both our nations can work together on energy and transport to deliver on the commitments both our nations made in Paris.

The issues we face go to the heart of three of my portfolios: Transport, Energy and Resources and Associate Climate Change.

Before I speak to this I want to recognise the deep connection our two countries have.

The New Zealand Government recognises Japan as one of our longest standing, most important friends in Asia and indeed globally.

Links between New Zealand and Japan date back over 100 years, and our two countries celebrated 60 years of diplomatic relations in 2012.

Our trade and investment relationship has spanned many decades, and there are many success stories to speak of.

And our bonds go deeper – when Canterbury suffered a major earthquake in 2011 Japan was at our side, rapidly sending an urban search and rescue team.

And when Japan suffered a similar sized quake later that year we were able to do the same and assist in the rescues of Japanese citizens.

Many New Zealand businesses started out in Japan, and it was Japan that first brought significant numbers of Asian visitors to our shores.

Contacts at the people-to-people level are extensive and there are many strong, enduring partnerships.

Japan represents a quality relationship for New Zealand, one where the value-add is as important as the absolute volume of trade.

The New Zealand government is convinced that there is more value and opportunities to be enjoyed by both our countries, including in the areas of energy technology, transport and reducing emissions that I will speak about today.

New Zealand emissions energy profile

Both New Zealand and Japan face major challenges in meeting our respective commitments to reduce greenhouse gas emissions following the ratification of the Paris agreement.

But where there are challenges, there are always opportunities for innovation and for new ways of doing business.

For New Zealand our major challenge is how to reduce our agricultural and transport emissions.

This is because unlike most OECD countries, in New Zealand 49 per cent of our emissions are agricultural in nature – made up of mostly methane and nitrous oxide.

Reducing our emissions while growing our economy is a difficult challenge, but one we must solve.

Our Parliamentary Commissioner for the Environment recently released a report on the issue.

The report is consistent with the Government’s view that mitigation of greenhouse gases from agriculture is difficult and requires a multi-pronged approach.

Japan has already played a role in this and is a member of the Global Alliance on Agricultural Greenhouse Gases which New Zealand hosts. The Alliance brings countries together to find ways to grow more food without growing greenhouse gas emissions.

There will be a role for new technology and innovation. For instance the Government is investing $20 million a year in research into developing new mitigation options like a vaccine to reduce emissions from agriculture, which is a very promising long term option.

That’s not to say progress hasn’t been made. Our farmers are already amongst the most productive and efficient in the world. Over the past 20 years, they have improved the emissions efficiency of production by approximately 1 per cent per year by improving feed and nutrition, animal genetics, pasture management and animal health.

New Zealand is fortunate that its energy supply is already largely renewable, and this means our stationary energy supply is already one of the highest in the OECD. 

And I was pleased to recently announce that in 2015, 80.8 per cent of electricity was generated from renewable sources in, mainly due to increased geothermal generation. 

This is New Zealand’s highest renewable contribution in 20 years and shows we are well on the way to meeting our target of 90 per cent renewable electricity by 2025.

Starting at this already high level means our ability to reduce our emissions through further retirement of thermal plant and expansion of renewable generation is limited.

Fortunately, New Zealand has an abundance of renewable resources (mainly hydro, wind and geothermal) that can be economically developed over the next few decades.

This abundance opens up a number of opportunities for us; namely the conversion of many of our light vehicles to renewable electricity, and in the ability to use this renewable resource and expertise to assist others.

The future will offer us more opportunities in energy, such as green hydrogen production, which might one day develop into a viable export.

It is in renewable energy generation and transport that I see great opportunities for Japan and New Zealand to get more value out of our relationship – benefiting both of our countries and reducing emissions.

Energy Cooperation

There’s no doubt that our future energy markets will look very different to the ones we have today. 

Japan, as we know, is a major energy importer and faces the daunting challenge of how to secure a reliable energy supply that has a low carbon footprint over the coming decades.

I have looked with interest at Japan’s 2030 energy plan and applaud your initiatives to reduce your reliance on fossil fuel and increase your renewable energy by 2030.

New Zealand’s abundant renewable resources provide a unique opportunity for greater cooperation between our two counties to help us both achieve our respective goals.

That is, by working together we can make the best use of the expertise and the resources of both of our countries to meet our mutual goals.

Green hydrogen production is one of these areas. This involves harnessing New Zealand’s renewable electricity advantage, and using it to produce hydrogen which we can then export as a next generation fuel for electricity production, transport and industry. 

This could be of real benefit to Japan and help reduce your emissions from electricity generation, which have risen considerably with the return to coal fired generation.

