The New Zealand company Enviro-Mark Solutions, a spinoff from the Crown Research Institute Landcare, is a global pioneer is greenhouse certification. Founded in 2001, they now have hundreds of clients in seventeen countries.
Their most popular certification, CEMARS (Certified Emissions Measurement And Reduction Scheme) audits companies’ emissions and their emissions reduction plans – typically reductions of at least a few percent a year are required. Numerous large New Zealand companies are CEMARS certified and there are some amazing success stories.
A higher level is CarboNZero, which certifies that the client’s entire operation is carbon neutral. (Some residual emissions can be offset, where there is a plan to eventually eliminate them.)
Now they have a new tool that allow individuals to assess (and, if they want, offset) their emissions: the Enviro-Mark Household Calculator. It’s extremely easy to use and, unlike other calculators that I have seen, set up explicitly for New Zealand conditions.
Just trying out the calculator lets you start to get a feel for what a tonne of CO2 represents and how different sources of emissions compare. You can compare your household to the average for New Zealand: for a household of three, these are 1.4 tonnes from electricity, 5.9 tonnes from car travel, and 0.9 tonnes from waste, totalling 8.1 tonnes a year. You can see immediately the effect of switching to carbon zero electricity (discussed in a previous post), a more fuel-efficient car, or reducing your household waste. You can see that gas central heating adds about 2 tonnes a year. Taking the family to Sydney adds another 2.8 tonnes.
What I think people will find is that the steps they can take to reduce their emissions are simple and cheap. However, voluntary efforts by individuals by themselves are unlikely to cut emissions nationally. For example, land transport emissions in New Zealand rose 850,000 tonnes in just one year (2017), a trend which is still continuing. Turning that around will require hundreds of thousands of households radically cutting their transport emissions, as well as all other households cutting a little bit. That’s a bit task.
Offsetting: a sensible way forward, or rich people paying to continue polluting?
Offsetting is the second component of the calculator. Once you know your emissions you can choose to buy offsets for them, either for the whole year or for a single item such as a particular unavoidable flight. This is a controversial area. Individual offsets have been compared to the medieval custom of papal indulgences.
However, remember that we have hardly started on the full path of eliminating carbon emissions and stopping burning fossil fuels. We need everything that we’ve got to get started on that journey. Once we’re started, we will learn further as we go. The money from offsets pays for genuine carbon reduction projects, such as permanent indigenous reforestation, that might otherwise struggle to get going. The spectre of billionaires flying around in private jets with clean consciences is pretty far from reality at the moment.
One big issue that New Zealand is right on the point of facing up to is that of international transport emissions. (See the group Fly-Less Kiwis.) New Zealand may be remote, but most developed countries have similar per capita aviation emissions, and they are growing rapidly worldwide. Bringing international transport into the Emissions Trading Scheme would put a break on travel growth, support the carbon price, and fund a lot of low-emission industries that need support right now.
[PS – Don’t forget to submit on the Zero Carbon Bill! Officially known as the Climate Change Response (Zero Carbon Amendment) Bill, submissions close on 16 July. OraTaiao has published a guide to preparing a submission.]
There’s an old joke set variously in Maine, in Scotland, and probably in any number of other places, about some city folks asking directions from an elderly local. After several lengthy, confusing false starts at directions, the local finally concludes, “You know, you really shouldn’t be starting from here.”
This, to me, is the central joke of climate change mitigation. If only we were starting from somewhere else, say from twenty years ago, or even ten years ago, or if our economic, social, and political systems were set up slightly differently, things would be so much easier.
The problem is particularly acute in New Zealand where we haven’t really begun the actual work of cutting emissions yet, and where the range of allowable strategies is unreasonably restricted. There are many actions that have been tried and tested in most other developed countries (such as solar incentives, electric vehicle incentives, and vehicle fuel efficiency standards) but which are very far from being acceptable in New Zealand.
