Estimates Debate — Vote Energy

The energy estimates in front of us reflect, I believe, a particular mindset on the part of this Government. The highest-stated priority of the Government is to build a stronger economy, which will provide jobs, higher incomes, and improved living standards. The Budget vote identifies two Government priorities, wittily cited as the Key Government policy drivers. The first is removing red tape and unnecessary regulation. The intended outcome is ease of doing business. The second priority is investing significantly in productive infrastructure. The intended outcome is efficient, reliable, and responsive services. So this is the best the Government can do—the highest priorities it can think of in energy.

One of the flagship projects that the Government is encouraging towards this enlightened outcome is the lignite project in Southland. This erstwhile contributor to the betterment of humankind will emit some 15 million tonnes of carbon each year. That is some 25 percent extra on our total net emissions. Where is the sense in that? Where is the sense of global responsibility that we in New Zealand love to believe comes naturally to us?

The focus of our Energy Strategy is the extraction of fossil fuels to maximise our financial wealth. Some $166 billion is voted to this. The Government regards the environmental consequences of this manic policy as no more than an irritant, something to be minimised or paid for in clean-up mode as we move purposefully towards financial nirvana.

We can compare this fossil Energy Strategy with the latest work to come out of Denmark. Over the past year, while we have been planning a massive open-cast lignite mine, Denmark has set up a national commission on climate change policy. The Danish commission has undertaken far-reaching modelling and planning. The objective is not to lust for open-cast lignite extraction and offshore deep-water drilling, but to identify ways of removing fossil fuels entirely from its national energy system.

The Danish Commission on Climate Change Policy is developing a scenario in which it will have, by 2050, a fossil-free energy system, including transport. What is more, this national goal will be achieved without reliance on nuclear energy, and it will be achieved without reliance on carbon capture and storage. What do we do, in contrast? Here in fantasyland we seek to justify our absurd plan to produce lignite by a postulated reliance on future carbon capture and storage. This technology is not proven. To the extent that it has been tried, it has proven to be dangerous. But, never mind, it allows us to rationalise the absurd.

Complete removal of fossil fuels from the energy system, the Danish commission says, would result in an 80 percent cut in greenhouse gas emissions by 2050. Emissions from agriculture would dominate the remaining profile. Clearly, New Zealand would be left with a still-significant emissions profile with agriculture, but I tell members to imagine New Zealand having a 50 percent cut in emissions by 2050—a fossil-free energy system.

Wind and biomass are likely to be the likely contributors to the Danish energy system in 2050. What do we do here? We ignore our local wind manufacturer and we buy Danish. Whereas the current energy system is controlled only on the supply side, the future system, the Danish commission reports, must also include control on the demand side. This will include smart grids and intelligent energy use.

The Government down here in Earth’s last islands will respond with the benighted claim that such a goal will ruin our national economy. So let us look at what the Danes have to say. Their commission has calculated that phasing out fossil fuels would entail an additional cost of some 0.5 percent of GDP in 2050, and it will save the planet. Surely we can do better than we currently are down here. This is not simply a moral concern for posterity; it is a medium-term economic security and geopolitical policy transformation.

The Danes have said that although their report is specific to the current Danish situation, the analytical approach they used is generic and can be of use to other nations. Let us send a team of officials to Copenhagen for discussions right now.

Ā, tēnā koe e te Heamana. Huri noa i tō tātou Whare, tēnā koutou katoa. Aotearoa New Zealand is blessed with abundant natural resources, and, together with smart New Zealanders, we are able to come up with a portfolio of energy options that meets the needs of New Zealanders today and into the future. This Government is focused on striking a balance between our concern for ensuring sound environmental management and exploring the economic opportunities open to us. We are a Government that is focused on “and, and, and”—not either one thing or the other but what balance in a mixed portfolio we can bring to bear for New Zealanders now and into the future.

