Pat Wall: Keep the assets, ensure our future

As fossil fuel resources deplete, economies will contract, thus productivity and profitability will go down. Photo / Thinkstock

Opinion

Energy security is crucial for our nation and the selloff of energy assets may sabotage the future of New Zealand. According to the International Energy Agency, the world hit peak oil in 2006 and we are now on the downhill side of the curve with potentially as little as 30 years left before we are sucking the bottom of the barrel.

Evidence of this is all around us if we consider the rise in fuel costs, increased conflict over fuel resources and increased effort to utilise more expensive and hard to get non-conventional hydrocarbons.

If left unchecked, we will see living standards undergoing a dramatic decline. All discussions of an economic nature are moot without energy, for without energy there is no economy.

As fossil fuel resources deplete, economies will contract, thus productivity and profitability will go down.

Keeping this in mind, consider our reliance on these resources. According to the NZ Energy Data File 2011, about 62 per cent of New Zealand's energy comes from fossil fuels while the remaining 38 per cent comes from renewable resources.

Several other nations have begun to deal with these issues and no nation is moving forward faster than China. Yes, China has made it a national imperative to convert to renewable energy because they are aware that hydrocarbon supplies are in decline.

It takes energy to make the infrastructure to harness energy and presently we are squandering that opportunity. It will take at least 15 years to build the infrastructure required and the longer we wait, the more it will cost and the less likely it will ever happen.

Our existing energy generation infrastructure offers a good basis to build on. As oil prices rise, more of our energy needs will be met by electricity and therefore our electrical generation infrastructure will become more important, more valuable and more profitable.

For example, to put 1.5 million electric cars on the roads it would require three times current generation capacity, but we will also require much more electricity to keep our economy running. So, in the future, electrical generation capacity will become ever more important and must be increased vastly to meet future needs.

We should use profits from electrical generation to augment renewable capacity to kick dependence on fossil fuels. If we start investing now, we would also keep money in New Zealand by not needing to import as much oil.

Rather, we would be meeting our needs with free, local, renewable resources. Indeed, we must build the infrastructure to capture the energy but the running costs are low.

Why risk letting the backbone of our future economy fall into foreign hands to enrich someone else? Our electrical generation profits will be growing immensely as we change from oil as our reliance on electricity goes from 38 per cent to 90 per cent of total energy or perhaps even more.

Furthermore, without complete ownership, we cannot ensure re-investment will take place to augment generation capacity and we risk having a serious shortfall.

This is a matter too crucial for market forces because they may dictate to squeeze all the profit out rather than investing.

New Zealand, like the United States, is becoming a polarised nation. Polarisation paralyzes a nation and makes progress impossible.

We need cooperation, lest we lose everything due to blind faith in economic ideologies. We need to look after New Zealand by keeping jobs and money here; by investing in renewable energy while creating jobs and export potentials.

We should learn to accept that not everything will be comfortable and at times we may have to pay for things. Our politicians might say inaccurate things because they are scared to tell the truth to a public that does not want to hear the truth.

We should look at the long term consequences versus the short term inconvenience and get on with it. Finally, we should make politicians accountable, so that they actually look after the needs of the people, rather than corporate or private interests.

*Pat Wall is an energy management student at Otago University