However, the rash of climate protests and councils declaring climate emergencies is about to force the moment to its crisis.
One flashpoint is the election pledge of 100% renewable electricity by 2035. The Interim Climate Change Committee reported to the government on this target in April. The press are now reporting on a leaked copy of the report, resulting in an all too familiar media circus.
National’s climate change spokesman Todd Muller said the report exposed the “economic lunacy” of being fixated on greenhouse emissions from electricity generation, which formed only a small part of New Zealand’s overall emissions. “The report talked to the economic lunacy of seeking 100 per cent renewable energy in the first place,” Muller said, with New Zealand’s large generation from renewable giving a significant strategic advantage.
The issue has enough ingredients – a large industry that is complicated technically, economically, and politically; an election promise; obvious pollution by large companies; the price of an essential consumer item – to guarantee a classic stoush.
Setting aside Muller’s use of “renewable energy” when he means “renewable electricity” (“energy” includes things like petrol), does he have a point?
Unfortunately the ICCC report is not available yet. However, the ICCC website does host a report by the New Zealand Initiative, a libertarian think tank formed out of the Business Round Table, that comes to similar conclusions. That report, virtually a hatchet job on the whole idea of renewable energy, devotes a lot of space to criticizing two of the more successful decarbonization efforts underway worldwide, those of the UK and Germany.
For about a decade, the percentage of renewable electricity has been rising slowly, partly in response to the present target of 90% renewable (on average) by 2025:
It is now regularly over 80%, and the addition of more wind power is predicted to cut into the remaining fossil fuel baseload, cutting emissions further. Unfortunately, those emissions are still 5 million tonnes of CO2 a year. Is that really a small part of our overall emissions, as Muller claims?
Here are a few different ways of looking at the significance of our electricity emissions.
As a proportion of our 85 million tonnes (Mt) of gross emissions, they are small but not that small.
On the other hand, 34 Mt of those emissions are biogenic methane, which has been set aside. That leaves 51 Mt.
But the important target is zero net emissions. Those are currently 24 Mt. Suddenly the 5 Mt from electricity is looking more significant.
In addition, some of our emissions such as aviation and shipping (6 Mt), trucking (8 Mt) and many industrial emissions (12 Mt), such as those arising from producing steel, aluminium, fertilizer, and paper, are hard to eliminate and/or protected as trade-exposed industries.
Some obvious uses of fossil fuels, like natural gas used to heat homes and workplaces, are possible to eliminate, but turn out to be quite small (1.6 Mt).
Taken together, we are left with only two sources that are large and possible to start eliminating right now: electricity (5 Mt) and cars (7 Mt). That requires tackling these two institutions head on.
So, to paraphrase the situation in terms of the old joke I started with: How can we get there, starting from here?
Why is there an ecological crisis and why has it been so hard to deal with?
There is certainly no shortage of culprits – people have blamed neoliberalism, capitalism, consumerism, economic growth, overpopulation, evil corporations, greed. But underneath all the many aspects of this difficult problem lies one fundamental phenomenon: the Tragedy of the Commons.
This states that self-interest will lead to the depletion of an unmanaged, freely available resource, against everyone’s long-term interest. In an unmanaged fishery, each fisher has an incentive to catch as many fish as possible; if they don’t, another fisher will. Without cooperation between all parties, the fishery will be destroyed.
It is one of those ideas that, once learned, you start to see everywhere, even in areas that are not purely economic. Voting, taxes, vaccination, rubbish, labour laws, health and safety, and human rights all share some of the features of the tragedy of the commons. They are all areas where progress has been made, slowly and with difficulty, in many countries.
In climate change politics, the mechanism is constantly at work. Every country, every economic sector contains powerful voices arguing why someone else should cut emissions instead of them.
