Economic Recovery

In association with

Govt must be judged by its climate actions

The Government’s given a communications masterclass on Covid-19 but no amount of spin will hide climate inaction, writes environment editor David Williams

Just how seriously this Government takes climate change will be evident today.

The Budget is arguably the most important in a generation. Already, Stuff’s Luke Malpass reported last weekend, $22 billion in stimulus had been “shovelled out the door” during the pandemic.

Figures that once seemed eye-watering, tens of billions of dollars, will be splashed around, placing a huge debt burden on future generations. But, without it, many hundreds of businesses won’t survive, and thousands more people will join the dole queue.

A greater threat looms.

As the Labour Party warned in the lead-up to the 2017 election: “If we do not urgently reduce our emissions of greenhouse gases, warming will disrupt the climates our agriculture and other industries depend upon, sea-level rise will affect our coastal cities, and ocean acidification will affect the marine food chain.”

To avoid this crisis, will the coalition Government announce a suite of climate-related projects? Pump billions of dollars into the large-scale insulation of homes, improving the energy efficiency of buildings, building new renewable energy power stations, or subsidies for electric cars?

There’s consensus about the need for big spending to hasten the economic recovery from Covid-19. The political barney will be about how much, which projects, and how far to go. What should be spent on straight recovery, in wage subsidies and interest free loans designed to keep businesses afloat and workers in jobs, and, alternatively, on infrastructure spending and job creation?

How much of the “Rebuilding Together” Budget addresses climate change is where rhetoric meets reality.

Soon after becoming Labour leader, Jacinda Ardern called climate change “my generation’s nuclear-free moment”. Labour’s 2017 election policy said the cost of doing nothing is far higher than the cost of mitigation.

To be fair, the Ardern-led Government hasn’t done nothing.

As promised, it put greenhouse gas emissions targets into law, and established a Climate Change Commission to keep the country on track, and provide advice. There’s the one billion trees (not all paid for by Government) project, and the goal of having 100 percent of our electricity generated by renewables, in a normal hydrological year, by 2035. (The last Labour government’s goal was 90 percent renewable by 2025.)

There are more difficult things it hasn’t done. Agriculture, one of the country’s biggest polluters, won’t enter the emissions trading scheme until 2025. The Government has flip-flopped on a target to make its fleet emissions-free.

At least it can use reliable, decades-old technologies to reduce emissions. Solar and wind power are far cheaper now than when the global financial crisis hit in the late 2000s.

New Zealand is also in good company. Of 197 parties to the United Nations convention on climate change, 189 have ratified the Paris Agreement, which aims to keep global temperature rise this century “well below” 2 degrees Celsius, above pre-industrial levels, while pursuing efforts to limit the increase to 1.5 degrees.

The Labour Party’s 2017 election policy noted many pollution-reducing projects “have other positive impacts and create jobs”.

Green-tinged infrastructural projects are big employers, with a large proportion of the total cost spent on labour. Workers need training. Solar panels on state houses reduce power bills for the vulnerable. Warmer, drier homes lead to healthier tenants or owners, as does a reduction in air pollution. Micro grids can improve resilience to natural disasters.

Within the Government coalition, the Green Party has, in the parlance, gone hard and early on climate change.

It has called for a $1 billion, three-year economic stimulus package that puts people, climate and nature first. Writing in The Guardian, Greens co-leader James Shaw, who’s also Climate Change Minister, says action on reducing emissions can’t be put off again, noting: “Global CO2 emissions need to at least halve in the next 10 years”. “If we spend the next few years restoring business as usual, we will have only a few years left to transform that business as usual into something else. It simply won’t be able to be done.”

The Government took health advice on Covid-19. Thursday’s Budget will reveal if it’s willing to act on expert advice on climate change – and its own rhetoric.

“Every tenth of a degree of warming matters. As it gets warmer, more extreme events happen.” – James Renwick

The effects of warming temperatures, more than 1 degree above pre-industrial levels, are already upon us, and expected to worsen.

Farmers in many regions are suffering through the worst drought in living memory, and the Government is spending $17 million – most of it to provide water – for the recovery. (To see the drought’s consequences go and open your fridge. Butter is more pale than usual.)

Extreme weather in February caused huge rockfalls and slips across Southland and Otago, closing the Milford Road, and heavy flooding that sparked millions of dollars in insurance claims. These more intense, damaging storms will become more frequent as temperatures increase. 

