Download Energy and Climate Change Policy Context New Zealand Energy

Appendix A
(a)
Energy and Climate Change Policy Context
In support of its commitment to developing electricity from only renewable resources,
Meridian has embarked on a programme of wind and hydro development around New
Zealand of which Project Mt Munro plays a role in securing long-term energy supply and
in supplying short-term electricity demand.
(i)
New Zealand Energy Strategy (NZES)
The Government has issued the “New Zealand Energy Strategy 2011-2021 –
Developing our energy potential”. As discussed above, the Government‟s goal for the
energy sector is to maximise its contribution to economic growth.
The Government‟s Energy Strategy focuses on four priorities to achieve its goal, these
being secure and affordable energy, diverse resource development, environmental
responsibility, and efficient use of energy9. Large parts of this strategy are relevant for
Meridian‟s activities in maintaining existing, and building new, renewable generation.
With respect to the priority to have secure and affordable energy the Government notes
that high standards of energy security are critical to New Zealand‟s economic
performance and social well-being – particularly in relation to oil and electricity. Value
for money is achieved when prices are set at a level that reflects the cost of supply,
including environmental costs. They reflect the least cost provision of energy services
at a level of quality demanded by customers. Long term security and reliability of
electricity supply requires long-term regulatory certainty and effective and balanced
rules, so that:

There is enough electricity generated to meet demand;

Energy is obtained from a diversity of sources (taking into account the uncertainty of
hydro inflows and wind flows) rather than being reliant on a few dominant sources
and locations;

The transmission and distribution system reliably conveys power from generation
plants to consumers;

The system is run efficiently with minimal losses.
Ongoing investment in generation, transmission, distribution and in demand
management technology is necessary to provide New Zealand with a robust electricity
system capable of providing an acceptable standard of reliability and security.
Also relevant and discussed above is the Government‟s decision to retain and affirm the
challenging, but realistic, target that 90% of electricity generation will be from renewable
sources by 2025 providing electricity supply is secure.
9
“New Zealand Energy Strategy 2011-2021 – Developing our energy potential”. August
2011, page 5
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(ii)
New Zealand Energy Efficiency and Conservation Strategy 20112016 (NZEECS)
The Government released the New Zealand Energy Efficiency and Conservation
Strategy 2011-2016 in August 2011.
Making improvements in energy efficiency, energy conservation and renewable energy
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is an important priority for the Government .
As the introduction to the NZEECS notes the use of energy efficient technology and
practices, energy conservation, and renewable sources of energy can:

Enhance economic growth through increased productivity;

Improve energy security by reducing energy demand, including for imported sources
of energy;

Assist with energy affordability by reducing consumer energy costs;

Defer the need for more expensive energy supply by making better use of existing
energy;

Reduce greenhouse gas emissions from energy;

Improve people‟s health, well-being and productivity through warmer and more
energy efficient homes.
As such, the NZEECS contributes to the delivery of Government‟s energy priorities set
out in the NZES.
The NZEECS objective with respect to the electricity system is an efficient, renewable
electricity system supporting New Zealand‟s global competitiveness.
A low-emissions electricity system provides New Zealand with a distinct energy
advantage over our trading competitors. It also is a tangible demonstration of New
Zealand‟s environmental responsibility.
The following actions are included in the NZEECS that will help drive greater energy
productivity in the electricity sector over the next five years:

Removing unnecessary barriers to investment in large-scale renewable electricity
generation, such as further improving consenting processes under the RMA and
supporting the implementation of the National Policy Statement on Renewable
Electricity Generation to provide clear guidance to councils;

Incorporating the cost of greenhouse gas emissions into electricity investment
decisions through the NZETS;

Fostering the development of new renewable sources such as marine energy;

Ensuring the electricity sector has an appropriate focus on electricity demand
management tools.
10
“New Zealand Energy Efficiency and Conservation Strategy 2011–2016”. August
2011, page 16
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(iii)
Central Government Climate Change Policy
While New Zealand‟s total greenhouse gas emissions are small from a global
11
th
perspective (around 0.2-0.3% of global emissions ), New Zealand has the 5 highest
per capita emissions in the OECD. In addition, New Zealand‟s emission level is forecast
to grow as our population and economy grow.
The government has set a target for a 50% reduction in New Zealand‟s greenhouse gas
emissions from 1990 levels by 2050.
New Zealand is willing to commit to reducing greenhouse gas emissions by between
10% and 20% below 1990 levels by 2020, if there is a comprehensive global agreement
and certain conditions are met.
Government policies that will reduce energy greenhouse gas emissions include:

The NZETS;

Facilitating greater investment in renewable energy and in energy efficiency and
conservation.
(iv)
New Zealand Emissions Trading Scheme (NZETS)
The Climate Change Response (Emissions Trading) Act 2002 was amended in 2009 to
moderate the impact of the planned emissions trading scheme.
The Act establishes the NZETS. An objective of the NZETS is to ensure that those
responsible for emitting greenhouse gases (including the burning of fossil fuels) begin to
take responsibility for the environmental cost of the emissions associated with their
activities. The premise of the NZETS is that emission permits, or New Zealand Units,
will be surrendered to match the level of emissions produced across the economy in the
ratio of one unit for two tonnes of CO2-e emitted until 2012 and moving to a one-for-one
obligation in three equal steps from 1 January 2013 to 1 January 2015. Alternatively a
penalty of $20 per tonne can be made until 2015. These units will need to be purchased
on either the domestic or international market – the cost of which will be brought forward
into this economy.
The Act implements a phased economy-wide emissions trading scheme covering all six
greenhouse gases. Emitters in the stationary energy sector are required to surrender
emissions units to cover their emission from 1 July 2010.
Emissions trading schemes seek to provide incentives to discover the most achievable
emission reduction options at least-cost solutions. The provision of a price of carbon is
expected to incentivise the development of new generation of renewable energy and
provide a disincentive to investment in thermal generation.
(v)
Resource Management Act (RMA)
The Resource Management (Energy and Climate Change) Amendment Act 2004
amended the RMA to reflect New Zealand‟s obligations under the Framework
11
Ministry for the Environment and The Treasury (2007) ibid. p.2.
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Convention on Climate Change and Kyoto Protocol by giving greater emphasis to
climate change and renewable energy matters in RMA planning and decision-making.
The Amendment Act makes explicit provision within Section 7 of the RMA for all persons
exercising functions and powers under the Act to have particular regard to:

Section 7(ba): the efficiency of the end use of energy;

Section 7(i): the effects of climate change;

Section 7(j): the benefits to be derived from the use and development of renewable
energy.
The benefits of renewable energy developments must expressly be considered together
with other Part 2 matters.
The Government released the National Policy Statement (NPS) on Renewable Energy
in April 2011 setting out setting out objectives and policies to ensure the sustainable
development of renewable electricity generation under the Resource Management Act.
These amendments seek to achieve greater alignment between national policy
statements, local government plans and national energy objectives, outlined in the
NZES, NZEECS and climate change policies, and aim to ensure that councils consider
the contribution their regions can make to meeting New Zealand‟s commitments under
the Kyoto Protocol.
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