In this opinion piece ahead of this week’s Emissions Reduction Plan and Budget announcements, Lucie Drummond, Mercury’s General Manager, Sustainability, looks at the coming unveiling of a new, low-carbon future, what it will mean to Kiwis and what is already being done.
There's a little-known climate change statistic that, if just taken at face value, can look daunting – New Zealand needs to build the equivalent of a wind farm every nine months from now until 2050 to help hit emissions reduction targets and get to net zero.
We at Mercury know a bit about wind farms; we are launching New Zealand's biggest, at Turitea in the Manawatū. It is a $465 million project which, when fully commissioned next year, will bring on 840GWh of new renewable electricity a year, enough to power 375,000 electric vehicles (EVs) on the road.
On Thursday, the Government will unveil its latest Budget. Understandably, people will want to know how it will address the very real challenges of the cost of living while also prioritising the increasingly urgent need for us to decarbonise.
In the Emissions Reduction Plan – more details of which are due out today – we will start to see the plan on how to fuel New Zealand's transition to a low carbon economy. It's then we will see how the Government is planning to organise the whole country – you, me, us, companies and communities – to make this step change.
I'd say this at the outset – yes, the changes we need to make to address climate change can seem overwhelming. But there is much to feel positive about, including having an electricity system that is among the best in the world.
While other countries are struggling with the challenge of decarbonising their electricity, the benefit of our existing low emissions electricity system is that we can use it to help decarbonise other sectors like transport and process heat. This is a real advantage.
But we know there is still much to do. Like many sectors, the electricity sector is already working hard on continuing to play our part. If you look back in history, what we are facing now is no more than was done between the 1960s and the 1990s when the investment in electricity and New Zealand infrastructure was made.
So we have done it before and we can do it again. In fact, I think it will be awesome to have, for the first time, a single plan to guide New Zealand into this low carbon era; I find that uplifting as is a lot of the work going on in the electricity sector to help this huge change occur.
What we – and many others – will be looking for in the Budget and the ERP is how the Government is intending to harness the public and private sectors to do what no one entity or party can do alone. Collective action between companies, communities, government and individuals is the only way to achieve this transition and its targets – and the Budget should contain some strong signals about how it will enable this collective action.
The electricity sector is already undergoing the most transformative change in its history; much can be learned from the success we've had, replacing fossil fuels with new renewable generation.
Currently the sector has committed $2 billion to low-carbon generation which will result in an additional 8 per cent of renewable generation added to the national grid by 2025. We are on track to get to over 90 per cent renewable electricity in the next five years.
Mercury and the sector as a whole know that one of the areas New Zealand really needs to focus on is reducing transportation emissions. There is great work occurring in the sector on complementary matters, like ways to integrate EVs into electricity networks, with innovative work to shift EV charging from peak times to off-peak times when there is spare network capacity.
It's probably the question I am most asked: "Will there be enough electricity if we electrify all the cars?"
The answer to that is: there will be, but we need to build more generation at a pace faster than at present.
So we'll be looking to the Government not only to provide a plan but also to enable this pace of change, like resource management reform, for example. It will have to signal how everyone will help – not just companies and public servants but communities and the individuals within them.
One of the key signals the plan could provide to the energy sector is a renewable energy target. We have a high proportion of renewable electricity in New Zealand, but in terms of all energy we are only about one third renewable. Shifting from a renewable electricity target to a renewable energy target would be a clear signal that could help unlock even more action across the energy sector.
For the actions we take as individuals we will all likely have to change the way we think about things – reducing the amount we travel in our cars, for example. EVs are important but they are not a silver bullet to reduce transport emissions.
E-bikes are a great example - there are many wonderful providers out there helping New Zealanders embrace the varied modes of transport now available to us. Big Street Bikers are one group who are making e-bikes more accessible through providing Locky docks - a docking station which is also a secure installation, meaning the bikes can't be stolen while they are powering up.
We have to be careful, however, that this change does not also bring about a new form of inequality. The recent petrol price rises are an example – it is clearly inequitable and undesirable if only people of a certain socio-economic level can buy EVs and free themselves from that.
Our best shot at achieving a low carbon New Zealand is to work together; every possible lever, public and private, will need to be pulled. There's no silver bullet to decarbonise the whole economy; it will require multiple answers, working in tandem.
Success will come from working in collaboration, leveraging our strengths. The public sector can encourage private sector innovation in the right directions, including targeted funding where the commercial incentives aren't there for private investment.
The private sector can bring the expertise, innovation, efficiency of capital allocation for new generation and new technologies that can achieve mainstream adoption of low carbon energy.
It's an intriguing and exciting future and I can't wait for the Government to unveil the plan.