This conviction, that dealing with climate change means understanding and essentially solving the tragedy of the commons, led me to look deeper into the story of its discovery and spread. I found that – as befits a truly simply and universal phenomenon – it was discovered independently many times, first in 1833. But surprisingly, the idea did not stick or become widespread until quite recently. A 1980 paper described climate change as a tragedy of the commons in great detail and clarity: but it was ahead of its time, and no one noticed.
New Zealand’s ability to build domestic clean technology industries and respond effectively to climate change is handicapped by a deep-seated rigid notion that low carbon innovation can come about on the back an ETS alone. This notion disregards the processes by which low carbon innovations have successfully been developed and become competitive to date.
Concepts like ‘level playing fields’, ‘picking winners’ and ‘distortionary effects’ are selectively used to argue for lack of government action beyond emissions pricing. Consider this: since climate change came onto the political agenda in 1980, not a single clean technology has come about solely on the back of a carbon market.
In fact, existing carbon pricing mechanisms that most closely resemble the first-best policies long prescribed by economists have come about following, and as a result of, investment incentives and incremental buy-in from industry and the general public. New Zealand is among the last remaining countries to understand this, and to acknowledge the economic opportunities that you forego when you adopt laissez-faire innovation policy.
Our current government has announced funding for clean energy R&D and testing facilities, which is a great start, but addresses just one part of the innovation puzzle. Addressing the other parts of the puzzle will need to see public entities formalise and broaden stakeholder participation in the policy process, think in terms of 30 year innovation programmes from both producer and consumer perspectives, and put in place demand-side policies to support commercialisation of domestic high-risk low carbon technology. Achieving New Zealand’s decarbonisation goals will stand or fall on whether we tackle the notion of laissez-faire (ne pas faire?!) innovation – and how entrepreneurial are our current and future parliaments willing to become.
If and when we popularise a more nuanced, wiser and longer-term narrative of environmental innovation and societal change, we will simultaneously address New Zealand’s historically poor track record in terms of productivity and economy-wide capacity to drive and coordinate innovation’’.
There was tangible new energy rippling through this year’s New Zealand Wind Energy Association conference, with key industry players showing off some extraordinary new kit being deployed in Manawatu and South Taranaki. The Turitea wind farm will be among the most productive wind farms in the world, in no small part thanks to Vestas’ ‘Extreme Climate’ turbines uniquely designed for markets with the nastiest of winds. This industry has come very far since 1978, when the Danish government mustered political will from left- and right-wing parties for a complete overhaul of its energy system and channelled it into a mad and risky policy experiment that seeded and nursed Denmark’s world-leading wind manufacturing market. Without that bold policy experiment, it is difficult to see how we would have the wind technology we have today.
Has New Zealand taken heed and learnt from successful clean technology innovation processes?
Is our parliament planting and nurturing seeds for low carbon innovation in transport, housing or agriculture that will drive domestic emissions reductions and become a cornerstone of New Zealand’s future export markets?
Here I will share with you why I think the answer is no (or, not yet) and pinpoint the weaknesses of New Zealand’s collective approach to low carbon innovation by showing you how it differs fundamentally from that Danish success story, or in fact any success story on low carbon innovation.
Successful cleantech innovation policy needs to be inclusive, involving small players and unlikely winners.
History is littered with examples where disruptive innovation emerges from situations where small, medium enterprises (SME’s), start-ups and grassroots enterprise are given resources and a safe space to pilot concepts, learn, adjust and scale up. The Danes had two separate wind innovation programmes – a Small and a Large Turbine programme. The Small Wind programme sought to identify, test and improve high potential wind turbine designs built by blacksmiths and folk school teachers during the war and was highly successful. The Large Wind programme worked with R&D departments of existing utility companies to build and test larger turbine models, and failed.
In fact, there is a lot of evidence to suggest that established enterprise often struggles to look outside the box when it comes to disruptive low carbon innovation. This is because they are designed to do what they do at the lowest cost possible, operating in mature markets under strong price competition, with shareholders breathing down their necks for a 12% return on investment. They don’t have the luxury to go back to the drawing board; they need to keep the ship going full speed, even if they know that ship is heading towards an iceberg. Start-ups, social and community enterprise don’t demand 12% returns, very often because they derive social and environmental value from their work – they are often motivated to fundamentally rewire the ship and change the direction it is headed. But – and here is the catch – they can only do that if and where the state steps in to reduce risk exposure.
