Energy Policy

Administrative Update 16 May 2007

Read the Energy Policy Summary

Definitions

"Demand Side" refers to the ways energy is used rather than the ways it is produced. For example, demand side participation in the electricity market means that demand reductions as well as supply can be bid into the market.
"Distributed Generation" refers to the creation of a network of smaller generation facilities and includes the building of smaller generation plants close to demand.
"Energy Services" means the heat, light, motive power and electronic activity derived from the use of the energy, whatever its source.
"Renewable Energy" means energy derived from sources which occur naturally and which replenish naturally, used at a rate which allows the source to replenish and on a scale which minimises adverse effects on the environment.

Introduction

Energy Services are essential to our way of life. They are currently provided wastefully, using fuels that are non-renewable, through institutions and structures that are uncoordinated and resistant to change. There are significant barriers to people, communities, and businesses making more sustainable choices about their energy sources.
We cannot continue on our present track even if we wanted to. Our energy use is colliding with the limits of the planet in two ways:

• We are using up fossil fuels at an increasing rate. In particular, world oil production will soon peak and start to decline. There is no easy substitute for low-cost oil that fuels our whole economy, so we need to prepare for this now.

• The use of oil, coal, and gas is producing greenhouse gases that are already changing the climate. Substantial reductions in greenhouse gas emissions are required within a decade to avoid catastrophic climate change. Reducing our use of fossil fuels is critical to achieving this.

Vision

The Greens envision a New Zealand in which:

• All reasonable needs for energy services are reliably and affordably met from renewable energy.

• There is much smarter use of energy, which would allow the scale and impact of energy production and use to be reduced in line with ecological sustainability.
• All New Zealanders are involved in decisions about energy and take responsibility for using it sustainably.

Key Principles

1. The scale and rate of energy use are both key markers of sustainability and both are subject to ecological limits.

2. All New Zealanders should be able to access affordable energy services that meet essential needs and enable participation in society.
3. For reasons of both resource depletion and climate change, we need to progressively reduce our use of fossil fuels to a very low level, eventually providing all energy services from renewable energy.
4. To avoid social, economic, and environmental disruption, the reduction of fossil fuel use needs to be planned, the burden shared fairly, and replacement energy sources need to have a low environmental impact.
5. Energy services, such as warm houses, food production and supply, and industrial processes, must be provided using much less energy than now, through both improvements in efficiency and changes in behaviour. This is necessary to minimise environmental impacts and ensure the ongoing availability of energy services.
6. Planning, regulatory and market decision-making must be coordinated to deliver sustainable energy services and embody a precautionary approach, and be supported by good information.
7. Individuals, communities and businesses need to be empowered to make decisions about energy and its use that enhance sustainability.
8. Iwi and hapu rights under Te Tiriti o Waitangi to manage and develop their resources within the constraints of sustainability must be recognised and supported in the transition to a sustainable energy future.

Specific Policy Points

1. Responding to the challenge of the end of cheap oil

There is growing evidence that world oil production is close to peak. That is, when total production cannot be increased any further and will soon begin to decline. Demand is still increasing rapidly and so prices will rise substantially and global conflicts will intensify when the peak arrives. Oil will remain available for several decades but not in the quantities we use now. It is vital that our economy becomes less dependent on oil.
Much of the Green Party's transport policy is geared towards reducing dependence on motor vehicles and increasing our use of energy efficient modes of transport that can be powered by renewable energy. Our waste policy is focussed on more efficient use of resources including energy. The Green energy policy will also assist in the transition away from our current heavy reliance on oil. In order to facilitate this transition, the Green Party will support:

1. Development of a fully renewable electricity generation system, except for dry winter emergency supply, by 2030.
2. A national transition strategy which includes:
   
   1. Examining the role of direct electric power, biofuels, and hydrogen from renewable energy for public transport and essential transport services;

   2. Assessing the impacts of peak oil and climate change on air and maritime
      transport, our trading relationships and main industries, and an investigation of the role of new technologies in these industries (eg new generation wind and solar freighters in the shipping industry);

   3. A comprehensive public information programme about the need for a transition away from a dependence on fossil fuels;
   4. Developing an international strategy to:
      
      1. Share technology and expertise with smaller Pacific nations, and

      2. Cooperate with other nations and develop an international agreement on sharing the remaining oil, to reduce conflict over its allocation;
   5. Developing fuel efficiency standards for all motor vehicles entering the country which:
      
      1. Allows for different types of vehicles to meet different needs, but discourage the use of large vehicles where small ones will suffice, and

      2. Progressively rises to set a stretch target based on the state of technology.

2. Responding to the challenge of climate change

All policies in this document will contribute to reducing greenhouse emissions, as will Green policies on Climate Change, Transport, Waste, and Sustainable Agriculture. In addition the Greens will:

1. Ensure that New Zealand supports the implementation of the Kyoto Protocol, because this is the only international agreement that we presently have that works towards reducing emissions.
2. Set the liability for carbon emissions at points in the economy so that ordinary consumers and most businesses do not have to engage directly with international trading
3. Require Electricity companies who burn fossil fuels to purchase Kyoto compliant emission units and transfer these to government.

