Key Points:

Prime Minister Helen Clark reopening Parliament this month set a goal for New Zealand to be carbon neutral and to define New Zealand as environmentally sustainable.

She wants this to brand New Zealand in a similar way that the anti-nuclear policy has.

"I believe New Zealand can aim to be the first nation to be truly sustainable," she told Parliament.

But like the anti-nuclear policy, the Government's energy policy is long on rhetoric. Enough hot air on climate change to fuel a power station has been generated.

The reality is that since Labour took office in 1999 New Zealand's emissions have grown at twice the rate of the United States, four times the rate of Japan and are even larger than Australia.

In the decade since Kyoto was signed, New Zealand has no policy and at the current rate will be several degrees warmer before an agenda is agreed.

Today, Contact Energy, announced a bold $2 billion five-year programme to build new renewable energy projects -- geothermal and wind -- that would fit Miss Clark's plans beautifully.

Contact's investment plans in renewable generation could play a significant role in helping advance a more sustainable and climate-friendly energy generation sector.

However, the country's biggest private sector power company, which has come to the wind party late, also told Miss Clark the Government needed to streamline the resource consent process to get the stations built in a reasonable time.

It also needed to finalise a policy on carbon tax, not only quickly, but comprehensively so it covers all producers, including farmers.

Contact believes geothermal is the best replacement for carbon producing gas and coal stations because it is more reliable than wind. But it has been frustrated by the six-year process it has taken to get resource consent to upgrade the Wairakei station, still months away.

To ensure security of power supply and achieve the Government goal of carbon neutrality, the consenting process needed to be changed.

Chief executive David Baldwin called for the Government to use the "call-in" process under the Resource Management Act, where there would be just one hearing under an Environment Court judge.

That should cut the process to a year. It would be particularly appropriate for the geothermal projects, but also for the four wind farms Contact is now considering.

Mr Baldwin said recent talks with the Government had not just been sympathetic to the idea, but "enthusiastic".

Contact plans to build up to 260MW of new geothermal generation, with two new power stations planned for the Taupo region.

The four wind generation projects at undisclosed sites could generate a total of 700MW. The development of any two of these sites would cost up to $1 billion.

To encourage a speedy consenting process for its geothermal programme, Mr Baldwin said he could delay the building of the already-consented carbon-producing, gas-fired, 400MW Otahuhu C by 18 months.

However, he added, that plant was still necessary and would help replace inefficient, dirty, old thermal plants, such as Huntly.

The giant 1000MW Huntly station, owned by Genesis, would become a back-up station rather than a base-load one, helping further reduce emissions.

As well as streamlining the consent process, the Government needed to finalise a fair, market-based pricing system for carbon emissions.

"We support the Government's commitment to addressing climate change, but feel strongly that, if New Zealand is serious about taking meaningful steps to reduce our greenhouse gas emissions, then we need price signals across the entire economy."

Electricity generation produces around 10 per cent of the country's greenhouse gas emissions. The Government has done nothing, and apparently plans to do little, to address greenhouse gas emissions from farming, which produces 50-60 per cent of New Zealand's total.

Contact was prepared to invest billions in new, renewable generation but it needed investment certainty and a market reflecting true costs of energy generation, rather than any system of subsidies and interference in the market, Mr Baldwin said.

The bad news of all this investment is that consumers will pay the price.

The cost of renewable generation was rising even without carbon pricing.

"We are moving into a carbon constrained era," Mr Baldwin said.

The $2 billion investment plan put paid to hopes Contact would make a capital return to shareholders.

Contact shares which have risen 19 per cent since last year, rose 37 cents to a record $8.95 after today's profit result and investment plan news.

Jason Lindsay, energy analyst for First NZ Capital said the shares rose on expectation that Contact's leap into renewable energy would allow it to benefit from "a carbon constrained world."