Dr Rosie Bosworth delves into a comprehensive report from the BusinessNZ Energy Council. It creates two clear energy scenarios for our future, but which path will we take?

Rapidly changing energy needs, emerging technologies and an uncertain energy future are taking NZ and the rest of the world by storm. With energy related headlines peppering the global media on a daily basis, it is unsurprising that energy security, efficiency and sustainability are becoming an ever increasing area of focus for countries worldwide.

Dr Rosie Bosworth
Dr Rosie Bosworth

New Zealand holds an enviable position internationally in terms of its renewable energy production and consumption, being one of the few countries to achieve eighty per cent renewable electricity generation (in 2014). However, it would be naive to think that this will continue to afford us energy security immunity in the long term.

Business NZ Energy Council (BEC) chair, Hon. David Caygill, thinks so too. "New Zealand, like the rest of the world, is facing rapidly changing energy needs, emerging technologies and an uncertain energy future. It needs to make choices on the nature of our economy and society, and how to meet our associated energy needs."

Accordingly last week, in an attempt to address and plan for New Zealand's energy future, the BEC launched a report, New Zealand Energy Scenarios: Navigating Energy Futures to 2050, in conjunction with organisations from business, academia, government and non government. The BEC is the New Zealand Member Committee of the World Energy Council (WEC) consisting of NZ organisations working for a sustainable energy future. The report outlines two different scenarios - Kayak and Waka - of what New Zealand's energy future could look like over the next 35 years.


While based on the World Energy Council's (WEC) framework, it considers the need to balance energy security, energy equity and environmental sustainability (AKA the Energy Trilemma) and has been tailored to accommodate NZ's unique energy profile.
The "Kayak" scenario is founded on symbolic characteristics of the kayak such as individualism and speed. In contrast, "Waka" is said to be characterised by the collective greater good and interdependence and harmony.

At the heart of Kayak is an energy future where markets, not governments, drive supply chain decisions and innovation. In a Kayak future the premise is that a global deal on climate change has been agreed, yet international commitments on reducing emissions are weak. In this context, business and consumers make informed decisions in their own interests based on price, supply and quality.

Accordingly, the New Zealand government remains hands-off with respect to national energy production and consumption and the sustainability thereof. Instead it focuses on facilitating the domestic energy markets by establishing strong competitive frameworks relying on the pursuit of least cost energy supply. There is no support for low-carbon technologies apart from a modest carbon price, and development of technology within global energy markets. Nonetheless, energy efficiency improvements from technologies, such as those that help manage consumers' consumption and costs, results in a 25% reduction in energy consumption by 2050.

Under Kayak, with a strong anti-interventionist approach, New Zealand enjoys cheaper energy, and decreased energy intensity (1.7% per annum). This is primarily due to the reliance on markets which drive energy supply towards least-cost solutions, a higher growth in the service, commercial and value-added sectors, growing consumer demand for energy efficient products and vehicles, and continued energy efficiency investments across the industrial and primary sectors (like agriculture, forestry, and fishing).

Yet, according to the scenario, cracks begin to emerge with higher growth and population pressures resulting in higher density cities, pressure on water resources and weather risks increasingly giving rise to capacity and resource constraints. Economic growth is effectively borrowed from younger generations as a failure to mitigate carbon emissions means they face higher costs and economic volatility post 2050.

At the core of Waka is an energy future based on changing global circumstances and environmental awareness that drive business, consumers and government to make decisions in the national interest. Environmental quality of energy supply takes precedence over price and security. Internationally, a comprehensive global deal on climate change (and by extension, energy intensity and demand) has been agreed based on strong emissions reduction commitments. In lock step, the New Zealand government has established its own mandate for a Zero-Carbon future and an aspirational goal of 100% renewable electricity by 2050. Under Waka, the development and adoption of technology within global energy markets is supported by a suite of government initiatives and mandates promoting a low-carbon energy future. By 2050 the electricity sector has reached nearly 100% renewable electricity, and energy emissions have practically halved over the next 35 years despite population growth and increased electricity demand.

Waka sees a reduction in energy consumption of 28%. Lower overall global rates of economic growth and governments around the world adopting more nationalistic policy positions impact on our exporters with the tyranny of distance and high carbon prices adding to freight costs.

But what do the two scenarios look like from an energy mix perspective?


Under both Kayak and Waka scenarios, New Zealand's energy mix highlights a declining reliance on fossil fuels and increasing levels of renewable electricity generation. NZ's thirst for oil peaks in 2030 in Kayak, whereas the downward trend begins much earlier in Waka (after 2020). Domestic coal demand becomes virtually non-existent in both scenarios. These are steadily substituted by electricity, hydrogen and bio fuels. In order of size, these include hydro, geothermal, wind, solar and bio-energy. Natural gas remains a steady, albeit slightly declining, portion of the energy mix in both cases.

In both Kayak and Waka, the proportion of renewable electricity generation from today's current levels (circa 80%) is increased to 85% or 98% respectively. However, under Kayak hydrocarbons remain an important primary fuel source with oil, gas and coal still comprising 45% of primary energy inputs in 2050. Waka's NZ energy mix is skewed towards a higher proportion of renewables (65% of energy inputs in 2050), mainly in the form of electricity. These include facilitated hydro projects, targeted subsidisation of biofuels, support for higher uptake of renewable heat and waste heat by-products (co-generation). In both scenarios solar grows both as an energy source (3% and 6% of total generation output in Waka and Kayak respectively) for electricity generation and as a source of direct heat.

The greatest strides in technology change have been in NZ's land transport sector. Under Waka, by 2050 the country has undergone the complete electrification of the national vehicle fleet due to improved efficiency of electric vehicles and an exemption from on-road user charges to 2030 as well as use of public transport, ride and car sharing. In Kayak the uptake of more efficient internal combustion engines (ICEs), non-plug-in hybrids, and bio-diesel have driven these improvements.

While being on opposite ends of the spectrum, BEC says both have been designed to help us consider where we could potentially find ourselves in 2050. With Waka, Caygill says "We're on a long-term journey, with a goal in mind. In this scenario we work together as a team, using the great natural resources we have in New Zealand. In Kayak, New Zealanders paddle alone. We deal with situations we have in front of us, we want to go forward efficiently and quickly, but need to go with the flow."

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