4. Not support any additional use of coal for energy in New Zealand.
5. Offer a tax incentive of accelerated depreciation for investments in industry, commercial buildings and farming that increase energy efficiency or the use of renewable energy but which require a longer payback time than is normal for business investments.
6. Require rental properties to be retrofitted to meet minimum standards for energy efficiency and insulation by 2012 and allowing such costs to be tax deductable until 2012.

3. Improving energy system planning and co-ordination

Changing the Framework

New Zealand's energy supply industry has evolved in an ad-hoc and ideologically driven way which appears at times to deliver the worst of both market and regulatory processes. We have neither the discipline of a genuinely competitive market, nor the integration and co-ordination of a fully planned system. There is no one entity that holds responsibility for ensuring security of energy supply or sustainability.
The challenge is to design a regulatory framework that will rapidly move our energy supply and use towards sustainability. Market mechanisms can be used within this framework to encourage efficiencies. In order to focus the energy sector on sustainability and improve co-ordination and planning, the Green Party supports:

1. Introducing a National Policy Statement on Sustainable Energy under the Resource Management Act to help guide the transition to a sustainable energy future;

2. Redesigning the Electricity Commission as a Sustainable Energy Commission (hereafter referred to as the Commission) with regulatory responsibility for all fuels and a clear mandate for sustainability;
3. The Commission and the Commerce Commission investigating the level of profits in the energy industry in recent years, and recommending the best measures to ensure energy prices are not inflated by profiteering.

Transforming the Electricity Market

The electricity market needs to be structured to deliver sustainable energy reliably. To help achieve this, the Greens will:

4. Ensure electricity market rules encourage demand side participation in the market and distributed generation (including two-way metering and/or billing for houses and businesses that generate their own power), in order to reduce the risk of electricity transmission failures and losses, and environmental damage, and increase flexibility;

5. Provide dry winter security of electricity supply through a balanced mix of reserve generation and demand side measures, including a well-publicised national conservation plan that educates users to take specific conservation measures in stages that are triggered by certain lake levels. A "dry winter index," like the UV index, will be published to signal the state of the lakes;
6. Facilitate and remove obstacles to community-owned and operated sustainable energy systems, including iwi and hapu developing such systems within their rohe.
7. Ensure consumers and small providers of energy services and distributed energy have the same input to the Commission decisions as large suppliers and users, eg through the creation of advisory panels.
8. Require that the new Commission:
   
   1. Ensure that all major capital projects, whether power stations, transmission lines, pipelines, or an LNG depot, are not approved until they have been tested against sustainable alternatives such as energy efficiency, fuel switching, renewable generation, load shifting and distributed generation;

   2. Fund research into such alternatives so well informed comparisons can be made;
   3. Work closely with Land Transport New Zealand to ensure that decision-making in the transport sector supports the transition to a sustainable energy future;
   4. Investigate the best means of introducing "progressive pricing" whereby a quantity of electricity and/or gas is available at relatively low cost, and subsequent units are more expensive;
   5. Set rules for the electricity market that prohibit fixed charges for electricity for the main family residence and charge per unit used, so that energy savings are fully reflected in cost savings; and
   6. Investigate the level and structure of gas charges, especially the extent to which high fixed line charges are a deterrent to connection to the gas supply.

A sustainable approach to transmission lines

The Greens wish to see our grid evolve into a web connecting a distributed energy system. Large upgrades of the transmission system that lock in to place a model of coal power stations in the South and demand in the North are not consistent with this goal.

In addition to the measures already stated in this policy, the Green Party will:

9. Require an urgent independent review of Transpower's planned grid upgrade with a view to developing alternatives that have less impact on the environment and better facilitate a sustainable energy system;

10. Require Transpower to develop a long-term strategy to ensure the grid can serve as a network connecting a distributed energy system with minimal environmental impact;
11. Ensure the pricing and investment strategies of the national grid and local lines supports efficiency investments and load shifting and facilitates distributed generation.