Already a number of Japanese companies have made preliminary investigations into the possibility of producing hydrogen in New Zealand and exporting it by ship to Japan.

Indeed, in my last trip to Japan I saw a small part of this initiative when I visited Chiyoda’s SPERA plant in Kobe which bonds hydrogen to toluene as a method of shipment.

Our government is fully supportive of such ideas and welcomes further cooperation between Japan and New Zealand to help develop clean future technologies like hydrogen.

Geothermal energy is another area of potential cooperation between our two countries. New Zealand has a long and proud history of geothermal development and we have the largest proportion of geothermal energy providing electricity in the OECD.

Japanese companies were involved in the earlier development of our geothermal sector and this provides us a good opportunity for future collaboration in both Japan and other countries.

We know Japan holds huge geothermal potential and I understand that it intends to further develop its geothermal generation over the coming decades.

Your Ministry of Economy, Trade and Industry (METI) said it expects 380 to 850 MW of new installed geothermal capacity by 2030.

New Zealand geothermal technology companies stand ready to partner with you and we look forward to helping further develop this renewable resource. 

Transport cooperation 

As I mentioned earlier, transport emissions are a major challenge for New Zealand. 

New Zealanders have one of the highest car ownership rates in the OECD and transport accounts for around 17 percent of New Zealand’s greenhouse gas emissions.

Transport is the largest consumer of energy in New Zealand and is predominately oil based.

Driving an electric vehicle in New Zealand results in 80 percent fewer CO2 emissions than driving a conventional vehicle.  This is very high by international standards.

We know that encouraging the uptake of electric vehicles in New Zealand, will get us closer to our provisional target of reducing greenhouse gas emissions by 30 per cent below 2005 levels, by 2030.

Our Government is actively encouraging New Zealanders to make their next car an electric car.

Earlier this year we announced a package of measures to address the barriers and rate of uptake of EVs. The Government set a target of two 2 per cent of the national fleet - approximately 64,000 vehicles – being electric by the end of 2021.

More than 2000 electric vehicles are now registered in New Zealand, surpassing the Government’s aim to double the fleet this year.

We need to work in partnership with business and central and local government to break down all the barriers to uptake of electric vehicles in New Zealand. Our package of measures includes:

• building a network of NZ’s motor industry leaders to support the Government’s programme,
• making electric vehicle procurement more attractive for business and government vehicle fleets, through aggregating demand, and looking to reduce tax barriers to electric vehicle purchase,
• providing financial assistance for innovative ideas and projects that can help to support the uptake of EVs,
• ensuring our regulatory framework is future focused, allowing for the growth of EVs,
• ensuring that the infrastructure exists to support that growth, and
• promoting the benefits of EVs to consumers.

With around 66 per cent of the New Zealand vehicle fleet sourced from Japan, this is another area where we will benefit from greater cooperation and trade.

Used import vehicles from Japan have already made a valuable contribution to New Zealand’s electric vehicle uptake, but only one type of new Japanese electric vehicle is currently sold in New Zealand. 

Japanese manufacturers could make a very valuable contribution to increasing the uptake of EVs in New Zealand if they were to increase the availability of their EVs in New Zealand – whether new, or as manufacturer-supported used vehicles.

Air Service Agreements

The ASA between New Zealand and Japan was signed in 1980 with the most recent MoU was signed in February 2012.

The main features of ASA are:

• Open capacity to all airports outside of Tokyo.
• For Narita Airport in Tokyo, there is unlimited capacity for direct flights.
• For non-direct flights to and from Narita:
• New Zealand airlines can fly 7 times per week to and from Narita via Hong Kong, Brisbane, South East Asia or the South Pacific.
• Japanese airlines can fly 7 times per week between New Zealand and Narita via Sydney plus one other point in Australia or South East Asia.
• For Haneda Airport in Tokyo: Japanese and New Zealand airlines can operate 7 flights per week provided current flights to Narita airport are maintained.

New Zealand has an open skies policy and we have some of the most liberal air services agreements in the world.

We recognise air links are crucial for a country in our part of the world and we would welcome further strengthening of our ties with Japan in aviation.

Conclusion

There is no doubt that reducing our emissions poses some major challenges for our countries.

But as I’ve outlined today, these challenges also pose some major new and exciting opportunities for our countries to build on our already deep relationship and work together.

I want to reiterate that Japan represents a quality relationship for New Zealand, one where the value-add is as important as the absolute volume of trade.

I am confident there is more value and opportunities to be enjoyed by both our countries, in the areas of energy technology and transport that I have spoken about today.

Thank you again for your invitation to speak to you today. I look forward to your questions at the end of this session.