sign uplog in
Want to go ad-free? Find out how, here.

Brian Fallow takes a look at the energy policies of the Labour, National, Green and ACT parties against the backdrop of uncertainty over the future of the aluminium smelter at Tiwai Point and the oil refinery at Marsden Point

Brian Fallow takes a look at the energy policies of the Labour, National, Green and ACT parties against the backdrop of uncertainty over the future of the aluminium smelter at Tiwai Point and the oil refinery at Marsden Point

By Brian Fallow

The energy policies that parties are peddling in this election are more than usually important given the extended period of upheaval and uncertainty the energy sector faces.

There is the overarching issue of decarbonising the economy, where the disagreements are about how, and how quickly, to do that.

And there are the question marks hanging over the future of the smelter at Tiwai Point and the refinery at Marsden Point. Uncertainty also swirls around other conspicuous smokestacks, at the Glenbrook steel mill and the Methanex plants in Taranaki. All are important not only for local employment but also the national trade balance.

Labour has adopted a target of 100% renewable electricity generation by 2030 (five years earlier that its previous target), up from 83% now.

The target would be reviewed in light of the 2025 carbon budget required by the Zero Carbon Act passed last year. There is a good chance, however, that the Climate Commission will counsel against trying to eliminate the last few percentage points of fossil-fuelled generation, on cost-benefit grounds.

But the closure of the aluminium smelter, which consumes about an eighth of the country’s electricity, would narrow the gap.

Even so it is an ambitious goal when combined with the policy of accelerating electrification of transport and industrial heat. Transpower has estimated that demand for electricity will grow by more than 50% by mid-century.

Overall, energy use is responsible for 40.5% of New Zealand’s emissions of greenhouse gases (as of 2018), of which nearly half are from transport, the fastest growing source of emissions.

Per capita transport emissions are high by international standards reflecting high rates of car ownership and the age, and associated low fuel efficiency, of the fleet.

Labour does not seem willing, however, to put much taxpayer money where its mouth is on electrification of transport. It would progressively increase funding of the Energy Efficiency and Conservation Authority's (EECA’s) low emission vehicles contestable fund to $25 million, to support the purchase of EVs and instal more chargers for them. But half of that would come from sector levies.

And in a bid to gradually reduce emissions from vehicles with internal combustion engines it would phase in a fuel efficiency standard for new and used light vehicles entering the country. It would not affect the resale of existing vehicles but the Ministry of Transport estimates the clean car standard would reduce the average emissions of vehicles entering the fleet by 40% by 2025.

Labour is also attracted to the potential for “green” hydrogen -- using renewable electricity to split water and provide hydrogen for fuel cells in heavy vehicles where the weight of batteries would be prohibitive. This is sometimes cited as a potential alternative use for Manapouri’s output when the smelter closes.

Whether it is through lithium batteries or hydrogen fuel cells, using the energy freed up by the smelter’s closure to propel vehicles is attractive since the loss of a billion-dollar exporter in Southland may well coincide with a decision to close the oil refinery in Northland leaving New Zealand supplied entirely with imported refined product.

Both of those things would widen the current account deficit, which has to be funded by either running up more debt to, or selling more assets to, the rest of the world, with ongoing economic costs.  

Labour and National both believe/hope a deal can be struck with the smelter’s majority owner Rio Tinto on electricity transmission costs that would extend the life of the plant by another three to five years.

If Tiwai were to close as currently scheduled next August, Transpower would immediately lose the tens of millions of dollars a year it charges the smelter for the use of lines and pylons erected more than 50 years ago, even as it begins the long and expensive upgrade to the national grid needed to allow Manapouri’s output to flow north.

Having the taxpayer pay some or all of the smelter’s transmission bill could be politically presented as a subsidy not to a multinational mining conglomerate but to every other power consumer. The Electricity Authority reckons transmission charges account for just over 10% of the average consumer’s power bill.

Tiwai’s closure is expected to accelerate the closure of older thermal generating capacity, like the remaining coal-fired units at Huntly and the Taranaki combined cycle gas plant at Stratford. The risk is that it also crowds out new renewables.