4. Using all energy forms more efficiently

Energy efficiency is the fastest, cheapest and least environmentally damaging way of increasing the energy available to us. Coupled with a greater awareness of how our own behaviour affects energy use, increasing energy efficiency can significantly improve our quality of life while reducing energy demand.
Green policies on transport, waste and ecological tax reform will all contribute to improved energy efficiency. To further enhance energy efficiency the Greens will:

1. Review the role of the Energy Efficiency and Conservation Authority alongside the Commission to ensure that there are no institutional barriers to a transition to a sustainable energy future;

2. Strengthen the role of the National Energy Efficiency and Conservation Strategy (NEECS) by strengthening the targets, accelerating the timetables and giving the strategy greater legal weight;
3. Refocus, to the extent possible, existing electricity SOEs on selling affordable energy services rather than increasing electricity sales, encourage development of SOE business strategies based around energy efficiency and stable demand for energy and assess whether a new energy services SOE is required;
4. Introduce a Government leadership programme to introduce state of the art energy efficiency throughout its own vehicles and buildings, with a focus on demonstrating what is possible, developing domestic capacity in the production and installation of new technologies, and bringing the price down for the rest of the economy;
5. Introduce mandatory energy efficiency standards for a wider range of appliances and machinery, and progressively raise these standards as technologies develop;
6. Update the Building Code for new houses to:
   
   1. Include energy performance standards that truly reflect likely future costs of energy, and regional climate differences, and

   2. Encourage solar design by including measures that are more easily met if the principles of passive solar design are used.
7. Develop an energy-demand labelling system for houses and require houses to carry such labels if they are put up for sale;
8. Establish a locally based advisory service to provide free or low cost audits of homes and advise on measures to improve their energy efficiency and incorporate renewable energy options;
9. Set targets and timetables, and increase funding in order to significantly accelerate the rate of domestic energy efficiency retrofits (including insulation and damp proofing of homes), and expand training schemes for auditors and installers;
10. Expand funding for home insulation programs and installing energy efficient, low emission home heating devices;
11. Develop ongoing and expanded public information campaigns about the importance of energy efficiency and conservation;
12. Teach energy efficiency and conservation as part of the core environmental education curriculum in schools;
13. Require the Commission to report on the best way to change the way that gas is used in New Zealand's energy supply, to ensure that new gas discoveries are used as a direct fuel rather than converted to electricity. This will avoid the 50% or more energy waste in that process and reduce electricity peak load, which is driving the project for new large transmission lines.

5. The transition from fossil fuels to renewables

Renewable energy production and use in New Zealand is growing but it is not growing as fast as our total energy demand. We need to accelerate the replacement of fossil energy sources with renewables in order to meet climate change obligations and become less reliant on oil. To achieve a progressive shift from fossil fuels to renewable energy, the Green Party will:

1. Support the continued use of carbon credits to encourage projects that reduce fossil fuel use and develop renewables, and extend the programme to smaller projects;
2. Encourage the development of emerging renewable technologies by setting Feed In Tariffs whereby they will be paid a higher rate per kWh generated for the first few years;
3. Fund research and development of sustainable energy technologies where New Zealand has a natural advantage, such as wind (including for shipping), and wave, current and tide power systems.

Supporting Wind Energy

New Zealand has an excellent wind resource that can be used for pumping or electricity generation. Wind farms are quick to be commissioned, easily extended, and can be sited close to demand. The combination of wind and hydro is particularly beneficial as water can be stored in the lakes when the wind is blowing and used to generate power when it is not. Care is needed in choosing sites for wind farms, in order to respect cultural values such as iconic views. We want to see communities and energy companies agreeing about possible wind farm sites before specific proposals are developed.
The Greens will:

4. Provide planning assistance to district and regional councils, to enable them to provide sites for wind farms in their plans that minimise conflict with other community values in advance of specific proposals.

Using the Sun

Solar energy is most effectively used as direct heat, for water and space heating. Solar electricity from photo-voltaic panels is still very expensive but is appropriate in remote and off-grid locations. As this technology reduces in price, and with the benefit of bulk purchasing, it may become part of our grid-connected electricity system. The Green Party supports:

5. Letting a Government tender for a five year programme to produce and install 500, 000 sq metres of solar water heating panels (sufficient to supply about 125,000 homes). The programme will be:
   
   1. Divided between government buildings (such as state houses, prisons, and hospitals) and suitable private buildings (with priority given to low income families, large families, and isolated rural communities) where the cost savings from the bulk purchase will be passed on to the householder, and

   2. Designed to build capacity in the manufacturing and installation of solar water heaters and bring down the price substantially and permanently.
6. Requiring that solar water heating, or other technologies giving equivalent performance such as heat pumps or wood-fired wetbacks, be installed in all new houses, hotels, motels, and residential institutions after the five year programme above has been completed;
7. Requiring, as part of a National Policy Statement on Sustainable Energy, that all district plans provide for solar access to roofs and north walls to facilitate the use of solar energy;
8. Developing partnerships with mortgage providers to establish a facility for solar mortgages for new houses, which increase the amount that can be borrowed for solar water heater or solar design features;
9. Providing education, training and promotion for the sustainability requirements that encourage passive solar design in the new Building Act, including retraining for architects and builders and information targeted at people buying new homes.

