Electricity (Renewable Preference) Amendment Bill

I move, That the Electricity (Renewable Preference) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. First of all, I want to thank my former colleague and friend Charles Chauvel, whose name this bill was in originally. Apparently, I am completely incapable of having bills drawn from the ballot. In my entire time in Parliament I have never had one drawn, so I am reliant on my very kind colleagues to draw bills from the ballot in my portfolio areas and to then, very kindly, hand them over to me. That is what Charles Chauvel did, and I am happy to take this bill through its first reading.

This bill creates a preference for renewable electricity generation through the reintroduction of a 10-year restriction on new baseload fossil-fuelled thermal electricity generation capacity, except where exemptions may be appropriate. I will be honest. I have very low expectations that this bill will progress beyond its first reading, but I sincerely hope that members will give it due consideration.

This bill is an important first step to meeting two current Government targets: firstly, that 90 percent of electricity generation be from renewable sources by 2025, and, secondly, the National Government’s target of a 50 percent reduction in greenhouse gas emissions by 2050. I am very pleased that the National Government has kept the Labour Government’s 90 percent renewable target, and I want to commend it for that. But both targets are meaningless without a plan or a strategy or any policy to get us there, and on current policy settings we will not achieve either target. The 90 percent renewable energy target should be easy for New Zealand. We are blessed with an abundance of renewable energy resources. I do hope that I do not hear claims from members who oppose this bill that we are doing OK because 2012 was a record year for renewable electricity generation. It was, but only because it rained a lot. That is the only reason—our hydro lakes were at full capacity. I do not believe that hoping for wet weather is a plan or a strategy to get us towards a 90 percent target by 2025.

When it comes to the National Government’s 50 percent target for greenhouse gas reductions by 2050, again, we have no plan. We have a collapsed carbon price, we have foresters deforesting and exiting the emissions trading scheme, we have no new plantings, and all the complementary measures introduced by the previous Labour Government have been removed except for the road-user charge exemption for electric vehicles. That is all that remains.

Broader than that, on the international stage, New Zealand is the only country to have not tabled an unconditional, single-number target for greenhouse gas emission targets for the 2013-20 period. This is something the National Government needs to rectify urgently. It was due in October last year. We are the only country that has failed to deliver, and that has been noticed on the international stage. My point is that we need a plan, and this bill could be an admittedly small, but a very important, first step.

I want to say that this bill recognises that possibly the most crucial first step towards supporting renewable energy and towards meeting these targets is to have an effective price on carbon. This is a point that has been driven home by the Wind Energy Association, which points out continually that an effective price on carbon is the best move that we can have for supporting renewable energy in New Zealand. The reason I say that my bill recognises that is that it has a 10-year restriction on this baseload fossil-fuelled thermal generation moratorium—a 10-year restriction—and that is in recognition of the fact that once we do have an effective price on carbon, this measure will no longer be needed. But until that effective price on carbon is there, the renewable energy sector is in a vulnerable position. The history of that is that we put that 10-year limit on when we first introduced the emissions trading scheme and when we recognised that it might take a number of years for the scheme to bed in, for all the sectors to come in, and for there to be a price on carbon that actually drives the behavioural change that all members of this House claim they support but very few put their votes behind. We are in exactly the same situation now, unfortunately, where the measures that were introduced under the emissions trading scheme, as well as the complementary measures, have all been wound back. We do not have any price on carbon. Currently, the price on carbon on the spot market is around 15c, so, again, this bill is very timely—very timely. It would put in place a moratorium that would take us through to a time when we do have an effective price on carbon and when this measure is no longer needed.

When it comes to the issue of the price on carbon, I want to read out a couple of quotes from when the National Government voted against this measure in 2008, when it repealed it. Then Minister of Energy and Resources Gerry Brownlee said: “Reducing carbon emissions in the electricity sector remains a goal, and renewable technology will be encouraged through the Emissions Trading Scheme.”—through the emissions trading scheme. Well, that is no longer the case. It is no long the case, at all. The second quote from Minister Brownlee, again in the first reading of the bill that repealed this measure in 2008, is: “National believes that investment decisions in the electricity sector should be made on the basis of sound economics, with environmental effects taken into account through a price on carbon,”. So the main reason given for not supporting this measure back when the National Government repealed it was that it was going to have an effective price on carbon. Well, we do not have one. We have a collapsed carbon price—15c. So what is the National Government’s response to that, given that this was the main reason it gave for opposing this moratorium back in 2008? I look forward to hearing that answer.

