Electricity (Renewable Preference) Amendment Bill

Sat sri akaal, Mr Assistant Speaker, and thanks for the opportunity to participate in the first reading of the Electricity (Renewable Preference) Amendment Bill. The bill is in the name of Moana Mackey, and National will be opposing this bill. This bill is one that is taking us in the reverse direction. The bill is giving the wrong indication to the business community that if you have the intention to expand your business, then the Government is not prepared to guarantee you power supply. When I migrated to New Zealand I was very happy to see that there were no power cuts, but some years later after arriving I started hearing that it was possible we might have power cuts. I was very disappointed. Those days are not far away if we adopt this bill, which bans our thermal generation of electricity and will ensure that we will have power cuts in this country.

The bill creates a preference of renewable electricity generation, which we agree to, but we do not agree to the 10-year restriction on new baseload fossil-fuelled thermal generation. The ban would put the security of power supply at risk. The ban on thermal generation was initially enacted as part of the Labour Government’s emissions trading scheme in 2008 and subsequently repealed by the National Government in late 2008.

The National Government, as part of its growth agenda, has ensured the security of energy supply, encouraged competition, and boosted the level of renewable energy. We believe that it is the responsibility of the Government to provide infrastructure to the businesses so that they can grow their business and eventually help to grow the economy. Under National the proportion of energy generated from renewable resources has increased and is constantly above 70 percent—far higher than under Labour. We have remained on track to achieve the goal of 90 percent renewable generation by 2025. Labour had 9 years to make meaningful reforms to energy and to increase renewable energy. Instead, it made an arbitrary and hasty ban at the end of its term.

Gas and coal plants generate between 20 percent and 30 percent of our electricity. Without this, the lights would not stay on. Thermal generation has been even more important during the times of peak demand. During the several winters between 2000 and 2008, gas and coal plants were at times supplying 50 percent of New Zealand’s electricity needs because of low hydro lake levels. To suggest that New Zealand could do without thermal generation does not stand up to the facts. The ban on thermal energy was totally unnecessary and threatened the security of supply. It is vital that we keep the lights on, and I oppose this bill.

I call the honourable member Andrew Williams—nice haircut.

Thank you very much, Mr Assistant Speaker. It is a bit like your own one. I take a call on behalf of New Zealand First, and in this instance we have determined that we will support the Electricity (Renewable Preference) Amendment Bill through its first reading and hope that it does go to a select committee. We do so on the basis that we feel that on such an important subject New Zealanders should be given the opportunity to have input and to have a good, national debate about this particular subject.

Although we acknowledge the noble intent of this bill, we do still have serious reservations about its practicability. This bill would reinstate a 10-year ban on new coal or gas-fired baseload power generation. Such a ban existed briefly under the previous Labour Government. It has since been repealed by this House. New Zealand First reluctantly supported the original ban as part of an agreement we reached with the Labour Government in 2008 in respect of the emissions trading scheme. With the benefit of hindsight, New Zealand First acknowledges the problems that that ban created. First of all, it put in jeopardy the security of supply. On average, one-third of our nation’s electricity generation comes from thermal power. During the winter months thermal generation can be as high as 50 percent. If it were not for pre-existing baseload gas and coal-fired thermal power stations, such as those at Huntly and New Plymouth, we could be at crisis point.

Second of all, it had an adverse effect on oil and gas exploration. Unlike the Greens, New Zealand First is not anti-oil and is not anti-gas. We acknowledge the role that they have to play in a modern economy. Of course, there must be restrictions on where and how drilling can take place, and it must be done in a sustainable, environmentally friendly way. These regulations need to be strengthened, not weakened. The last thing we want is our own Gulf of Mexico situation. However, that being said, the oil and gas sector provides enormous opportunities for employment and regional development in all parts of New Zealand, potentially. In Taranaki alone the industry contributes $1.8 billion in GDP and 10,000 jobs. Possible new ventures in Northland and on the East Coast could provide similar rewards. The reinstitution of this ban could put in jeopardy any future discovery and development projects.

