National's Energy Policy

Tardy comments on my part, it's great to have a properly sourced, though brief, policy document.

My first thought is that I would have hoped to see a greater emphasis on energy efficiency. This is likely to be the cheapest way (per kWh) of improving our security of supply.

This is particularly important to the National party since they are sitting on the fence about returning to a situation where most of our energy comes from renewables.

Because of the extraordinarily cheap hydro power in New Zealand we use electricity to heat our water and our homes and to cook our food. If 50% of our power is coming from thermal electricity generation (as it was this winter) then this situation is insanity from an efficiency point of view. One converts gas inefficiently to electricity by way of heat in the generator and then transmits it ineffiently to the home over power lines and finally converts it inefficiently back into heat. It's much better to just cart the gas to the home and burn it there.

On the other hand if 90% of electricity is coming from sources like hydro geothermal and wind, as Labour hopes, then that may well be fair enough.

If National is serious about maintaining a high level of natural gas in our power generation mix they should also be thinking about how to supply natural gas cheaply to city dwellers, for water and space heating and for cooking.

Second point, obviously the growth of electricity demand has been estimated very differently in the recent past by various Government sources. It would be great to hear from someone why the Minister appears to have reduced the estimated growth rate so much at some point in the last few years. As I have noted before these estimated future growth rates don't seem to have a good record over the medium to long term.

Third point, I am very uncomfortable with a projected reliance on gas power generation. As has been noted elsewhere current reserves will not supply gas for these plants over the life of the station. It's quite possible that gas powered plants built in the near future will require imported gas to run, and thus be at the mercy of the very volatile international market. This is apparently why the new 385MW e3p gas fired generator required a Government underwrite. New gas fired power plants could well require similar underwriting and would seem to be a pretty large financial risk to the tax payer. It would have been good to see the policy address this issue. If imports are required gas fired generation will not keep prices down, which is another aim of the policy.

Of course we may find more gas, and possibly oil, and I'm broadly sympathetic to the notion of making sure that the policy environment is not discouraging exploration. But the fact remains that exploration for deep sea oil and gas is enormously expensive and on an international scale discoveries so far have been minor.

This seems like the worst part of the policy to me, with one paragraph quoting a private presentation given by a scientist at GNS, Chris Uruski, to the National party caucus in 2007. It's pretty clear that Uruski is an optimist about future discoveries and good on him. Those who are interested in what Uruski may have told the National party should look at this recent presentation. (Bottom line on last few slides).

The National policy quotes a possible petroleum potential of 24 billion barrels of oil equivalent, currently in New Zealand we have found roughly 1.7 billion barrels of oil equivalent (almost all of it in gas, this figure from the Uruski presentation), and in the more recent Uruski presentation I have linked to he quotes a more conservative potential of 17 billion barrels of oil equivalent. Finds on this scale would indeed be very significant, but I would stress that these figures are estimates based on geological surveys, not on actual discoveries of oil and gas, or on efforts to work out whether such resouces, once found, can be economically extracted.

One should really be asking what level of risk the tax payer should take in terms of security of supply and price of electricity based on the hope that we will find an order of magnitude more economically extractable oil and gas in New Zealand's territorial waters than we have so far.

I'll leave the important issue of the RMA revision since I don't know much about it. I do suspect National's desire to rewrite this legislation is not largely, certainly not solely, driven by the desire to get wind farms up and running. But getting wind farms up and running would indeed be a good thing.

I'm way behind the play on this one, incomplete selection of other posts here: Visible Hand, Kiwiblog The Standard No Right Turn Frog Blog Colin Espiner