I want to address some of the concerns that are going to be raised about this bill. This bill does not threaten security of supply. Can I repeat that—this bill does not in any way threaten security of supply. The bill, in fact, recognises the importance of security of supply, and, as such, it provides exemptions for use of non-renewable energy during a power crisis. It allows for the running of plants that combine non-renewable and renewable sources. It allows for the running of non-renewable plants that recycle heat, and thermal plants that temporarily replace the whole or part of another thermal plant, so that security of supply is not threatened. We could not have done more to guarantee security of supply. I suspect that we are going to hear the same old excuses, but there is actually no basis to that threat that I am anticipating will come from National members.

Of course, this moratorium applies only to new baseload generation. It does not apply to peaking generation, which is what we need when we get those spikes at peak demand time. That is not affected at all by this piece of legislation. It is only new baseload generation that is affected.

If I can come to another reason that was given at the time as to why the National Government did not support the thermal generation moratorium—and I believe that this is actually a key reason, and back in 2008 I do not think that we were quite as cognisant of the National Government’s intentions in this area as we are now—that reason is that it would discourage oil and gas exploration. I want to quote again from the first reading with Gerry Brownlee where he said: “The fourth reason why the Government is repealing the ban is that it disincentivises oil and gas exploration in New Zealand. Already the ban, in the short time it has been in existence, is seeing some explorers and investors shy away from New Zealand.” Well, I do not know whether that is true, but I suspect that that is really at the guts of what we are talking about here. Look, I understand that this National Government likes fossil fuel exploration. It goes giddy for it. I get it. That is fine. It is the National Government. That is what it does—that is what it does. But my question to those members is why you would not do both. Why would you not support the renewable—

💬 Hon Chris Tremain: We are.

No, you are not, Mr Tremain. Oh my dear! Why would you not support the renewable—

💬 Hon Chris Tremain: We have got the highest amount of renewable—

Because it rained a lot, Mr Tremain. That is why we had a record year in 2012, because the weather Gods smiled on the National Government and it rained a lot in the hydro lakes. Dear Lord, is that the basis upon which the National Government is voting against this bill—because in 2012 it rained a lot? That is so scary in its logic that it beggars belief. Even the current Minister of Energy and Resources’ own officials have told him that on current policy settings we will not get to that 90 percent renewable target.

My message to the Government is that this bill provides investment certainty for the renewable energy sector, especially when we have a collapsed carbon price. There is nothing else driving that behaviour change. It provides security that a big oil or gas find, particularly gas, is not going to change the current economics of electricity baseload generation, which actually are very, very favourable for renewables at the moment. But a big gas find and a National-led Government that will not rule out that that gas will be generated into electricity, baseload electricity generation—and I would love to hear a National member rule that out—provide enormous uncertainty for this sector. This piece of legislation takes that uncertainty away until we get an effective carbon price, which is ultimately what is really going to drive the kind of progress and renewables that we want.

Again, I say to the National Government that this is not about stopping oil and gas exploration. It is not about turning off fossil fuels. It is about asking why you would not provide the same level of support and enthusiasm for the renewable energy sector, which is creating a huge number of high-skilled jobs, as you are for the oil and gas sector. The oil and gas sector does get subsidies. It gets tax rebates. It gets assistance with seismic surveying and the costs around that. All the renewable energy sector is asking for is a fair go. This bill is a step towards that fair go, and I urge all members of the House to support it.

This does take me back, this bill—thank you, Moana. Groundhog Day—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member will use the member’s full name or title.

Thank you. Ms Mackey, this takes me back to December 2008. The very first speech that I gave in Parliament was a speech on the repeal—

💬 Chris Hipkins: I’ve forgotten it already.

You have not forgotten it—I cannot call you Chris, can I?

The ASSISTANT SPEAKER (H V Ross Robertson): No.

So it is Groundhog Day. Here we are, trying to put into place a piece of proposed legislation that was repealed by this Government—in fact, it was the very first piece of legislation that we repealed—because we knew of the damage it was doing.