Finally, we do have some concerns that this bill, if it was to go through, could actually increase dependence on the use of back-up coal generation by banning new-generation gas capacity. Gas, although not 100 percent clean, is a lot cleaner than coal. Surely, it is better to use gas than to have no power at all, which is the dilemma we face when considering this bill. New Zealand First would rather choose the lesser of two evils than go back to the Stone Age, which is where this bill could take us if the overall situation is not addressed. In this respect, New Zealand First also has a policy whereby in a future Government we would be seeking to merge all the current State-owned enterprise power generators, such as Meridian Energy and Genesis, and move them into one single entity so that the security of supply and the security of future provision of energy sources would be under the one banner and controlled from one source, rather than it being fragmented as it is today.

We want to encourage, however, the greater use of cleaner, greener, more sustainable energy. New Zealand First certainly does support all endeavours to secure other alternative additional means of providing energy to New Zealand industry and homes. However, let us allow democracy to take its course. We feel that this is a good argument and that the bill is worthy of being considered by the public of New Zealand. We are in favour of it going to a select committee so that the people of New Zealand can have their say on this important subject. It is the right of every New Zealander to have access to reliable power, gas, and energy, and in that respect we support this going to a select committee for consideration.

A little bonus time on my feet tonight, this time to speak against a very short-sighted—in my view—bill, the Electricity (Renewable Preference) Amendment Bill, which re-enacts the ban on thermal energy generation. I fully understand that it re-enacts the ban for 10 years. But I think there are a few other things that need to be pointed out in the course of this discussion, and I just want to pick up on one of the points that Andrew Williams, the previous speaker, made. I see no reason for this bill to be forwarded to a select committee. It just takes up a whole lot more of this House’s time to decide something where, frankly, we will end up with the status quo, because common sense tells you that it needs to.

This type of bill, this type of action, along with the promotion of an advanced emissions trading scheme system, puts a significant amount of pressure on the average New Zealand energy consumer. I am certainly not in favour of that. I am also not in favour of either the previous speaker’s single generator or the proposal for a single buyer for electricity.

I want to explain briefly why. In rural New Zealand our biggest power charges by far are our lines charges. They have nothing to do with the electricity supply. If you want to go and live in a place like Taumarunui, National Park, Ōhākune, or any of those little parts of New Zealand that are most important to our tourism industry and to the future of this country, you will find that your lines charges are significantly higher than your electricity proportion of your bill. In fact, they do not get the lines charges in the electricity portion of the bill; they get them separately. So I guess that part of New Zealand clearly understands where the cost of electricity is. It is in the distribution cost, for those of us in rural New Zealand. That is the challenge for the electricity industry, in my view.

To ban thermal industry at a time when there is potential for modern, efficient, environmentally friendly methods of thermal generation becoming available to us—and it is quite possible that they will—I think would be irresponsible. It is a resource that, in my view, we should use if we can use it safely and sustainably as a country. Again, the previous speaker referred to some of the reasons for that. Clearly, some of us have longer memories than others and can clearly remember the time when electricity was not something you took for granted at your gate, because some days it did not turn up. In fact, in rural New Zealand we still find that on the odd occasion, but not because of a shortage of power supply.

My region is covered in windmills, and although I do not object to them, I can only see them. I do not have to live beside them or put up with the noise and the vibration of them. I also think that in the future we are going to see windmills dotting New Zealand’s landscape like derelict dairy factories in Taranaki. There will be one on every corner and they will be rusting. That is another reason that I am not particularly in favour of fiddling with the electricity generating process.

Not so long ago, in fact about half an hour ago, we were talking about a bill that is preserving our native and natural environment. I do not think that it is efficient for us to use more of our—and I know they are called sustainable resources and things that will last for ever, but in fact a lot of them do not, and I referred to the windmills earlier. I think we have a responsibility to future generations to look at alternatives and to use those resources that we have in abundance in New Zealand, provided we use them responsibly and use them in a manner that provides for a sustainable future for this country. I do not think it is our business to run Parliament as a type of a game of monopoly. I think bills like this tend to do that, to some extent.

This bill achieves little, as there will be no new thermal generation or electricity plants built in New Zealand in the next few years—probably for 10 years—because we have sufficient electricity in this country to sustain our future. I would not like to be the person trying to obtain a consent to build one of those plants under the current environment anyway. I cannot support this bill and that is me.

It gives me great pleasure to rise to speak to the Electricity (Renewable Preference) Amendment Bill, sponsored by my colleague Moana Mackey. Much in all as I admire the member who has just resumed his seat, Ian McKelvie, I have not heard such an antiquated speech in a long time. We should be preparing for the future. [Interruption] We should be preparing for the future. We should be looking ahead.

