Study shows need for power vision

The Government needs to decide on a long-term energy strategy so that businesses can have greater certainty when making investment decisions, the New Zealand Business Council for Sustainable Development says.

The council published a study today of the energy policy options facing New Zealanders up until 2050.

"If the Government doesn't indicate which pathway it wants to go on, there's a problem for people in the marketplace who have to make investment decisions," says the council's chief executive, Peter Neilson.

"Once you've built a plant, it might be there for 50 to 100 years."

Deciding whether to build such a plant is difficult if Government policy changes every three years. Once such decisions are made, the high capital costs mean it's difficult to reverse them.

Neilson says the council is not trying to go back to a 1960s style energy plan. "Businesses have got to accept they will take most of the risks because that's what they get rewarded for."

The study outlines four possible paths the Government could choose. It could opt to continue with current patterns where energy consumption has outstripped growth in the economy since 1970 which would require gas discoveries and the use of coal.

The study found 70 per cent of New Zealand's energy supply in 2003 came from fossil fuels oil, gas and coal.

The Government could choose a shielded approach where security of supply is the primary driver to the detriment of economic growth.

Or it could choose a conservationist approach which would involve accepting lower economic growth.

But the council's preferred option is what it calls the "transformation" path which aims to de-couple the traditional link between economic growth and energy usage. This would mean a largely service-based economy combined with producing higher-value products and energy-intensive industries declining.

The Government would encourage this transition by helping with extensive research and development and by setting stringent energy efficiency and environmental standards. That scenario also involves first-class public transport in urban areas and encouraging households to use less energy or even generate their own through the use of such things as solar panels.

The council also favours keeping as many options open as possible and stresses that an increased use of renewable energy such as wind, hydro, solar and geothermal will not be enough to meet the country's needs.

Both the growth and transformation scenarios would depend heavily on technological developments.

Neilson says the study was commissioned "as a result of overwhelming concern expressed by its members that successive governments had failed to put in place a long-term sustainable energy plan".

Members involved in preparing the study included BP, Shell and the Government-owned energy companies.

Energy options

* Continue current patterns - will require gas discoveries and the use of coal.

* Shielded approach - where security of supply is the primary driver to the detriment of economic growth.

* Conservationist approach - involves accepting lower economic growth.

* Transformation approach - aims to de-couple the traditional link between economic growth and energy usage.