We are absolutely committed to energy and resources as a cornerstone of our growth agenda, of our economy, and of our long-term sustainable commitment to our environment for ourselves and for future generations. We have, on the one hand, renewables. We have a goal in this country of achieving 90 percent renewable energy sources as the basis of our electricity generation. I am pleased to say that in 2010 we achieved 74 percent of that target, and in the March quarter of this year we achieved 79 percent.

💬 Hon Shane Jones: Labour policy.

In 2005, 9 percent of our renewable energy was made up from geothermal and wind, of which we seem to be getting a significant amount on my left. Today, in 2011, we are at 17 percent. This Government remains committed to achieving that target, so not only have we achieved the highest-ever deliverables in this regard—at 79 percent—but also we have had the largest consented amount of renewable energy.

We have an emissions trading scheme, which puts a price on carbon, and we are already seeing behaviour changing in that regard. We have a national policy statement that will inform decision makers under the Resource Management Act about the commitment of this Government to see more renewables. New Zealand joined the International Renewable Energy Agency for the first time this year. The report by the International Renewable Energy Agency commented positively on New Zealand’s balanced approach to using its resources in a sustainable way. It commended New Zealand for its target on renewables while also identifying that the world, of which New Zealand is a part, is on a journey to a low-carbon future, but it will take some transitioning.

So as part of this Government’s balanced commitment to taking advantage of all of our abundant resources, in 2009 we announced a commitment to our petroleum action plan. In partnering with the science institutes of New Zealand, we have identified significant potential in oil and gas and minerals here in Aotearoa New Zealand. The member who recently left the Chamber bemoaned the fact that two football teams of people have left the north to go and seek jobs in Perth. Guess what jobs those people have secured? They have secured jobs in the mining industry in Perth. Many of the 77,000 Māori who have gone overseas—[Interruption]—many of whom are related to the Hon Shane Jones and Kelvin Davis, who applaud their aspirations to be involved in employment—would prefer the opportunity for higher jobs and better incomes right here in New Zealand.

This Government does not resile from its commitment to explore the oil and gas and mineral potential that has been identified here in New Zealand. We have established New Zealand Petroleum and Minerals within the Ministry of Economic Development, which is very focused on how we can ensure that the permitting processes we have in place are sound and inclusive of those who have interests around the country, such as iwi, regional and local government, and regional development agencies. The focus is on ensuring that we bring in the best possible price for New Zealand in the oil and petroleum area.

I want to tell the Chamber tonight that petroleum is New Zealand’s fourth-largest export earner. In the 2009-10 financial year, exports totalled $2.1 billion. In the 5 years between 2004 and 2009, the New Zealand Government earned approximately $1.4 billion in tax and $1.1 billion in royalties. Where does that money go? It goes to fund our schools, it goes to fund our hospitals, and it goes to fund our roads and our police force. All of that money supports all the aspirations of New Zealanders who are committed to being participants in a First World economy.

But I have more good news to share in the energy and resources area. In respect of the electricity reforms that this Government instituted upon coming into Government, we have brought about significant changes. The sector is able to operate more efficiently and more effectively than it ever has done before. We have as a cornerstone of those reforms the establishment of the Electricity Authority, which has a significant work agenda set out in legislation. It is on target to achieve its targets, notwithstanding the fact that it came into force only on 1 November last year. We expect that it will be able to deliver on that work agenda by 1 November this year.

But one of the significant reforms that I want to talk about, which the Electricity Authority has overseen, reflects this Government’s commitment to ensuring that competition exists not only on the supply side but also on the demand side. On the supply side, for instance, this Government has ensured that there is better competition in the South Island by transferring Tekapō A and Tekapō B from Meridian to Genesis Energy. On the demand side, many members will have observed and, I hope, participated in the What’s My Number campaign, which requires just a short trip onto the internet to www.whatsmynumber.org.nz.

💬 Aaron Gilmore: Say it again.