The Government currently has two targets. The first is that 90 percent of electricity generation will be from renewable sources by 2025. That was a Labour Government target. It was set when Labour was in Government, and it is very pleased that the National Government has seen fit to retain that target. The second thing the Government has got as a target is to reduce greenhouse gas emissions by 50 percent by 2050. But it has no plan to achieve either of these targets. What we have are two targets out there in the future with no stepped plan to achieve them. We agree with 90 percent generation from renewable sources. Goodness knows we have got wind, marine, geothermal, hydro, and, hopefully, more solar power coming on stream in the future.

The opposition to this bill is based on antiquated views of how this country might sustain its energy supply in the future. I would like to draw what the bill does to the attention particularly of the member Kanwaljit Singh Bakshi, who seemed to have ignored the fact that the bill quite explicitly says that this does not include “an existing plant” or “an electricity generation plant that is operating in accordance with a contract for reserve energy entered into by, or on behalf of, the Commission”. So let us not hear any more of this nonsense about the lights going out. Let us not hear any more of this nonsense. It does not affect existing plants.

What the bill does do, in fact, is put back in place the Electricity (Renewable Preference) Amendment Act, which the Labour Government enacted over 5 years ago. That established a restriction on new baseload fossil-fuelled thermal electricity generation. Can I be any clearer than that? It established a restriction for 10 years on the building of new baseload fossil-fuelled thermal electricity generation plants. It was a start to try to wean ourselves off our fossil fuel dependence and begin to apply the kind of pressure that we need if we are ever going to reduce our greenhouse gas emissions and if we are ever going to transition to a society that is not dependent on fossil fuels.

I am just astonished that members opposite cannot bring themselves to support this bill. They will have to, at some stage, be dragged, kicking and screaming, into the 21st century, or into the next decade, anyway, of the 21st century. The future is not in electricity generation using fossil fuels. The future is in renewable energy. Fortunately, New Zealand has an abundance of all those things that other countries cry out for in order to complement or overtake their use of fossil fuels for electricity generation and allow them to move their countries and their economies on beyond using fossil fuels for electricity generation.

This is a ban for 10 years. It is something that expires at the end of that 10 years, because at that point we will be able to assess the extent to which we have been able to move towards sustainable renewable electricity generation. Thank you.

I rise to oppose the Electricity (Renewable Preference) Amendment Bill. This member’s bill in the name of Labour MP Moana Mackey will create a preference for renewable electricity generation by a 10-year restriction on new baseload fossil-fuelled thermal electricity generation. The ban on thermal generation was initially enacted as part of the Labour Government’s emissions trading scheme in 2008 and subsequently repealed by the National Government in late 2008. This bill re-enacts that ban.

A ban on thermal generation is unnecessary. A ban would also put security of supply at risk. New Zealanders need to be assured that during the harsh winters that can grip many regions we have a backup when hydro lakes and wind generation are low. During several winters between 2000 and 2008 gas and coal plants were at times supplying over 50 percent of New Zealand’s electricity needs because of low hydro lake levels.

The bill defines “fossil fuel” in new section 62C, inserted by clause 5, as natural gas, coal, petroleum, any refined petroleum products, or any other obligation fuel. Gas and coal plants in New Zealand generate between 20 percent and 30 percent of our electricity, and they play a crucial role in keeping New Zealanders warm in winter and our lights on for households and businesses to function.

The portion of energy generated from renewable sources has risen under a National Government. It is consistently above 70 percent, which is far higher than it was under Labour. Just last month the Environment Court gave the go-ahead to Genesis Energy’s Castle Hill Wind Farm project, which is north of Masterton and east of Eketāhuna, to build 286 turbines, which will power around 370,000 homes. National remains committed to renewable energy, and we remain on track to reach the aspirational goal of 90 percent renewable generation by 2025.

Our reforms have controlled runaway increases in power prices. In fact, price increases have halved, yet we have still maintained investment in generation and transmission. New Zealanders are savvy and are increasingly taking advantage of greater competition and switching companies for a better deal, as shown by the popularity of the What’s My Number website. The Government has already undertaken major electricity reforms to increase competition and improve security of supply. Labour and the Greens have already done their best to scaremonger and deter investors with their plans to nationalise the energy sector. Their power plan will kill competition and raise prices. This bill, which seeks to ban thermal generation, would cause further economic mayhem. I will not be supporting the bill. Thank you.