Having a higher reliance on renewable generation intensifies concern about dry-year risk, when less snow and rain than normal falls in the catchment of the hydro dams.

So Labour is keen on the idea of a pumped hydro storage scheme at Lake Onslow above the Clutha, as a kind of battery capable of storing about a fifth of a normal year’s national hydro generation. It sees that as essential to its 100% renewable electricity target.

But it is subject to a viable business case, which given an indicative cost of $4 billion and the opposition of power companies, is a significant hurdle.

National, for its part, says a “political” target for renewable power risks making electricity less affordable. It prefers a “fuel neutral approach to an energy transition.”

Its idea of neutrality is one friendly to natural gas, which it considers a strategic resource essential to security of electricity supply and for high temperature industrial processes.

It would repeal the ban on oil and gas exploration, it says, and rely on the technology-and sector-neutral mechanism of the emissions trading scheme to bring energy emissions down.

Whether a National-led Government would in fact be willing to countenance the sort of carbon prices needed to deliver the emissions reductions it has signed up to with the Zero Carbon Act on their own, without the assistance of more prescriptive complementary measures, is debatable however.

“National will continue to support the development of new opportunities such as hydrogen, offshore wind and biofuels”, it declares but leaves it at that, offering no clues as to how.

It is more forthcoming on electric vehicles. The conventional wisdom is that EVs are most likely to make their way into the suburban garages of the nation when people buy ex-fleet vehicles second hand. National would exempt EVs from fringe benefit tax until 2025 to encourage corporates to invest in them and would target a government fleet that is one-third EVs by 2023.

It would also exempt EVs from road user charges until at least 2023 and allow them to use bus lanes.

It reckons these measures would cost $93 million over four years.

The Greens support the target of 100% renewable electricity by 2030.

They want to see support for solar power, which at present only provides about 0.3% of the country’s electricity. They propose a variety of programmes to that end, to be financed from the Covid-19 response and recovery fund.

They make the point that more widespread small-scale generation would also require a smart grid enabling two-way traffic in electricity.

The Greens want to see industrial use of coal ended by 2030 and of gas by 2035 and would triple existing government support for businesses replacing those fuels with clean alternatives.

They would ban new onshore fossil fuel extraction.

At the other end of the spectrum ACT would, like National, repeal the ban on new offshore oil and gas exploration permits.

Broadly speaking ACT is as keen on mining as the Greens are on public transport.

It says natural gas can deliver dry-year electricity security at a fraction of the cost of pumped hydro, and would support the transition from coal as a source of industrial heat.

ACT was the only parliamentary party to opposes the Zero Carbon Act, which it would replace with a “no nonsense” climate change plan that would tie New Zealand’s carbon prices to those paid by our top five trading partners.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

57 Comments

Act is the most sensible and pragmatic regarding climate change policies.

"Green" Hydrogen is a net loss of energy and has a negative EROI, it will not replace fossil fuels which have positive EROIs. Even coupling Hydrogen production with hydro, solar, wind etc is not as efficient and makes less sense than using the electricity directly. In order to have an economy a source of energy needs to have a EROI of greater than 10 to account for the losses along the way. Energy policies will become increasingly important in the years to come and we will need to have a hard think about what energy infrastructure we keep and maintain.

Depends. Is a Negative EROI a bad thing if the resulting fuel product overcomes obstacles?

E.g. Using electricity directly (batteries) might not be feasible for long range flight, but using that electricity to manufacture Hydrogen or some other type of fuel for Aviation purposes is useful.

The problem with it is that for the example given of aviation the energy contained within the avgas needs to be replaced by hydrogen which requires energy to produce. Avgas provides energy but hydrogen is only a medium to transport energy before use. Sure there are scenarios where taking the hit on negative EROI to produce some other product is beneficial but these will be niche and only where strictly necessary. Begs the question are commodified long haul flights necessary?

Great pair of comments!

Yes, it is entirely feasible to choose negative EROEI energy, to do specific tasks. Power Apollo 13, for example.