Making use of Wood and other biomass

Waste wood from plantation forests can be used in co-generation plants to provide process heat and electricity for industry, with some power exported to the national grid. Dry wood pellets and firelogs are also an acceptable fuel for household space heating in a high efficiency wood stove and this can help cut the electricity peak load. Our forests could become a major source of energy in the future, including eventually for transport fuel.
Other biofuels have some promise on a limited scale. Where they can be made from waste, like biodiesel from tallow or used vegetable oil, or like ethanol from waste whey in the dairy industry, they are a sustainable alternative. Care is needed to ensure that crops grown especially for fuel produce more energy than is used in the process, and that they do not take land out of food production on a significant scale.
The Green Party supports:

10. Ensuring research and development is undertaken to establish the potential for woody biomass and biofuels within New Zealand;

11. Removing any obstacles in the electricity market rules to co-generation from woody biomass;
12. Reviewing the Wood Processing Strategy, in partnership with the industry, to incorporate planning for fuel wood;
13. Compiling an inventory of waste biomass materials suitable to make fuels and matching this with local potential users;
14. Facilitating the development of a local wood pellet supply industry;
15. Ensuring the Building Code supports the installation of high-efficiency wood stoves within air quality standards;
16. Facilitating and encouraging localised small scale programmes to develop biofuels from waste;
17. Working with iwi and hapu to facilitate the use of iwi-owned forests and forestry waste for biomass.

Wave, tide and currents

New ways of capturing energy from the oceans with small modular turbines are being tested and show promise. New Zealand's long coastline makes these technologies attractive for us, but they are some time away from full commercialisation. To support this work, the Greens support:

18. Funding research and demonstration projects in this area and assess the feasibility of New Zealand developing a leading edge role in this area (as some other countries have done with wind).

Geothermal

Geothermal development for industrial process heat and electricity can be sustainable under some circumstances. It must be developed with care to ensure that natural thermal features are not disrupted, that fluids are reinjected to deep wells so that heat and fluid are not depleted. Iwi and hapu connected to the resource, and their values, must be respected. The Greens will:

19. Support sustainable development and use of geothermal energy.

20. Facilitate iwi and hapu involvement in the development and use of geothermal energy.

Hydroelectricity

Hydro provides the backbone of our current electricity generation system. The Green Party does not favour further large hydro plants because:

• Our system is vulnerable to dry winters already and we need to diversify away from hydro, and

• Rivers are important habitats for wildlife and highly valued for recreation such as fishing and kayaking. We need to protect wild rivers from further development.

The Greens support:

21. Small hydro developments being considered on their merits, where they can be built without significant damage to ecology or public values;

22. Iwi and hapu involvement in the planning of small hydro projects, where these projects involve water resources within the rohe of the iwi or hapu.

6. The future of other energy sources

A wide range of energy sources is under discussion publicly as we face up to the loss of Maui gas and the threat of dry winters and high oil prices. The Green Party supports a transition to renewable energy. Our views on oil and gas are described above. This section sets out our views on fuels not discussed elsewhere.

Hydrogen

Hydrogen is a way of storing and transporting energy, not a primary energy source in itself. The combination of hydrogen fuel cells and solar electricity may provide a sustainable energy future for electricity and transport but is still some time away. Until hydrogen can be made from a renewable energy source such as solar electricity it cannot be regarded as sustainable. The Greens Party supports:

1. An investigation into the role of hydrogen as part of overall assessment of pathways to a sustainable energy future.

Nuclear power

New Zealand has clear policy against the use of nuclear power. Nuclear energy is expensive, hazardous, and unnecessary.

2. The Green Party opposes the use of nuclear power.

Coal

Relatively little of our energy comes from coal at present, though this has increased as the Huntly power station has begun running solely on coal. New Zealand's coal reserves are mostly in the South Island. Much of it is low quality, wet and expensive to transport. Burning coal, even with modern technology creates local air pollution and mining it destroys land and pollutes the water. There is still no way to reduce the climate changing emissions from burning coal, which is the worst of the fossil fuels from a greenhouse perspective.

3. The Green Party does not support any additional use of coal for energy in New Zealand. (see Section 2)