So if the government wants to decarbonise housing, transport and agricultural sectors, it needs to reach out to small players and unlikely winners with the flexibility to invest in high-potential low-return innovation, and incorporate their needs in the policy design process. In practice, this means working with local and regional handholding organisations (regional economic development, incubators) to identify a representative variety of change makers (incumbents, new entrants, academics, independent research organisations), and involving them in the policy design process in a more structured and transparent way.
Successful cleantech innovation policy leverages public support for climate change action to ensure that there is domestic demand for precommercial technology.
In New Zealand we tend to think of subsidies as a tool to shoulder the pain of carbon pricing, a sequel or an afterthought to a proper functioning carbon market. In fact, the most successful mitigation programmes to date have put investment incentives central, in tandem with supply-push policies. Without investment incentives, novel technologies tend to stall following the R&D phase, unable to compete in the market in absence of economies of scale, established supply chains and legitimacy. In other words, it is not a level playing field to begin with, and demand-pull policies are put in place to give a wide range of new technologies a chance to acclimatise to the marketplace (and vice-versa).
The Danes placed market access regulation, investment incentives and supply obligations side-by-side with R&D, testing and independent quality assurance standards, to ensure there was domestic demand for continuously improving wind turbines that were nowhere near competitive on the market. This allowed actors from across society to rally behind the government’s clean technology programme, becoming part of the solution rather than the problem. Yes – it was expensive and yes, it was a gamble. Wind technology now represents 12% of Danish exports. An entrepreneurial government takes calculated risks – and it pays off handsomely.
Successful cleantech innovation policy distributes the social and economic benefits of expensive mitigation programmes widely across society.
Investment incentives allowing the widespread diffusion of novel clean technology by industry and civil society generate public benefits and public support for more stringent climate change and energy policy. In Denmark that popularity ensured support from centre – right wing parties, generating more or less continuous political support and a healthy investment climate for the wind industry over the course of forty years. This is just about how long it has taken for wind to be able to compete with conventional fuels on the market. We need to stop writing off subsidies for pre-commercial low carbon innovation as ‘hand-outs’. To prevent organised opposition of powerful lobby groups and industries, we need to factor in the social and political effects of climate change policies by studying their combined distributional effects on different stakeholder groups.
For those of you who still don’t get the message – let me put it bluntly: laissez-faire innovation policy is out-of-date. Governments worldwide are taking a leading role in bringing low carbon innovation to market, enabling consumers and communities to partake in technology diffusion and meeting local and regional needs, and opening up thorny questions around sustainable consumption at the same time.
To those of you who experience a visceral reaction to these arguments (and/or want to send me hate mail), I’d like to pre-empt some common questions:
Q. How do you know this, what are you basing this on?
A. I have compared adoption and non-adoption of the full range of supply-push and demand-pull policies driving renewable energy innovation in five countries from 1900-2015.
Q. If what you say is true, how come New Zealand has achieved the highest share of renewables without subsidies or direction from policy makers?
A. A large proportion of New Zealand’s power generation capacity (hydro power) was built, owned and operated by the state prior to 1978 when the sector was unbundled and privatised. So no, New Zealand has definitively not achieved its track record in renewables without government support – to the contrary.
Q. Are you seriously saying that our leading firms can’t innovate?
A. Under pressure from government or competition incumbents can pursue disruptive innovation side by side with their mainstay business – but in small concentrated markets like ours, with low public expenditure on R&D, incumbents can and have sometimes used their market power and their sway over government to resist having to reorient their assets, technical capabilities, and business models, and to proactively keep niche innovations at bay. Inclusive, transparent policy processes and resourcing new market entrants with niche innovations and can help balance out the conversation, step up the pressure on incumbents to reallocate resources, and step up the pace of change.