But you have to remain well into positive EROEI territory as a society (BAU are we knew it, probably can't function below 11:1, some say 8:1, and we're headed thataway already).

All storage mediums are negative EROEI - batteries, pumped hydro and hydrogen. But they all have their uses.

But as PDK says, the total system EROEI needs to remain strongly positive to support our lifestyles.

NZ's Meridian Energy was a principal player in distributed roof-top solar industry in California in early 2000's, Then it sold out. Don't know why. but it hasnt spilled over into the local market. Why was it in California?

Mostly likely due to Californications energy policies. Not sufficient state subsidy. Rolling blackouts in California. All to do with energy policy as the sky is about to fall in due to climate change.
We are wasting our time and will cost NZ big time if the Greens get any where near the levers of energy policy and Labour on zero carbon etc will also screw the country. Will just take a bit longer with Labour.
2016 California dreaming
https://wattsupwiththat.com/2016/03/22/california-dreamin-renewables/
more california dreaming 2020
https://wattsupwiththat.com/2020/08/18/green-california-has-the-nations-...

Fossil energy is the one which is subsidised. Watch fracking - which won't endure without the Govt-issued debt which is unrepayable due to too low an EROEI.

I always wondered what a dinosaur sounded like.....

Well that's a lot of hot air Nige - maybe you should get into wind turbine business?

California's energy woes are from soaring temperatures (new record set in Death Valley), insufficient lines capability to import electricity from out of state and the fact that all the neighbouring states were using their own generation for air con and couldn't sell to California. Nuclear killed itself being the most expensive form of generation, coal lost to natural gas, which is in turn being beaten by wind & solar.

The Greens at least have an energy policy and aren't content to have the modern world pass us by - which it is in every sector. The "do nothing" comments & "blowing up bridges" comments are so apt when describing this silly backwater country.

That is an interesting spin on the subject showing mainly that you don't know what you are talking about.
The Death Valley temperature was second hottest after the 1913 one. It wasn't unusually hot over the state on the days the lights went out. They had to have rolling blackout because the wind didn't blow and on one day, a backup GT was forced off. Nuclear from existing plants is very cheap and reliable. California shut one down to please the environmental movement. They have to import a lot of their power, just like their fuel, because of their virtue signalling policies. Their power demand has significantly fallen in the last 20 years as industries and people leave the state. If you are comparing prices for energy, use $ per dispatchable MWh. That is the true comparison and the unreliables do very poorly. Power is so unreliable (and expensive) in California that they are subsidising gas turbines in RMR contracts, just like South Australia had to.

CM- as usual you're good technically but predetermined ideologically.

'unreliables' are ll we will end up with, and all that ticks the 'no detrimental legacy' box. The sooner we organise ourselves for the inevitable, the better.

And given that all $ are debt-issued at a keystroke in some bank by an economics-trained person (someone who knows f-all, in other words), why do you assume $ are any measure of anything? They've been pumping them in in an attempt to keep the balloon inflated, for 12 years. Even more recently. No way that debt can be reconciled with the remaining energy and resources on/in the planet. And if debt is unreconcilable, what is a $ 'worth'?

We live in (zero and below) interesting times. One thing that worries me, is the 400-odd nuclear plants extant and what happens to them in a collapse scenario? Does HomerJ just walk off the job?

If you mean by predetermined, I want the lights to come on when I flick the switch, yes I am that. Do you know what you call places where that doesn't happen? Third World. And I want power cheap enough so we don't have a large portion of our population living in energy poverty. Power price rises are very regressive taxation. With regards the rest of your writings, it doesn't interest me at all.

Other readers might find that illuminating.

I point out that energy underwrites $, 100%. Yet you - smart technically and honest (as in: not a spruiker, like some here) recoil to "I want cheap power".

Amazing. I can only assume your job is bound up in that? Upton Sinclair comes to mind.

Great piece Brian - thanks.

Basically, extraction is yesterdays' approach to all things. In a finite world, it was always going to be off the table at some predictable point. So Act and lesserly National, are wrong.

