Towards Zero Carbon: Minister Woods speech to Gas NZ Industry Forum

Tena koutou e nga maata waka

Tena koutou te hau kainga. Ngai Tahu, tena koutou.
 

Ko Megan Wood ahau, Minita o te Karauna.

Tena koutou i runga i te kaupapa o te Ra.

Noreira, Tena koutou, tena koutou, Tena tatou katoa.

It is my pleasure to open the 2019 Gas Industry New Zealand Forum today.

And may I congratulate you on having the foresight to hold it in the country’s best city.

Thank you to Gas New Zealand, the LPG association and the New Zealand Institute of Gas Engineers for organising this event and to Peter Gilbert for the invitation to speak at this year’s Gas Industry Forum.

I also wish to acknowledge those international delegates who have traveled from their home countries to be here this week.

The theme of this year’s Forum is ‘pathways to net zero carbon’.

This is a very timely topic for the industry to be discussing.

As we reckon with our global confrontation with climate change, it is clear the old ways of running our economy and paying our way in the world will need to change.

We are on the precipice of a major economic transformation.

The way our economy has been working is putting the survival of our planet at risk.

So things need to change. We need a transition. A transition that is not treading water or maintaining the status quo into the never-never.

As a global community, we need to change our economy at a larger scale and at a faster pace than that of any economic transformation in human history.

That’s the key thing I want to emphasise.

The change we need to make is unprecedented.

No one has ever attempted anything on this scale, at this pace before.

Because no one has ever had to.

There is no precedent here. There’s no guidebook, no manual.

So we have to write it, and we have to write it together.

That’s why discussion in this industry, and across our wider energy sector, about how we continue to power our economy, create jobs, and pay our way in the world while reducing our carbon emissions are so vital.

As a Government, we have set very clear goals: 100 per cent renewable electricity by 2035, in a normal hydrological year, and a net zero carbon economy by 2050.

We are committed that this transition we must undergo be a planned and managed one, not a rush job left to the last minute and done in a short period of time with no thought given to its economic and social consequences.

We’ve seen before in this country what happens when rapid economic change is imposed with no thought for those effected.

I came of age here in Christchurch in the 1980s.

So as well as being a huge Madonna fan and possessing vivid memories of being glued to the royal wedding, I also have vivid memories of what the rapid and unplanned economic changes of that era did to the people in my community.

I remember the Addington workshops closing overnight, and many of my friends parents and other people in our community losing their livelihood overnight.

I remember watching how hard that was for them – how so many of them felt they hadn’t just lost their job, but their standing in the community.

The way they provided for the families, the source of their own dignity, was ripped away.

They felt powerless.

Those memories have always stayed with me and have made me determined that economic change must be well planned, must be fair and must treat people with dignity and respect.

And that means a long term, managed transition over the coming decades, that supports businesses, workers and communities.

That means industries like yours investing in new ways of doing business, new technologies that will help reduce emissions, and finding new opportunities in this changing world.

It means Governments supporting those moves with clear policies and wise investments.

And it means all of us keeping a clear eye on things like energy security to ensure our country can keep moving forward.

My work programme as Minister for Energy is driven by those considerations.

One particular area of focus is the use of process heat in industry, offering one of New Zealand’s most significant opportunities to improve energy efficiency and reduce energy emissions

The industrial sector is an important contributor to the New Zealand economy. Output accounts for around 10 per cent of real GDP and the sector employs around 11 per cent of the labour force

About 60 per cent of process heat is supplied using fossil fuels and it contributes 9 per cent of New Zealand’s emissions.

Changing how industry uses energy will be a crucial component in New Zealand’s transition to a productive, low emissions economy and our future energy state.

The Government has been developing policy options to encourage energy efficiency and the uptake of low emission fuels in industry.

Our aim is for consultation later this year.

The Ministry of Business, Innovation and Employment recently released its yearly energy publication which showed that renewables as a share of primary energy supply hit a record high of 40 per cent in 2018.

I am encouraged by the increasing share of renewable energy in our primary energy mix and hope to see this trend continue as we move towards a net zero emissions economy.

In support of our renewable energy work programme, we also see hydrogen as having a potential for an important role in New Zealand’s energy future.

It is also, I believe, an exciting opportunity for the gas industry, providing the ability to leverage existing infrastructure, skills and know how.

Hydrogen offers a flexible and clean approach to energy for New Zealand.

With hydrogen, we have opportunities to create new jobs, convert heavy transport away from fossil fuels, enhance our security of electricity supply and even generate significant export revenue.

In combination, electricity and hydrogen provide a robust energy system platform to decarbonise New Zealand.

Their complementary characteristics can deliver benefits that neither electricity nor hydrogen can deliver in isolation.

We released a Green Paper on “A Vision for Hydrogen in New Zealand” on scoping New Zealand’s hydrogen potential and to frame discussions in support of a national strategy development.

Public consultation closed on this closed last week and I want to thank everyone who made a submission.

Government and organisations in New Zealand are already investing in hydrogen projects and trials.

Importantly for the gas sector, the Provincial Growth Fund has invested in First Gas’s project to assess the existing gas transportation infrastructure for its potential to support future hydrogen transportation.

This work may form the basis for the utilisation of our existing gas infrastructure in a low carbon economy.

We have also invested $27 million in the development of a new Taranaki Energy Centre, alongside spending of $20 million over four years to establish a new science research fund for cutting edge energy technology.

Ports of Auckland has committed to building a hydrogen production and refuelling facility.

The company, along with its project partners Auckland Council, KiwiRail and Auckland Transport, will invest in hydrogen fuel cell vehicles as part of the project.

Similarly, in Taupo, Tuaropaki Trust has partnered with Japanese multinational Obayashi Corporation to construct a pilot hydrogen production facility using geothermal electricity.

In Taranaki, the joint venture between Ballance Agri-Nutrients and Hiringa Energy aims to produce commercial-scale green hydrogen.

This indicates that New Zealand firms are seeing the potential and opportunities for hydrogen in our future economy. Our Hydrogen vision supports this.

While there is an increasing share of renewable energy in our primary energy mix, we need to acknowledge that issues with gas infrastructure and dry spring conditions exposed some weaknesses in our energy system.

In this context, since the last Gas Industry Forum, we released a discussion document on potential changes to the Gas Act 1992.

This discussion document sought views on what unnecessary barriers the Act may have for our future energy system, and the role that gas will play in this.

It also sought the views of submitters on ensuring that the regulatory settings are right around the release of information that may have significant downstream impact, or harm the security of supply.

A just transition means ensuring the reliability of our energy system as we progress our changes.

Submitters strongly supported amendments to the Act to provide a clear regulation-making power for information disclosure.

This is complementary to the Gas Industry Company’s work to assess the current information disclosure settings in the market.

These changes are being finalised and I intend to announce the changes to the Act soon.

In addition, we are looking into what regulatory changes may need to be made to regulations under the Gas Act 1992 in order to ensure that these do not pose a barrier to projects for developing hydrogen and biogas. 

This is about future proofing our regulations while ensuring they are supporting a stable and reliable energy system today.

In closing today, I want to thank you all for putting the need for a transition to a low carbon economy high on your industries agenda.

If this transition is left to chance, or to the last minute, all New Zealanders will suffer.

I am pleased that is not the path our country is taking.

Instead, we are planning now for a better future.

I look forward to hearing the results from the new insights, questions and discussions this Forum will present.

Tackling this transition together is one of the most important piece of work we have ahead of us.

I look forward to working with all of you to make it happen,

Thank you.