I repeat it for the member. It is www.whatsmynumber.org.nz. I share this with members because 448,952 New Zealanders have visited that website and they have accrued estimated savings of $55 million to $56 million. The average time spent on that website—time more productively spent than on other websites that may be mentioned tonight—is 2 minutes and 43 seconds.

The point of that website is that we as a Government are very conscious of cost of living issues. Electricity, power consumption, in homes is a significant part of that, and this website and the opportunity to switch power companies puts power in the hands of consumers to decide whether they are getting the best deal from their retailer. If not, they can switch. Unlike members on the Opposition benches, we actually trust that if consumers are given information and tools, they will make powerful choices for themselves. Some 349,477 unique visitors to this website are making those choices, and 29,453 have initiated a switch. That switch means that they will accrue savings, but, more than that, it will continue to drive down prices by increasing the competition between retailers. I am sure that that gladdens the heart and warms the homes of many New Zealanders. I would like to happily segue in the minute I have left into the Warm Up New Zealand: Heat Smart campaign being run—

💬 Hon Simon Power: Segue; nice word.

Thank you very much. The campaign is being run by the Energy Efficiency and Conservation Authority. This Government has invested in 188,500 homes by installing insulation that will warm the homes. In addition we are installing efficient heating to reduce people’s power bills and improve their health, and that means better sleep for students so that they can go to school the next day sharp and ready to be taught by teachers who have been able to identify through national standards which students at an early age need assistance.

The Warm Up New Zealand: Heat Smart campaign has been extremely effective around the country. We have passed the milestone of insulating 100,000 homes, and we look forward to working with more and more local councils with targeted rates schemes to make that available to more New Zealanders. Thank you.

I will take a brief call on Vote Energy to respond to the Greens, particularly Kennedy Graham, who had a bit of a love-in with Denmark and the goals that Denmark has going forward to 2050. The reason I want to respond to him is that he fails to mention that New Zealand right now is actually ahead of Denmark in terms of the percentage of energy created by renewable sources. In fact, New Zealand sits at No. 2 in the world—not No. 3 or No. 4—in terms of the proportion of energy that is created from renewable sources. Iceland is No.1 because of its huge resource of geothermal energy. So for Mr Graham to stand in the Chamber and wax lyrical about Denmark and the goals that it has and not mention that New Zealand already sits ahead of Denmark in terms of renewable energy production is somewhat remiss, I think.

The other point that is worth mentioning—and it occurred while the Green Party was in bed with Labour over the last 9 years—relates to the increase in renewable energy. Over the 9 years of the Labour Government it consented on average 200 megawatts per annum of renewable energy. The peak was 300 megawatts per annum in new renewable energy consents. National was fortunate enough to win the last election. One of the key changes we made was to the Resource Management Act, which allowed renewable energy projects that had national significance to be taken directly to the Environment Court. There has been a significant result from that change. In fact, this year alone—the 2010-11 year—we have consented 1,500 megawatts of renewable energy. In one year alone we have consented 1,500 megawatts of renewable energy, yet Mr Graham stands on the other side of the Chamber and says we should all be looking at Denmark. I suggest to Mr Graham that Denmark should probably be having a look at New Zealand, and it should be sending its MPs to New Zealand to see what we are doing in the renewable energy space.

We are in great shape in this space. I acknowledge the Acting Minister of Energy and Resources for the excellent work that she is doing. In terms of renewable energy, we are at the top of the world—No. 2. I think if we continue the way we are going, with the goals we have—to have, by 2040, 90 percent of energy produced through renewables—we could well be No. 1. I rest my case.

Vote agreed to.

Vote Women’s Affairs agreed to.

Vote Customs

The CHAIRPERSON (Lindsay Tisch): The question now is that Vote Customs stand part of the schedule. Those of that opinion will say Aye, to the contrary, No—[Interruption] Well, if the member does not take a call, he will miss out.