Q. But isn’t it potentially dangerous to let the government ‘pick winners’?
A. This argument is based on the premise that market price is a good indicator of the relative value of different technologies to society. But even under a perfect emissions trading scheme, where carbon price equates the true marginal abatement cost (we don’t have this), price still doesn’t take into account the systemic factors that constrain and enable the emergence of cost-competitive technology. In the energy sector that might include for example requirements and compatibilities of different technologies in relation to demand profiles, structure of the existing power market supply, risk premiums facing new technologies or externalities that are a function of increased adoption (such as innovation and learning spillovers, imperfect competition, supply chain coordination effects, and legitimacy costs).
So: you pick winners whether you put in place enabling policies or not; in absence of demand-pull policies, we will simply squeeze out any pre-commercial technologies, and wait on other countries to do the innovating for us. While cost-efficiency and affordability are legitimate concerns, taken alone they are not a sufficient basis on which to evaluate public intervention for pre-commercial technologies. A more constructive policy assessment would focus on the design of the monitoring, feedback and decision-making mechanisms that the government can use to allocate resources to highest potential technologies.
References: Kelsey, J., 2002. Reclaiming the future: New Zealand and the global economy, 2nd ed. Bridget Williams Books. Kelsey, J., 2015. The FIRE Economy: New Zealand’s Reckoning, Bridget Williams Books. Rosenberg, B., 2016. New Zealand’s Low Value Economy, AUT.
By Anna Berka. This article first published at Pure Advantage. See original article. Dr Anna Berka works on innovation policy, civic enterprise and decarbonisation and holds degrees in economics, environmental science and policy. She previously worked for the Energy Centre, University of Auckland and is currently consulting for public entities and community enterprise.
Stop flying, cut out red meat, switch to an electric car or, better yet, a bike. Newspapers and websites are full of stories of people who have made the switch to a low-emission lifestyle. The stories are inspiring, to me anyway, and they are definitely newsworthy. But, at least judging from the online comments (‘Not gonna happen!’), they can be irritating to others.
Nevertheless, there are other more serious arguments that individuals should not be the main focus of climate change action.
The strongest point is that climate change is a global problem that can only be solved by collective action, the main vehicles for which are state regulations and international agreements. A focus on individuals, goes the argument, feeds the neoliberal cover story that people make entirely free choices and hence, if they’re choosing to burn fossil fuels, they are part of the problem. This line of thought leads to cognitive dissonance and a tendency to absolve other actors, such as fossil fuel multinationals, car manufacturers, and town planners, of responsibility.
A second argument is that a few committed individuals cutting their emissions merely frees up resources for others – less concerned about climate change and less motivated to act individually – to use instead. Lowering demand for petrol lowers its price, at least in the short term, allowing others to use more.
However, as time has gone by, I have been less and less convinced by these arguments.
First, taking action can have a powerful transformative effect.
Second, you may find that the action was much easier than you anticipated. Pessimists like to draw attention to the hardest steps – “people will never stop flying, that’s ridiculous!” – an angle which is countered when you find out how easy the easy steps are.
Some movements really do start small and spread from many small centres, even if many other things have to line up to allow that to happen.
This same phenomenon happens at other levels, too, as we’re seeing now with more and more councils around New Zealand declaring climate emergencies and setting progressive mitigation targets. Same thing for companies, trumpeting their transition plans and banding together, for example in the Climate Leaders Coalition. Same thing, we hope, for nations: this model is an underlying principle of the Paris Agreement, by which actions are voluntary but will be ratcheted up over time.
This is Elinor Ostrom’s ‘polycentric’ approach to climate change, an approach that is rapidly becoming mainstream. Ostrom won the Nobel Prize for Economics in 2009 for her studies of successful management of the commons. Her key paper on climate change was apparently never published, but is available as a World Bank report.