The point up thread about hydrogen, is well-made. It opens up a wider discussion about infrastructure maintenance, and triage.

We need an honest discussion; environmentalists and Nimby's need energy too, but 'how much' is an interesting piece of Boolean math. We need to be a long way away from 'economics' to discuss the real 'value' to society of things like pumped storage.

11
up

NZ has a propensity to blow up all the bridges behind it, while unable to build new bridges in front of it

It won't be too long and we'll not need to worry about building new energy sources (renewable or not) as our heavy industrial users migrate offshore. BFs article doesn't take into account two other large power users - Norske Scog and Oji Fibre Solutions. Both companies are currently assessing the viability of their operations in the Eastern Bay. Tiwai, Marsden, NZ Steel, Methanex, Norske, Oji - a pretty sobering list of likely candidates for significant downsizing or outright exits

Try comparing apples with apples.

To divest ourselves from fossil fuels AND keep our current energy-usage, would require 170% more electricity production. Was never going to happen. So of course there will be triage.

Think also of what society will want, post-FF. Paper will probably figure large, as a plastic displacer. We may well be pleased to be able to make it. Few are asking what will/won't be in demand, but the guarantee is that tomorrow won't resemble yesterday.

Paper is a dying commodity. Norske is in the process or has completed mass shutdowns of its mills in Europe. Pulp has more future in packaging but Norske is a paper producer. It's current trials in Kawerau aren't going well and to pivot to bleached pulp is unlikely given consent requirements and cost. Oji may well close its Kawerau mill in the near mid term due to large looming upgrade requirements. To replace all our FF requirements with electricity is so far down the track it'll be generations away unless there is a step change in technology around storage. Shuffling people around in puddleskipping EVs is one thing - heavy transport/machinery is a completely different story

Agreed Hook. But we should do things that work even if they don't do all the jobs. There are millions of puddlejumpers in New Zealand, and if we made them EV, then that would be great.

Most of the people buying "puddleskippers" could actually take public transport.. trouble is that doesn't send the right virtue signal to their latte sipping neighbors. Far better to say "look at me - I own an EV" than just stfu and take the bus or train.

That's an unhelpful generalization.

We own an EV - it's a Leaf with a modest range but it gets used for all those short trips (school run, kids after school activities, shopping etc), none of which were ever going to be practical candidates for public transport. We bought it because it made financial sense to use an EV for all the round town work that was chewing through the gas and hang on to the old car for trips and the odd occasion we need a towbar.

All manufacturing will move off planet in the next 50 years. Cheaper to move stuff around in zero gravity using free energy from the sun than make it in a gravity well like other luddites. Procure materials and manufacture in space, then send it down to Earth. Mana from heaven (or an new flat screen).

Bit hard to produce food from moondust bud. And you still gonna need water - also pretty scarce, even if you produced it by burning H2 in O2 you'd still need oxygen - even scarcer than water in space

I agree, it is very hard, but nothing worth having never came without hard work. I never mentioned the moon, or where the elements are coming from.

Unfortunately, work requires energy.

cart........horse.......

So just another "pie in the sky" unresearched opinion then? Typical of this forum.

"National, for its part, says a “political” target for renewable power risks making electricity less affordable. It prefers a “fuel neutral approach to an energy transition.”"
= do nothing.

It is a great pity.

This is a more important thread than any, anywhere in NZ, today. Nothing happens without energy, it's the 100% underwrite. Yet so few comments. Yet put up some shyte about house-prices.......

Transpower produced a report a couple of years ago showing how to get to 100% renewable electricity generation for a projected increased demand for electricity as we electrify to replace fossil fuels in industry and transport.

Some analysts say going from 95 to 100% renewable electricity generation has a high marginal cost. However EECA analysis is that increased energy efficiency measures would reduce electricity demand. If I recall correctly reducing electricity demand by energy efficiency measures comes at a much lower marginal cost than constructing that last 5% of renewable electricity generation, and effectively gives the same result of 100% renewable electricity.