On behalf of my colleague Moana Mackey, I now have the opportunity to speak for 5 minutes in reply to the other contributions that have been made in this debate on the Electricity (Renewable Preference) Amendment Bill.

What has become abundantly clear, listening to the members opposite speaking on the debate, is that none of them have actually read the bill. They have been clearly reliant on notes put together by someone in their research unit who also has not actually read the bill. As they talk about security of supply, and particularly talk about the importance of having access to thermal generation in the case of a dry year when supply might be at risk, they seem to have missed the fact that that is specifically allowed for in the bill. There is a provision in there that allows for non-renewable energy during a power crisis. So it is already covered. It allows for the running of plants that combine non-renewable and renewable sources. It allows for one thermal generating plant to replace another thermal generating plant where that is needed for upgrades and so on.

There are plenty of provisions in this bill that allow for security of supply. What the bill seeks to achieve is to ensure that future demand is met through renewable electricity. There is no good reason, in a country like New Zealand, why we should not be doing something like that. When we already get such a high percentage of our electricity from renewable energy anyway, we should be aspiring to do even better. We should be aspiring to have a fully renewable electricity sector over time. Of course no one is saying we are going to switch off the thermal generation plants, which is what some of the members over there have suggested—clearly, another example that they did not actually read the bill. There is no suggestion from anybody that that is what is going to happen. What we are saying is that as we try to meet future demand in the electricity system, we should do that from renewable sources, and that is something that I think is a perfectly legitimate thing to ask for.

This is the second time that we have debated this bill in this House, because the first time it was in my name and it was in the last term of Parliament. Gerry Brownlee came in and he spoke against it, and he said “We don’t need this bill because, although the Government does support the idea of meeting future demand through renewable electricity”—they do actually agree with that; you would not know that from listening to some of their speakers earlier tonight. But Gerry Brownlee, a couple of years ago, was saying that the Government did believe in meeting future demand through renewable electricity, and he said that the way it was going to achieve that was by putting a price on carbon. Well, how has that worked out? The price on carbon has collapsed. It is now providing no real incentive for renewable electricity.

Actually, now the Government has gone even further and said that it does not actually believe in renewable electricity at all. It is talking about how it supports this kind of 90 percent aspirational target, but it is just not going to do anything to ensure that we get there. But, actually, we need to get there. As a country, New Zealand should be leading by example when it comes to renewable electricity. We have no good reason not to, and we know that in the long-term interests of New Zealand, that is something that we should be doing. In the long term, renewable electricity is actually going to be significantly cheaper. In fact, much of our renewable electricity is already significantly cheaper than thermal generation, and that is one of the reasons why we have this very distorted market, which the Labour Party is committed to addressing through the NZ Power policy. At the moment, New Zealanders are paying a higher price for their electricity than they need to because the current market is failing. Yet the Government over there, once again, is not willing to do anything about that.

The Labour Party has made it very clear: we support renewable electricity. We are willing to do something about that. We support New Zealanders paying a fair price for their electricity. They are certainly paying well above a fair price at the moment, and we are willing to do something about that. In the meantime, the National Government’s response is “Just leave it to the market. The market will sort everything out.” So if future demand for electricity is met through further use of non-renewable resources, which costs more money to consumers in the long term, the National Government says that is perfectly OK. We on this side of the House say, no, that is not OK. We want renewable electricity. We want cheaper electricity. We want New Zealanders to be paying lower prices in their power bills each month. That is something that we are willing to do something about, while the current Government sits on its hands and simply says “It’s OK, the market will sort it all out.” The market is not sorting it all out. The market is failing in electricity, and the Government needs to intervene to do something about that.

The NZ Power policy will result in New Zealand consumers paying $200 to $300 per year less than what they are paying now. That is something we are very proud of. It also has the potential to create 5,000 more jobs. That is not something you hear the National Government talking about much these days. It does not seem to believe in creating new jobs any more. John Key is probably the only person in world history who hosted a job summit that resulted in higher unemployment, but that has certainly been the track record of this National Government.

We on this side of the House say we should get active. We should ensure that New Zealand’s electricity future is a renewable electricity future. We should ensure that we bring down the price of power for New Zealand consumers. We on this side of the House are willing to do something about that.

Order! Can I just remind members that there are to be no interjections during the taking of a vote, because it can actually be perceived as intimidation and may lead to a breach of privilege.