With that in mind, here’s an action you can take right now with just a phone call, that won’t cost anything, and that will wipe out a huge chunk of your household emissions:
Yes, that’s actually true. Just by switching electricity providers (0800 845 000, just saying) you can eliminate all your electricity emissions, which even in New Zealand could be 1–2 tonnes of CO2 per year. Ecotricity costs about the same as other retailers. (The exact prices depend on many factors, including where you live – the New Zealand electricity market is complicated.)
Ecotricity is a New Zealand electricity retailer that is 100% carbon zero. Their whole operation, from the generation of the electricity to the head office, is certified zero carbon by Enviro-Mark Solutions. (Enviro-Mark themselves, a Christchurch-based spinoff from the state-owned research institute Landcare, are an exceptionally well-regarded carbon auditor with clients all over the world.)
Once you’ve switched, you’ll find that you have an even greater incentive to electrify all your other energy uses.
It’s hard to believe that this is even possible. After all, we have a national grid, and who knows where your actual electrons came from? And yet, it really is true. Unlike other retailers, Ecotricity does not buy electricity on the spot market. Their entire supply comes through separate contracts with renewable energy suppliers, mainly South Island hydro and biogas. Their majority shareholder is the Central Lakes Trust, a charitable trust that funds community organizations in Central Otago. None of your money is going to Genesis or Nova to run coal and gas-fired power stations.
At the moment, they are tiny, with only 0.3% of the market. But they are growing:
In the long run, more demand for renewable energy will lead to more of it being supplied.
The ability to switch to fully carbon zero electricity at no cost is pretty special to New Zealand. Clearly, Ecotricity NZ has been inspired by the (unrelated company) Ecotricity UK, which has 200,000 customers and many imitators. In the US, most consumers can opt for ‘Green pricing’, which (at a price) ties them in to a complicated and possibly dodgy system of renewable energy credits. In Australia there are companies that offer carbon offsets and others that own only renewable generation and that have no side contracts with fossil fuel generators. But none these look quite as pure as Ecotricity.
[This article is republished from The Conversation. Plenty more to come on this subject in the future…]
New Zealand’s long-awaited zero carbon bill will create sweeping changes to the management of emissions, setting a global benchmark with ambitious reduction targets for all major greenhouse gases.
The bill includes two separate targets – one for the long-lived greenhouse gases carbon dioxide and nitrous oxide, and another target specifically for biogenic methane, produced by livestock and landfill waste.
Launching the bill, Prime Minister Jacinda Ardern said:
Carbon dioxide is the most important thing we need to tackle – that’s why we’ve taken a net zero carbon approach. Agriculture is incredibly important to New Zealand, but it also needs to be part of the solution. That is why we have listened to the science and also heard the industry and created a specific target for biogenic methane.
Create a target of reducing all greenhouse gases, except biogenic methane, to net zero by 2050
Create a separate target to reduce emissions of biogenic methane by 10% by 2030, and 24-47% by 2050 (relative to 2017 levels)
Establish a new, independent climate commission to provide emissions budgets, expert advice, and monitoring to help keep successive governments on track
Require government to implement policies for climate change risk assessment, a national adaptation plan, and progress reporting on implementation of the plan.
Bringing in agriculture
Preparing the bill has been a lengthy process. The government was committed to working with its coalition partners and also with the opposition National Party, to ensure the bill’s long-term viability. A consultation process in 2018 yielded 15,000 submissions, more than 90% of which asked for an advisory, independent climate commission, provision for adapting to the effects of climate change and a target of net zero by 2050 for all gasses.
Now we know how the government has threaded its way between these difficult choices.
Separate targets for different gases
In signing the Paris Agreement, New Zealand agreed to hold the increase in the global average temperature to well below 2°C and to make efforts to limit it to 1.5°C. The bill is guided by the latest Intergovernmental Panel on Climate Change (IPCC) report, which details three pathways to limit warming to 1.5°C. All of them involve significant reductions in agricultural methane (by 23%-69% by 2050).
