Government advised to change renewable electricity target, again

Energy Megan Woods said the Government stood by its renewable electricity target, as the Climate Change committee appeared to hint it missed the bigger picture. Photo / Mark Mitchell

New advice on how to achieve climate targets hints that the Government should drop its goal to make all electricity generation renewable within a decade, and not for the first time.

Shortly before the election, Labour not only retained the goal of removing fossil fuels from New Zealand's electricity system, it brought forward the target date to 2030, from its original plan of 2035.

The Climate Change Commission's draft advice to the Government on hitting its climate targets, released on Sunday, appears to take a subtle yet diplomatic dig at the target, describing it as "aspirational" and "part of a bigger energy picture".

While it does not explicitly call for the target to be dropped, it spends no time on working out how to achieve it, instead calling for a broader target, not just on electricity, but energy in general.

As part of a national energy strategy, the commission urges "the Government to set a renewable energy target to increase renewable energy to at least 60 per cent".

Analysts at Forsyth Barr said the advice, while "diplomatic" had "effectively stated the 100 per cent renewable electricity goal is not sensible".

This is not the first time the Government has been given the advice. The commission's precursor, the Interim Climate Change Committee was tasked with helping chart a course to 100 per cent renewable electricity generation, but effectively recommended the Government broaden its target.

Headed by Trustpower chief executive Dr David Prentice (although he had not joined the electricity company at the time of the report), the committee warned that while it was technically feasible to achieve the goal, it would be so expensive to do so that it would mean that overall emissions would be higher.

In simple terms, building the generation required would push electricity prices to a level which would dis-incentivise transport and industrial heat users from switching from fossil fuels to electricity. It argued for "accelerated electrification" of other energy users to lower carbon emissions more.

The recommendations of the commission to move away were welcomed by the New Zealand Initiative, which has argued that the Government's goal would raise electricity prices and could slow the decarbonisation of other parts of the economy.

"The Commission has done New Zealand a huge favour by adding its voice to opposition to the Government's 100 per cent renewable electricity policy," Matt Burgess, senior economist at the New Zealand Initiative, said.

Energy Minister Megan Woods was unavailable for an interview this week, but her office confirmed the Government's target for 100 per cent renewable electricity generation continues.

While the Government's renewable electricity goal could be aspirational, it could have practical implications if it remains in place.

The Interim Climate Change Committee's report said to hit the target, it could "overbuild" electricity generation, or examine other options such as pumped hydro.

While Woods initially appeared to take a sceptical view of pumped hydro storage in Cabinet papers, shortly before the election the Government announced a $30 million study - the NZ Battery project - to examine the possibility of a massive scheme in the lower South Island at Lake Onslow.

It will also examine smaller sites in the North Island which Woods has refused to disclose.

The proposal has supporters, including ICCC member and former Meridian Energy chief executive Dr Keith Turner, however many in the sector have questioned whether it is prohibitively expensive.

The Climate Change Commission's report repeatedly describes the NZ Battery project as expensive, and said there were questions over the technical and economic feasibility and public support for the proposals.

"While a solution to this challenge could enable Aotearoa to reach 100 per cent renewable electricity, it could cost taxpayers billions of dollars," the commission wrote.

"Alternative options for reducing emissions should be considered, as other actions may have a larger impact for the same cost."