This country’s glaciers – already in a startling retreat because of increasing warmth – were turned pink last summer by the Australian bushfires, which became an international symbol for climate change and a call to action, until the pandemic emerged.

Last year was this country’s fourth hottest on record, at 0.76 of a degree above the 1981-2010 annual average. The hottest was 2016. NIWA confirms it has been 39 consecutive months – back to January 2017 – since a nationwide monthly temperature was below-average.

The world’s top climate scientists warned in 2018 rapid and far-reaching cuts in emissions were needed to keep warming below the magic figure of 1.5 degrees Celsius. Beyond that, there’s a much greater risk of more intense storms and rising seas, but also forest fires, food scarcity, and water stress. The scientists’ report, for the Intergovernmental Panel on Climate Change, estimates keeping warming to 1.5 degrees, as opposed to 2 degrees, would save hundreds of millions of people from the risk of disruption and displacement.

“Like that report said, every tenth of a degree of warming matters,” says James Renwick, a climate scientist at Victoria University of Wellington. “As it gets warmer, more extreme events happen.”

The IPCC says to be safe there needs to be a 45 percent drop in carbon pollution, on 2010 levels, by 2030 – just 10 years – and “net zero” by 2050.

Under the Paris Agreement climate deal, New Zealand has declared it will reduce net emission to zero by 2050 and “biogenic” methane emissions to 24-27 percent below 2017 levels by 2050. 

We can plant trees to suck up some carbon dioxide, but reaching those targets will rely on cutting emissions, especially in our two biggest pollutant industries. The country’s greenhouse gas inventory for 2018, released last month, showed agriculture and energy (including transport), accounted for 48 and 41 percent of emissions, respectively.

Renwick says there are plenty of ways to reduce emissions.

An IPCC report, released last year, said switching to a plant-based diet would help. By cutting demand for meat and dairy products, that would reduce methane gas produced by ruminant animals and deforestation for paddocks.

“The agricultural industry is fairly adaptive and I’m sure it could steer itself in a different direction,” Renwick says. “It’s not a popular message but I think it’s an important one that we could reduce our reliance on dairy farming in New Zealand and still make money, and that would be great for our emissions and for the climate as well, as well as for water quality and a whole lot of other environmental problems.”

Methane, however, isn’t the worst of the unseen enemies.

Between 1990, the base year used in the Kyoto Protocol climate agreement, and 2018, 53 percent of the increase in this country’s gross emissions – 8167 kilotonnes of carbon dioxiode equivalent – came from the energy sector. Primarily that was road transport.

The biggest bogeyman, then, is people driving their petrol cars, pulling boats with their diesel double-cab utes, and trucking goods from one place to another.

Renwick: “If you turn off the methane tap the concentration in the atmosphere starts dropping pretty much straight away. If you turn off the carbon dioxide tap, then we’re looking at a century before there’s really any meaningful reduction and many centuries before it drops back to where it was before.

“It’s carbon dioxide that matters the most.”

A switch to, say, electric vehicles isn’t enough, however. Yes, roughly half of annual energy emissions – about 15,000 kt CO2e – come from road transport, but about 10 percent, or 3300 kt CO2e, comes from public electricity.

Without a switch to 100 percent renewable electricity, too, we might be in the perverse position of burning coal or gas to power “green” transport.

“New Zealand has so little solar it’s ridiculous.” – Russel Norman

The air seems charged with advice for the Government, right now.

Last month, Climate Change Commission chair Rod Carr wrote to Minister Shaw asking the Government to look at the Covid-19 recovery through a “climate change lens”. “Smart investment decisions in low-emissions practices, technologies and infrastructure can create jobs and will ensure people are better off both now and in the future.”

Waikato University’s Iain White has called for stimulus to be channelled into something he calls “economic localism”.

And last week, a paper in the Oxford Review of Economic Policy, warned that unless international leaders kept emissions in mind, the world risks leaping “from the Covid frying pan into the climate fire”.

The paper, whose authors include Nicholas Stern, a former chief economist of the World Bank, and Nobel Laureate Joseph Stiglitz, said decisive government intervention was stabilising Covid-19 infection rates and saved lives. “Decisive state interventions are also required to stabilise the climate, by tipping energy and industrial systems towards newer, cleaner, and ultimately cheaper modes of production that become impossible to outcompete.”

Where could this country get the biggest bang for every clean-tech buck?

Greenpeace New Zealand points to a 2018 analysis by Transpower, the national electricity grid operator, which suggests solar panels be installed on some 1.5 million houses, paired with a huge rise in residential and commercial batteries.