Farmers will be pleased with the “two baskets” approach, in which biogenic methane is treated differently from other gasses. But the bill does require total biogenic emissions to fall. They cannot be offset by planting trees. The climate commission, once established, and the minister will have to come up with policies that actually reduce emissions.
In the short term, that will likely involve decisions about livestock stocking rates: retiring the least profitable sheep and beef farms, and improving efficiency in the dairy industry with fewer animals but increased productivity on the remaining land. Longer term options include methane inhibitors, selective breeding, and a possible methane vaccine.
Ambitious net zero target
Net zero by 2050 on all other gasses, including offsetting by forestry, is still an ambitious target. New Zealand’s emissions rose sharply in 2017 and effective mechanisms to phase out fossil fuels are not yet in place. It is likely that with protests in Auckland over a local 10 cents a litre fuel tax – albeit brought in to fund public transport and not as a carbon tax per se – the government may be feeling they have to tread delicately here.
But the bill requires real action. The first carbon budget will cover 2022-2025. Work to strengthen New Zealand’s Emissions Trading Scheme is already underway and will likely involve a falling cap on emissions that will raise the carbon price, currently capped at NZ$25.
In initial reaction to the bill, the National Party welcomed all aspects of it except the 24-47% reduction target for methane, which they believe should have been left to the climate commission. Coalition partner New Zealand First is talking up their contribution and how they had the agriculture sector’s interests at heart.
While climate activist groups welcomed the bill, Greenpeace criticised the bill for not being legally enforceable and described the 10% cut in methane as “miserly”. The youth action group Generation Zero, one of the first to call for zero carbon legislation, is understandably delighted. Even so, they say the law does not match the urgency of the crisis. And it’s true that since the bill was first mooted, we have seen a stronger sense of urgency, from the Extinction Rebellion to Greta Thunberg to the UK parliament’s declaration of a climate emergency.
New Zealand’s bill is a pioneering effort to respond in detail to the 1.5ºC target and to base a national plan around the science reported by the IPCC.
Many other countries are in the process of setting and strengthening targets. Ireland’s Parliamentary Joint Committee on Climate recently recommended adopting a target of net zero for all gasses by 2050. Scotland will strengthen its target to net zero carbon dioxide and methane by 2040 and net zero all gasses by 2045. Less than a week after this announcement, the Scottish government dropped plans to cut air departure fees (currently £13 for short and £78 for long flights, and double for business class).
One country that has set a specific goals for agricultural methane is Uruguay, with a target of reducing emissions per kilogram of beef by 33%-46% by 2030. In the countries mentioned above, not so different from New Zealand, agriculture produces 35%, 23%, and 55% of emissions, respectively.
New Zealand has learned from processes that have worked elsewhere, notably the UK’s Climate Change Commission, which attempts to balance science, public involvement and the sovereignty of parliament. Perhaps our present experience in balancing the demands of different interest groups and economic sectors, with diverse mitigation opportunities and costs, can now help others.
We know what we have to do to beat climate change: electrify everything, and stop investing in things that burn fossil fuels. In New Zealand, that has been hard to do. Thirty years of climate policy have left us with only two main tools: the Emissions Trading Scheme, and an ‘aspirational’ target of 90% renewable electricity by 2025.
The ETS has failed to reduce emissions. Although the carbon price has now risen to $25/tonne, and a 50% discount for large emitters gradually unwound, the price is not high enough to have an effect. It’s adding 5c/l to petrol, and in theory it’s adding 2.5c/kWh to coal-powered electricity and (and 1.25c/kWh to gas). Gas peakers, which can be turned on every evening when the spot price is high, are still being used and even built.
The short story of new electricity generation in New Zealand is that we massively invested in fossil fuel power stations in the 90s and early 2000s, and then began to unwind that with a move into wind and an expansion of geothermal power in the decade to 2014. But in the past 5 years, that effort has come crashing to a halt.