Why is nobody looking at Nuclear? It's cleaner and more efficient than all the options Brian raises above.

No it isn't and maybe not, respectively.

Build costs are astronomical - if you don't cut corners. You have a potential Fukushima (you sure as hell don't locate if near a fault - is there anywhere in NZ that qualifies? And NOBODY has dealt with the waste (as indeed, society doesn't for processed resources generally - we're too selfish and leave the c--p to future generations who cannot vote, cannot object.

That's for heavy water reactors, which conveniently produce weapons grade plutonium as a byproduct. Molten salt/thorium reactors are the path that nuclear countries didn't pursue in the 50s because they didn't produce those large quantities of plutonium useful for building hydrogen bombs. Look them up - no risk of meltdown, safer (but not safe), smaller half-life byproducts. And because they can't melt down, they're in theory much cheaper to build.
To get you started:
https://www.iaea.org/newscenter/news/spotlight-on-innovation-molten-salt...

Fission - the most horrifically dangerous and costly form of electricity generation ever invented. They continuously leak tritium which causes leukemia. Entropy always wins! and in the nuclear industries case it's exemplified by roughly 1 meltdown every 10 years. Even if things miraculously work out perfectly with no earthquakes and no user errors, then the decommissioning costs are astronomical.

Why is it that there is so much emotive FUD around nuclear energy? I get that it isn't a good fit in NZ for various reasons but this sort of hysteria is actually contributing to pollution and GHG emission, not making the world a better place.

On safety:
https://ourworldindata.org/safest-sources-of-energy
https://climate.nasa.gov/news/903/coal-and-gas-are-far-more-harmful-than...

On waste:
https://www.energy.gov/ne/articles/5-fast-facts-about-spent-nuclear-fuel

Edit: On unintended consequences:
https://www.wired.com/story/germany-rejected-nuclear-power-and-deadly-em...

Everything I said was factual. You talk about emotive fear uncertainty and doubt. This is a line from one of the links you sent ....spent or used fuel (sometimes incorrectly referred to as nuclear waste) but it’s not the green oozy liquid you might be thinking of when watching “The Simpsons.”

The new religion, climate change. For the climate change brethren, a prayer to be recited daily.

Our Shaw on earth hallowed be thy name
your planet come
your law will be done on earth as it is in Aotearoa
Give us this day our wind and sun
and forgive the mortgages as we also have forgiven our debtors
And do not bring us to the time of fossil fuel but rescue us from it
For the wind and sun to power us for ever

VERY good.

There are still some folk who think (?)
that the planet was created 4,000 years ago
that growth is everything - and the kitchen sink
that they above the Laws of Nature, so.

Adhered to those
are others
scared, even in prose
desperate for their d'ruthers.

Truth, t'is on the pyre
belief be all they need
denial of increasing fire
a focusing on greed.

A pox on all their houses
thoser ticky-tacky ones
A curse on six-sprung mothers
and the ignorance of their sons.

It is sad to see such dinosaur comment here at so late a stage in human affairs.

VERY bad

If you want solar then make electricity companies buy at the same rate they sell. The current 3x differential currently makes solar unprofitable unless you have a battery.

If the government was really smart it would practice mercantilism. Find a local engineering firm making wind generators or whatever and become the biggest customer. Build the companies up so they start exporting and generating wealth for the nation.

The Gentailers are still 51% owned by Government
They are a protected species
Generation and Retailing should be separated
Eventually what is forseeable, in order to protect these monopolistic sacred cows will be mergers
Surprised it hasn't begun to happen already
Power at $0.35 kwh is expensive.
That is a product of constantly revaluing 70 year old assets
Transpower is a wholly owned government tax agency

Yes that's sad isn't it. Incidentally my fondness for mercantilism is aimed at SMEs not behemoth electricity companies which actually export nothing.

You might want to revise your economics of solar. The biggest gain is from maximising self-use (which effectively pays you the consumer rate). My grid tied solar is returning 35% per year - better than shares or housing and it is guaranteed. Adding a battery turns this return negative.