“New Zealand has so little solar it’s ridiculous,” former Green Party co-leader Russel Norman, now Greenpeace’s executive director for this country, says. The Sustainable Energy Association of New Zealand says less than 2 percent of the country’s 2.2 million buildings have solar connected to the grid. Including off-grid systems, that’s roughly 54,000 installations.

Embracing solar has spinoffs, Norman says, like resilience from the electricity grid, and lower power bills.

“Obviously we’re set up quite well in terms of renewable energy generation in New Zealand but the missing piece of the puzzle is solar.”

Last year, Northland’s Kaitaia College installed what was, at the time, the largest solar system in a school. During the day it uses all or the majority of the system’s power. But after 3pm, the excess power is bought by an organisation that sells it to lower-socioeconomic households. (Northlanders pay, on average, twice as much for electricity compared to Auckland.)

There’s a residential subdivision on the outskirts of Cambridge, in Waikato, that requires every house to have solar panels. The excess power is pooled and sold to electricity companies.

Shared power, used in the neighbourhoods of many countries, especially in Europe, is called a micro-grid.

“For some particular reason, Kiwis try to reinvent the wheel,” says Brendan Winitana, who chairs the Sustainable Energy Association of New Zealand (SEANZ). “This wheel’s already been invented.”

He adds: “It’s not just about putting solar on a roof, a micro-grid development is about providing a whole bunch of other stimulus of which employment is one.”

The Government could have a huge influence just on state-owned roofs. Kāinga Ora manages 63,500 state houses. Imagine if, say, it installed solar panels on the 6000-odd houses in Christchurch, or 4500 in Māngere-Ōtāhuhu.

Yariv Edery, an Auckland-based renewable energy consultant, says small storage devices could sit in each state home. “Those back-up batteries … will be controlled through a mainframe or central control point that will be able to look at the charge of all these batteries and help that power utility to shave peaks in power demand.”

That’s not to mention other public sector roofs – schools, prisons, the Department of Conservation – as well as local and regional councils. What if, like France or some parts of the United States, solar is mandatory on new buildings?

Andy Booth, Solar City’s chief executive, says his firm has researched how much solar the country would need to get to 100 percent renewable electricity generation.

“You’d only need to put panels on an area roughly the size of Rangitoto Island,” he says. The island is about 2311 hectares, or about half the size of Canterbury’s Lake Coleridge.

“We estimated that you get solar onto about half a million homes and a group of industrial buildings and you’d get the country to 100 percent renewable by 2028. Which is well ahead of the Government’s current target.”

A sign of the improving economics of solar is listed company Genesis Energy, partly Crown-owned, announcing in February it’s agreed terms for a 300-megawatt solar farm in Waikato. Depending on sunshine, that might generate enough power for up to 150,000 homes.

Mercury operates nine hydro dams on the Waikato River, including this one at Lake Karapiro. Photo: Flickr

In some ways, it’s bizarre New Zealand even has to discuss an increase in renewable electricity generation, considering the head-start we had. But maybe that’s part of the problem.

In 1974, 76 percent of the country’s electricity generation came from hydro alone. Adding geothermal (tapping into underground reservoirs of steam and hot water), 83 percent was from renewables.

Fast-forward to 2018, and our renewables portion is 82 percent, with hydro at 58 percent of the total.

In June 1996, when the country’s first big windfarm opened in the Wairarapa, there were high hopes for wind. A dozen areas around the country were considered suitable for windfarms. If fully developed, it was said they were capable of producing a whopping 12.6 gigawatt hours of electricity a year – more than a third of the country’s net electricity generation, at the time.

The goal of 10 percent of the country’s electricity being generated by grid-connected windfarms seemed within a turbine rotation’s reach. In reality it has fallen short – wind’s contribution is a touch over 5 percent. Australia’s proportion is higher, at 6 percent.

Guy Waipara, general manager of generation and resource at Meridian Energy, says during an electricity generation building boom in the mid-2000s, before the global financial crisis, the listed power company built five windfarms. At the same time, other companies were building geothermal plants.

“We were all investing, pre-GFC, to meet demand which on average had grown every year roughly 2 percent. And then post-GFC we had a huge flattening of that demand growth curve.”

(Meridian has 100 percent renewable power generation, including five New Zealand windfarms, six of eight power stations in the South Island’s Waitaki hydro scheme, and the country’s largest hydro station, Manapōuri, for its biggest customer, Tiwai Point’s aluminium smelter.)