I do not understand why this legislation, the Electricity (Renewable Preference) Amendment Bill, is before us, because I know right now that in terms of renewable energy generation, there is something like 3,500 megawatts already consented. It is not as if you have to encourage the industry. What it sounds like to me is that you are creating a disincentive for thermal generation. You say “baseload”. I talked to my colleagues, and we are trying to think of who, at the moment, is creating thermal baseload generation. We know there is an increase in peaker generation happening. We know that just recently Nova Energy opened a plant in North Taranaki; I went and saw that opening. But I am just really struggling to find the relevancy of this proposed legislation.

Is it propping up a failing carbon market? Is that what it is designed to do? Is it trying to create a disincentive for thermal generation, so renewables get a fair go? We know there has been a huge development of renewable energy and there is a huge number of projects already consented. We also know that we have, in terms of the nations of the world, the third-highest proportion of renewable energy generation. We are No. 3 in the world. So I do not know what you are trying to do, because we are already doing a lot. We are already doing a lot that is active in this market.

In fact, just last week your colleague down there Gareth Hughes, on your side of the House, made a comment at a symposium at Victoria University that there is too much tinkering around this space. This is what is happening: you are tinkering again. You are talking about this creating—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! I am not tinkering with anything.

Sorry, yes, I am not referring to you, Mr Assistant Speaker. The member is talking about creating certainty out there for the renewable sector. This creates uncertainty for the energy sector. In fact, that is what the sector said about this piece of legislation when it first came in back in 2008.

💬 Moana Mackey: Name them.

Todd Energy, for a start. That is what it said when you first put this proposed moratorium into place with your emissions trading scheme back in 2008. In fact, what it said back then was that this sort of thinking and tinkering actually will increase the price of electricity. I know that you are very concerned about that. Go back and read the statements. Go back and read the newspaper articles—all of those things. If the member remembers my speech back in that particular point in time, you know that Contact Energy, in collusion with Genesis Energy, because of moratoriums like this, was going to import liquefied natural gas (LNG) and was going to set up an LNG plant in New Plymouth. All of that was going to bring in LNG to be used in the consumption of energy for Methanex and different companies, and also the generation of power. When you start putting in disincentives and when you start controlling by regulation that you—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

Mr Assistant Speaker, I understand what you are saying.

💬 Iain Lees-Galloway: He’s a new member; he’s still learning!

The ASSISTANT SPEAKER (H V Ross Robertson): Yes, and I would ask him to look at Speaker’s ruling 27/5(1). The member may continue. You have brought me into the debate far too often tonight.

Oh, I am sure you are enjoying the debate, Mr Assistant Speaker, but we will leave you out, if you like.

What I am saying is that the tinkering around policies, around whether it should be thermal or renewable, is actually an out-of-date argument. When the member thinks about what is happening in the United States with shale gas, and how that now has been utilised for thermal generation, it has reduced their carbon footprint in the States quite considerably because they have moved away from coal.

💬 Moana Mackey: Are you saying that shale gas is better than geothermal for greenhouse gas emissions?

What I am saying to the member is that we as a nation already have a very significant level of renewable geothermal and wind generation, and we are just unsure of what the member is trying to achieve with this legislation. What we have seen over the last number of years is that a huge number of renewable projects has been consented. As the market continues, those assets will be built, and as they are competitive, those assets will be put in place as the investors in those assets deem fit.

What this is all about is manipulating the regulations around the source of energy for electricity generation, which I think is tinkering. It is Groundhog Day. It is not achieving anything that I think the member hopes to achieve. In a sense it is trying to—I think in her own words—wait until the carbon market becomes strong. So it is to support that. It is to support the continual building of renewables. They are already there, going. They are already there, waiting. I do not know what you are trying to achieve. I think that this piece of legislation is unnecessary in this House.