Can't see how you do that unless you use a rediculous amount of hot water or have an EV that you use at at night and charge during the day. Maybe you're a bitcoin miner?

Sorry, I undersold it - it's actually 37%. The system saved me $931.57 last year in electricity costs plus exports and costs me $682.35 per year on a 30 year mortgage (note that the panels I have are guaranteed to still be producing 80% capacity after 40 years so this is shorter than their lifespan)

If that is the case you have the most efficient and cost effective system in the industrial world - which obviously is unlikely. Most systems require about 10 years of consumption to be cost neutral, by which time you'll be looking to upgrade panels. Give us some costings to support your claims because frankly they are unbelievable. Your costings should include purchase, installation, sales of energy, savings on generated energy used

See comment above. It's a 5kW system installed on a north facing roof in Chrch which cost $13k installed - was installed during a house build which made it easier. The savings breakdown as $385 export at 8.19c/kWh and $545.66 of savings through self-consumption. The Trina panels are guaranteed for 40 years but will likely last longer. The inverter may need to be replaced after 20 years but that would only add about $1500 of extra cost over the 40 years.

Note that the return will increase as mortgage rates fall and electricity prices rise.

Regarding self use - totally agree, but it's not a trivial task. You can buy energy diverters which "trick" the smart meter into not exporting solar provided you have a large enough "dump load" like a hot water cylinder. Alternatively you can get a battery like a tesla power wall. It all adds to the current account deficit, and none of it increases the wealth of the nation. All that nonsense would stop of the buy/sell rate was the same, but as iconoclast said, the generators are a protected species.

We don't have any diverters. We occasionally time-shift appliances like the dishwasher and washing machine to run during daylight hours but only if this fits around our timetable and we remember to do it.

A battery is a very expensive way to store power. I calculated it out for my setup and it would effectively cost 61c/kWh for each kWh saved. This is based on a Tesla PowerWall with a 10 year lifespan. If the million mile battery makes it into PowerWalls at the same price then it might be viable due to the longer life.

You may want to check these websites out https://learn.openenergymonitor.org/ and https://www.mk2pvrouter.co.uk/ diverters aren't too hard to make yourself, I made one for the solar install that I put in at my mums place.

Not worth the effort to reduce my $1/day electric bill. And my hot water is a hot water heat pump.

Your retailer buys electricity at around 8c per kwh. You pay transmission (Transpower), distribution (local lines company) plus the retailer's margin plus GST. Why should your retailer buy power off you and pay for all the other costs that aren't related to generation? Solar makes little sense for NZ due to its consumption profile (at night, winter). It make sense in Australia because of its consumption profile (during the day in summer).
Deal with it.

Having been off-grid for 20 years - 16 of them with the present system at Dunedin latitudes - I disagree. Solar does just fine - if you live with, rather than arrogantly against - Nature.

But I sigh seeing the last two comments, after the energy-underwrites-money point made upthread. Why, oh why, do folk go back to mantra-chanting? Times are changing, and what was, won't always be. At some near-term point, having the capacity to produce energy will be priceless.

Oh, and the idiot comment two up - panels are usually guaranteed for 25 years. What happens in most cases, is a 2% drop-off in performance p.a. That's not linear, just sayin. My panels are 16 years down the track and over 90% of original output; closer to 95.

"Why, oh why, do folk go back to mantra-chanting?" - why don't you do everyone here a favour and take your own advice?? Even your own rubbish maths doesn't stack up - 2% pa drop off but after 16 years you're still at 90% + output. So you're expecting a rapid depletion on the horizon?? You truly are a piece of work

Sad comment.

The expected drop-off is 2% pa. I look after my panels and they were good quality (there is a lot of variation). Yes, it (pleasantly) surprised me too. It goes with my panels being well beyond your 'ten years and replace' assertion-nonsense upthread.

But you're just looking to justify a position. The difference is that I do, learn, and adjust my thinking in light of things. See the difference?

My panels are guaranteed to lose 0.5% per year for 40 years. They will likely do better than this and last longer.