Electricity demand has remained flat for almost the last 10 years, Waipara says. But over the last year or so he’s seen evidence of “green shoots of demand”. It comes at a good time.

Advances in wind technology mean today’s much-bigger turbines can offer double the production and output of those from, say, 10 years ago. Waipara: “You can now build high-quality, new renewables cheaper than you can run a coal-fired power station.”

(A criticism of wind, and solar for that matter, is it’s intermittent. The counter-argument is that the more solar and wind installed, the more water you can keep in your hydro lakes.)

It has been six years since Meridian’s last project, a 26-turbine, 60-megawatt windfarm, Mill Creek, in the Ohariu Valley, near Wellington, started operating. Now the company’s running the numbers at its proposed Harapaki project in Hawke’s Bay.

Bigger than West Wind, at 160-megawatts it’ll generate enough electricity for 70,000-80,000 homes, and cost between $350 million and $400 million, Waipara says.

The existing consents have been modified so the larger turbines can be used. Quotes are in for the core components, and civil work quotes have been received. It’s a big decision – made more difficult by Covid-19.

“There’s work to do to test whether or not what we’ve got is still relevant in the current world we live in,” Waipara says.

However, Covid-19 isn’t the only barrier to greater investment in renewable energy.

Structural headaches

Much of the country’s electricity system relies on large-scale power plants hooked up to the national grid, with transmission charges on top.

The biggest power retailers, Contact, TrustPower, Genesis, Mercury and Meridian, which between them have a 85 percent market share, are listed on the stock exchange, although the last three are partly Government-owned. Those five companies also generate about 90 percent of the country’s electricity.

Those companies would take a close interest in any shakeup of the industry, especially direct investment of taxpayers’ money or incentives for the uptake of distributed systems, like solar.

Norman, of Greenpeace, says: “The big energy companies, unless they get into the solar rooftop business, this is essentially a competitor to them, because they’re generator-retailers.

“Basically there’s no way any of them are going to support large-scale, rooftop solar.”

Winitana, of industry group SEANZ, says lines companies’ business model is a pipe – collecting money from electricity flow – rather than allowing their networks to be used as a platform, in which the excess energy from micro-grids can be sold.

The Government, he says, thinks the market should find its own way – in other words, politicians have so far refused to intervene. “You need the will and the desire at a policy level to make the changes quickly.”

However, Waipara, of Meridian Energy, says New Zealand’s dearth of solar generation is a fact of economics.

It’s more expensive to build small-scale generation, he says. Plus, New Zealand doesn’t get as much sun as Australia – a slight exaggeration if you compare, say, Nelson’s 2470 hours a year to Melbourne’s roughly 2100 hours – and this country’s peak demand is in winter, not summer.

“Given you’ve got a bulk transmission system already in place and load centres are all supplied to the network, the bigger you build the cheaper it is, and then the cheaper it is for consumers at the end.”

Waipara’s bullish on electric cars, as long as everyone doesn’t try to charge them at once. He reckons a million electric cars might increase electricity use by 5 percent, which can be absorbed within current capacity. “It’s not a game-changer.” (Last month, all plug-in hybrids and electric vehicles across the country reached 20,155.)

Minister’s already sold

Listen to Energy Minister Megan Woods and you’d think the battle to get backing for emissions-reducing projects was already won.

The Government put out a discussion paper last December on accelerating the country’s renewable energy and energy efficiency. Woods says the Covid-19 crisis hasn’t changed her thinking.

“One of the advantages we have going into our recovery phase, post-Covid, is that we have a well-worked-through plan about how it is that we work towards 100 percent renewables in New Zealand,” she tells Newsroom.

Renewables projects can be “jobs-rich”, she says, with International Energy Agency data suggesting that 60 cents in every dollar spent on energy efficiency ends up in labour costs.

“Investment flows through to people’s pockets,” she says. “As well as the benefits around decarbonisation, you also get with energy efficiency you also get lower energy bills. But we also know it will be a job stimulator. These are all very attractive propositions for us as we go into our recovery phase.”

The Government is already acting, she says.

In January, it announced $10 million for projects to replace coal boilers at eight schools, Ashburton Hospital, and an energy efficiency upgrade Hillmorton Hospital’s mental health unit buildings. It was part of a $200 million fund for a “clean powered public service”.