The last speaker, Jonathan Young, said that the Electricity (Renewable Preference) Amendment Bill did not know what it was trying to achieve, would not make any difference, but would somehow inhibit the development of the electricity industry. There are some inconsistencies there. The world does face a challenge from climate change. Climate change is caused by greenhouse gas emissions, and the increasing concentrations of greenhouse gas emissions in the atmosphere are probably the largest environmental threat that we all face in the world collectively. Emissions come from four main sources: electricity production, transport, industrial uses, and, in New Zealand, agriculture. They are all hard to fix. But the easiest of them to fix in New Zealand is your emissions from electricity. If New Zealand, a country that is as rich in renewable resources as we are, cannot fix that part of the problem, there is very little hope that the world will. If there is very little hope that the world will, that is a pretty depressing outcome that we leave for our children and grandchildren. It does not have to be that way. Instead of having this sort of depressing vision as to whether we can get there, we on this side of the fence think we should take meaningful steps to do it.

I was part of the Government that put this measure in the original legislation at the time carbon pricing was introduced. Why did we do that? Because we knew that it was very affordable for New Zealand to go down a renewables path rather than a fossil fuel electricity generation path, but we also were suspicious that a price on carbon did not give you the certainty that you will get there. That is why we put this in the original legislation, and we were right, because what has happened to the price of carbon since is that it has gone down below any expectation—in part because of poor policy choices by this Government, but also in part because of what has happened overseas. The price on carbon is not an inhibition on the development of fossil fuel alternatives. It is not nearly as significant an inhibition as it was, or as it may well be again in the future, but is not now. What this bill does is try to get New Zealand to meet that target of 90 percent renewables by 2025.

It is true that New Zealand has made great progress. The trend was downwards. The trend was downwards for some decades, and in the worst quarter 57 percent of our generation came from renewables. Since then the trend has gone the other way. That was caused by a myriad of measures taken by the last Labour Government. Those included carbon pricing, a national policy statement under the Resource Management Act to make renewables easier to consent, transmission upgrades, a Government policy statement under the New Zealand Energy Strategy, and lots of other initiatives—all of which combined to get the industry going in the right way, including the signal that was originally in the legislation in respect of future thermal generation.

New Zealand can get to 90 percent renewables by 2025, but there is a significant risk that if you have got gas—sorry, not you, Mr Assistant Speaker. But if an industry participant—

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you.

That was accidental, Mr Assistant Speaker, but it was quite good. If an industry participant has gas resources and it has no other use for them or it is not connected to the international gas market, it may be tempted to price its gas at just below the cost of renewables, not in a way that would meaningfully reduce power prices but in a way that would close out future renewables developments. So that is still a risk in New Zealand—that future thermal electricity will be priced just below the cost of renewables, foreclosing those renewable developments and bringing forward more gas-fired generation instead. That is what Moana Mackey’s bill addresses, and it should be supported by this House.

I suspect it will not be supported by National, because, of course, we had Gerry Brownlee come in and, in an act of petulance, really, in my opinion, reverse biofuels, causing the bankruptcy of people who had made no mistake, and replacing it with a failed voucher scheme, which never worked. This was another of his measures, because he really does not believe that there is a serious problem of climate change. Sadly, I think this bill will be treated in the same way by the National Party, but that is wrong.

Talofa lava and good evening. Look, it is an honour for me to speak on this, the Electricity (Renewable Preference) Amendment Bill. This bill demonstrates what is wrong with the Labour Party today—it demonstrates what is wrong with the Labour Party today. I look across at Moana Mackey, a person I have a lot of respect for as an intelligent, articulate young woman inside the Labour Party. Grant Robertson decides to give poor Moana Mackey this bill to come into this House with and act like this is going to make a difference to New Zealanders. I am sorry, but this bill, which tries to re-enact something that the National Government has already repealed, is a waste of our time in this Parliament. It is a waste of our time deliberating on this bill.

I say to Moana Mackey that I know that she is on the backbenches doing the numbers for Mr Cunliffe. I know that Moana Mackey is doing a good job at undermining the current leadership of the Labour Party, but, Moana, have a bit of pride and do not bring these types of ridiculous bills to this House—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

—for us to debate. What National stands for—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! [Interruption] Order! The member must use another member’s full name. Do not do that.

