Estimates Debate — Vote Climate Change and Energy Efficiency

In 17 years in this House I know of no area of public policy that is as big a botch-up as what we have with regard to energy and climate change. I am reminded of the debate we have just had in respect of corrections, and the fact that in the era of straight thinking we have a policy whereby people who did the rehabilitation programme had a higher rate of reoffending than those who did not do it. Well, in the area of energy efficiency, we have it just as bad. Labour came to Government in 2000 and said, in the great, proud words of Pete Hodgson, that we did not need to spend money on transmission or power stations because we had it with the great National Energy Efficiency and Conservation Strategy.

Over the last 5 years the Government has poured $100 million into this vote, on that policy, and in March this year we had a review. The review showed that gains in energy efficiency have been less than when we did not have a strategy—that is, for the 5 years from 1995 to 2000, we had improvements of 0.7 percent a year in energy efficiency. Since we have spent $100 million and we have had this flash bells and whistles strategy, energy efficiency has become worse. The Minister of Energy at the time, Pete Hodgson, must take responsibility for that fiasco and failure.

But the situation is worse than that. In the area of climate change we had the Government powering in and ratifying the Kyoto Protocol. The Minister Pete Hodgson told the country that we had to race in and ratify it because we would make hundreds of millions of dollars. In fact, he said that for members like those in the National Party who opposed that early ratification, it amounted to burning a multi - hundred million dollar cheque. Well, what has happened? We now have a projected bill of nearly $500 million because of that.

Let us look at the track record for the environment. This Government rejected the Dobson hydro scheme on the West Coast. That scheme would have been producing power as we speak if it was not for the stupid decision of Chris Carter in that respect. We had Project Aqua, a very large renewable power scheme, which the Minister in the chair, David Parker, campaigned against and passed dopey laws in this Parliament to defeat. Would we not prefer right now that Project Aqua was under construction to deal with some of these concerns?

Well, let us see what we did fund. The Government signed off $150 million to build an oil-fired power station in Napier. Its own State-owned enterprise has proposed building—and has received consent, with the Government’s support—a coal-fired power station at Whangarei. The bizarre thing is that while we have had Pete Hodgson, David Parker, and Helen Clark giving speeches all around the world about how we have to move on climate change, simultaneously the biggest change in energy generation is a threefold increase in the amount of power that we are producing from coal. Hang on, the great greenies have given so many speeches—and we have trebled the amount of power produced from coal. That is madness!

In fact, it is very interesting to look at the latest data under the United Nations Framework Convention on Climate Change. This Government has been keen to damn Australia and the United States. Well, let us compare the figures. Australia’s greenhouse gas emissions have gone up by 3 percent. The United States’ emissions have gone up by 2.5 percent—and they are the bad guys. They are the ones that Helen Clark damns. How much have our emissions gone up over the same period? They have gone up by 10 percent, I say to the Minister. I ask the Minister to take some responsibility for the failed policies that have done just that. I also draw his attention to the damning comments coming from every corner of the energy sector in respect of his policies. Dr Keith Turner has said that the state of the transmission system—

My understanding is that we are debating the climate change estimates, not the energy estimates—

The CHAIRPERSON (Ann Hartley): Vote Climate Change and Energy Efficiency.

—so I will not respond to the energy points that the member Dr Smith made.

💬 Hon Dr Nick Smith: But they’re quite relevant.

They are relevant to the energy sector and I will respond to them later. But dealing with the climate change issues, the National Party is criticising the adoption of the Kyoto Protocol, which was essentially designed by that very party when it had better representation, in the form of Simon Upton. We have done no more than implement what that party, when in Government, thought was a good idea.

There is no doubt that climate change for policy purposes has to be seen to be a real and pressing issue that demands a policy response. This Government has advanced a policy response to it through the Kyoto Protocol, at the time when National, having negotiated the terms of that protocol, then said, for reasons of political advantage, that although climate change problems might exist we should do nothing about them. That is the essential difference between what Labour has done and what National did.

In terms of the increase in the proportion of thermal generation over recent years, the member is correct in quoting those statistics that show there has been higher utilisation of existing fossil fuel - based capacity. Although a small amount of that has been from the additional capacity this Government caused to be built at Whirinaki, most of it has resulted from the increased utilisation of existing plant. And that, of course, was one of the objectives of the Bradford reforms, which that member voted in favour of, because it was true that levels of overcapacity in the generation sector were being inefficiently used.

💬 Hon Dr Nick Smith: Why did you stop Dobson? Why did the Government stop Dobson?

This Government did not stop Dobson.

💬 Hon Dr Nick Smith: Yes it did.

No, what it did was it declined—

💬 Hon Dr Nick Smith: I seek leave to table the letter from the Minister of Conservation, Chris Carter, to TrustPower, refusing to allow the use of the land adjacent to the Arnold River, which saw the rejection of the Dobson power scheme.

The CHAIRPERSON (Ann Hartley): The member seeks leave. Is there any objection? There is objection. The member should wait until the end of a speech to seek leave to table something.

I was going to say that the Minister of Conservation declined to allow the dam to inundate areas of the conservation estate. That is not the end of the matter though, because TrustPower, having been turned back on that particular version of use of water from the Arnold River, has redesigned its scheme and is presently pursuing a consent for a similar amount of power to be generated from the same water from the Arnold River but with a lesser environmental impact that would not inundate the conservation estate.

💬 Hon Dr Nick Smith: It has no storage.

Well, it may have less storage, but it has run-of-river capacity that is still capable of generating a similar amount of total electricity for the benefit of New Zealand’s power system and, indeed, for the particular benefit of supplementing the supply on the West Coast. So I disagree with the member’s characterisation of that.

He talked about the Whirinaki power station being built. The reason Whirinaki was built was that it was needed to cover dry year risk. One of the characteristics of New Zealand’s electricity system is our reliance on hydroelectricity. It is a wonderful resource that we are lucky to have, but in a dry year when the amount of water stored in the lakes is less we have an additional need for generating capacity. The market did not deliver that dry year security of supply, so the Government intervened by building the Whirinaki facility to cover that dry year risk.

Criticisms are made of that Whirinaki facility. Some say it would be better sited elsewhere. Those criticisms are made with the benefit of, firstly, hindsight and, secondly—

💬 Hon Dr Nick Smith: Why didn’t you put it in the right place the first time?

At the time, the reason why it was set up at Whirinaki was that it needed to be done urgently, and Whirinaki was a consented site. Therefore the facility was sited at Whirinaki. The reason why it needed to be set up urgently was that the imperfections of the market model, which Dr Nick Smith voted in favour of—Mr Bradford’s reforms—left us with dry year risk that was not properly accounted for.

Turning to climate change more generally, this last week we have seen a re-estimation of the balance of the Kyoto obligations of the Crown during the first commitment period, which runs from 2008 to 2012. Last year we had great hoopla from the National Party when it made great mileage out of the fact that New Zealand’s projected deficit during the first commitment period had increased to 68 million tonnes. It has now been reduced to about 41 million tonnes, and I think that that is good news.