Woods mentions the Warmer Kiwi Homes programme, for insulation and heating installation, launched, under this Government, in 2018. What she doesn’t mention is, the same day as the “clean power” announcement, $5.3 billion of its $12 billion infrastructure programme was pumped into roads.

Is the Government preparing for any big Budget announcements from its December discussion paper?

Woods: “We’re working through all those plans at the moment, in terms of what a recovery looks like, so I’m not in a position to say whether or not there’ll be a big announcement.”

What about a funding boost for the Energy Efficiency and Conservation Authority, which runs the Warmer Kiwi Homes programme? “The contents of the Budget will be revealed in good time,” Woods says.

The Government is a coalition of course – one that, on several occasions, has been shown to have a policy handbrake.

Renwick, the climate scientist, says all coalition partners have to agree on emissions-reducing proposals.

“I don’t doubt that the Labour Party see it that way, and I don’t doubt that the Green Party see climate change as the biggest issue we face. But getting legislation over the line is hard work, you’ve got to get everyone to agree.”

The only entity left out of “everyone” is New Zealand First.

Jenny Marcroft, the party’s environment spokeswoman, agrees clean tech projects, like wind and solar power, could be part of a Covid-19 recovery package. Asked if New Zealand First supports the Government target of having 100 percent renewable electricity by 2035, her answer doesn’t inspire confidence: “We haven’t made a statement against that, put it that way.”

Jonathan Young, the National Party’s energy spokesman, says the country’s supply must be affordable and reliable – for industrial businesses.

“The Interim Climate Change Commission reported pursuing 100 percent renewable electricity generation will drive up the cost of the wholesale price of electricity for industrial consumers by up to 40 percent. In many cases, this will make it completely uneconomic for them to recover from the Covid-19 shock.”

Building infrastructure in an economic recovery period is an obvious opportunity, he says. “But the key is identifying projects that make economic sense and funding those projects in an equitable manner.”

Young says the incentive to build new renewable generation won’t be as strong at a time when electricity demand is dropping and likely to remain flat for some time. He suggests the Government strengthen the national grid and adds connections to it, “in such a manner that it does not impose significant cost barriers for companies who want to decarbonise”.

Budget test

This country seems ripe for a power-generating revolution.

John Gilliland, managing director of geothermal consultancy JRG Energy, reckons hydrogen technology is advancing at an exponential rate. (The Government has announced $20 million from the Provincial Growth Fund will go towards a Taranaki “green hydrogen” facility.)

He thinks New Zealand has a natural advantage in this nascent industry, given its high ratio of renewable electricity generation. If hydrogen is the future of energy exports, Gilliland speculates it could put this country on a road to energy independence.

That would be great news, considering the country spent more than $7 billion in the last year on imported petroleum products.

One danger of a power revolution is that large-scale power stations might attract environmental protests because of their large footprints. But that need not always be the case.

Gilliland says he used to get frustrated when he lived in Taupō, looking at all the hot springs. If their energy was captured properly, you’d push a button and have hot water, he says.

“That water should have been used for many other things, like heating buildings, for example. Instead you have to turn your heater on and burn wood. As much as I love a good fire, it’s not the best for the environment nor for the ecosystem.”

Combine more effective geothermal with a greater take-up of solar, and the energy provided by power companies to homes in some regions could be minimal, Gilliland says.

There’s no financial incentive for the big power companies to change, so a shift to clean technology might rely on Government intervention. It has several incentives, including backing labour-heavy projects in the coming economic recovery, and helping to achieve its emissions-reducing goals. Politically, that list includes giving credence to the Prime Minister’s rhetoric and the Labour Party’s pre-election policies.

“It’s all just sitting there for the Government really,” Greenpeace’s Norman says. “This is a great opportunity for New Zealand.”

In January, the Government was accused of failing a test of its commitment to climate policies, by backing roads over the climate in its $12 billion infrastructure package. It set aside just $7.2 million to replace nine out of about 200 boilers in schools and hospitals across the country.

Today’s Budget is another test of the Government’s priorities. The scientific and expert advice is clear, as is the government’s targets set in its “zero carbon” legislation. The signals from a warming climate are loud to the point of being deafening.

Labour’s pre-election policy promised “real action” on climate change.

“It is not good enough to say we are too small to matter,” the policy said. “Kiwis are not shirkers.”

* This story has been updated with comments from National’s Jonathan Young, mistakenly left off by the author.

Help us create a sustainable future for independent local journalism

As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.

As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

With thanks to our partners