What this bill represents is a back-to-the-past approach to energy supply. First and foremost, Labour wants a single electricity buyer—a single electricity buyer. It is going back to the days when there were blackouts. It is going back to the Labour regime between 1999 and 2008, where electricity prices increased by 72 percent over 9 years. It accuses the National Government of sitting on its hands, although 78 percent of energy is renewable, which is higher than any level—any level—that the Labour Party achieved in its 9 years. In the last 4½ years of the National Government, we have seen price increases of around 16 percent—16 percent—and yet in 9 years, twice as long, the prices went up 72 percent.

The key message here is please do not bring these types of foolish bills to this House. The ban on thermal energy was totally unnecessary. Labour knows, and Mr Bakshi will point out in his speech, that in terms of renewable energy, in terms of geothermal energy, the types of consents for Castle Hill, a wind farm, which will come online—

💬 Iain Lees-Galloway: Can you cover all of that in 1 minute?

Mr—sorry, I do not even know your name. What is your name, sir? He says: “What about it?”. Well, 78 percent renewable energy—[Interruption] I am sorry, but this Government is bringing prices down. We are bringing renewable energy sources online and—

💬 Moana Mackey: No, you’re not.

Yes, we are. Poor Moana! I really feel for Moana, who can come into this House and—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

Moana Mackey. Grant Robertson gives her a bill that is totally redundant and that will get voted down because it is a ridiculous piece of legislation. I have a lot of respect for you—I have a lot of respect for you—but this is ridiculous, I am sorry. The ban was enacted in 2008, but we have got to have trust in the emissions trading scheme that the Labour Government put in place and we have supported. That has led to lower electricity prices and security of supply. I am sorry, but we cannot vote for this bill, because it is Back to the Future stuff and it is totally unreliable.

Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to support this Electricity (Renewable Preference) Amendment Bill, unlike the illogical ramblings we heard just then. What is this bill about? This bill is about cheaper electricity, this bill is about greener electricity, and this bill is about jobs and exports, and here, once again, National is voting against jobs, against the vision for our country, and against exports. That is not surprising, but it is disappointing, because cleaner and cheaper electricity, jobs, and exports should be things this whole House can agree with.

This bill is about reducing carbon dioxide emission, for all of our kids’ futures. This bill is about a simple, easy, costless step New Zealand can make towards the target that everyone in this House agrees with. I cannot for the life of me believe that National members are voting against Moana Mackey’s bill. I know they have voted against it in the past, but this is a chance for them to say that they made a mistake. It is all right to make a mistake, if you look at the evidence, if you look at the statistics on the table. Moana Mackey’s bill brings back that thermal ban that the Greens support, obviously. Actually, we would like to go stronger than the Labour Party, but it is light years away from National’s energy vision, which is simply to drill it, mine it, frack it. That is the extent of its vision for the country.

Sure, members opposite will talk about supporting renewables. They talk about it; they just do not walk the walk. You know, they have got a renewables target. They should support renewable energy. But when we look at the renewables we have in our electricity generation mix at the moment, we are the envy of the world. We are exporting expertise at the moment. We have got cheap hydro, wind, and geothermal energy, which we are benefiting from at the moment, yet in New Zealand our emissions from electricity have increased by 40 percent since 1990. The Government sits on its hands, paying lip service to this 90 percent by 2025 target, yet if you look in the Government’s own data at the Ministry of Business, Innovation and Employment reference report on New Zealand’s energy outlook, we are on track for only 78 percent by 2025. We are failing in the Government’s own data.

The Government talks about energy a lot, but all it talks about are oil, gas, and fracking. We heard the Prime Minister say that at the recent opening of the gas peaker in Taranaki. The Government talks about acting on climate change. What we see from this Government is it walking out of Kyoto II, weakening to almost an irrelevancy the emissions trading scheme, and even laying doubts on the science. It is not taking climate change seriously.

This bill is doing what we should be doing. It is a first step. We are blessed with options. We have got more than 20 wind farms consented, including the Castle Hill one. We have got huge opportunity to save energy—demand side energy efficiency. But, of course, there is a risk that we are not going to get to that target. We are not on track to get to that target, yet 100 percent renewables is possible, it is desirable, and it is affordable. As we have heard, there is a risk of gas taking out the reaching of that target. We know that gas is expensive. With the way the Government decides to price the electricity market, the long-run margin on pricing electricity, what we are seeing is all New Zealanders paying for expensive gas. Because it is expensive, we are seeing it used more than it should be.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Thursday)