The result is that emissions have remained stubbornly high, jumping another 2% in 2017:
For a period of intense international focus on climate change, and an urgent need to start reducing emissions, that’s pretty frustrating. We kept hearing about the 3000MW of consented wind power just waiting to be built – when the demand was there. We also heard about consents for new fossil-fueled power stations (1240MW planned), an old 377MW plant at Stratford that was up for closure that instead got a $45m makeover in 2017, a new 100MW gas peaker to open in New Plymouth in 2020, and the closure of the 500MW of coal-fired capacity at Huntly, originally set for 2018, extended first to 2022 and then to 2030.
Indeed, why would anyone build wind today? Wind power takes any price it can get. In a flat market, adding more wind will depress the spot price and hurt existing operators. Hydro owners would not suffer particularly – when the wind is blowing they can save their water for later – but fossil owners would be worst off, as they would face both lower prices and lower demand.
In this context the decision by Mercury to start building the Turitea wind farm is a welcome surprise and is striking in a number of ways.
1. It’s big. The first stage, committed now, has 33 3.6MW turbines, totalling 119MW. It adds 20% to New Zealand’s wind power. The turbines will be the biggest yet installed in New Zealand. (They are Vestas V112s, which are normally 3.45MW, but are available in a 3.6MW ‘power optimized’ option, presumably for very windy sites.)
2. It’s bigger than expected. The original consent was for 3MW turbines; Vestas has been able to deliver 20% more power in the same site with the same tower height.
3. It has big potential. Mercury is building the transmission lines for the full Turitea project, and for the additional Puketoi farm further east, now. The whole package totals 500MW. Although they’re not committing to the full thing now, surely this makes it likely to go ahead.
4. It’s highly efficient. Mercury and Vestas are claiming a 45% capacity factor, even higher than the New Zealand average of 37% which is already among the world’s highest. Presumably this is due to a combination of the site and engineering improvements.
5. It has global significance. Vestas will service the wind turbines for 25 years – longer than the usual certification of 20 years. In return they will also get access to data on the operation of the farm in this extremely windy area.
6. It’s cheap. The capital cost is $256m and Mercury have said their total operational costs are 1.3c/kWh. If finance is 7%, then the overall cost of generation is 5.1c/kWh, well below the typical spot price of 7-8c. That’s cheap for new build generation in New Zealand.
Why, then, are they going ahead, when I argued above that no more wind was going to be built? Part of the reason must be the change in government and the strong signals that a Zero Carbon Bill is coming, that the price of carbon will rise, and that more renewable generation will definitely be needed. But the (partly private, partly arms-length state-owned) electricity industry is not compelled to respond to any of this.
A conference call on the day of the announcement contains this important detail from Mercury CEO Fraser Whineray: “We’re also interested in where this will go for co-optimisation with our same island hydro scheme, that being the Waikato hydro scheme, which is the biggest peaker in the North Island.”
So that’s the clue. Mercury owns a lot of hydro. 1078MW on the Waikato, which is 58% of allNorth Island hydro. When the wind is blowing they can save their own water for later without bleeding income to other companies. (They do risk spilling water when they run out of storage, but they will have modelled that thoroughly.)
A lot of things had to line up correctly for this to go ahead. The larger future of New Zealand’s electricity sector will have to await details of the Zero Carbon Bill.
Will the Turitea wind farm reduce emissions? It’s possible that it will. If demand for electricity continues to be flat, then when the wind is blowing the gas peakers will be running less. If the 470GWh of wind power from Turitea entirely displaced gas, that would cut emissions by 235,000 tonnes of CO2 per year – to be sure, a small amount when we need to be cutting by millions of tonnes per year, for many years in a row – but well worth having, in an environment when cuts of any sort are hard to find.
In a few years, then, our electricity capacity might look more like this: