Energy Matters
My interest and understanding of the energy sector has evolved over the past two decades, most recently as the inaugural Chair of the Climate Change Commission and as shareholder in a family business providing solar electricity as a service to capital constrained businesses such as schools, not for profits, charities and small businesses.
In my opinion New Zealand has a significant opportunity to not only decarbonise energy production and use through the development of run of the river hydro, wind, solar, geothermal and bio energy, but also to reduce our dependence on long, risky supply chains of liquid fossil fuels and our exposure to volatile global fossil fuel prices we have no control over. Without banking on super critical geothermal generation, stimulated production of natural hydrogen from rocks or nuclear fusion, New Zealand has enough potential sources of renewable energy using available technologies to displace fossil fuels from most uses in electricity generation, light-weight ground transport, low and medium temperature process heat and heating air and water in homes and businesses.
We will be a wealthier, less risky, more resilient, and healthier society if we generate much of the energy we need on-shore from renewable sources. The Climate Change Commission estimates that by 2035 we could be saving billions of dollars in health care costs and household energy bills by getting off fossil fuels for heating and ground transport. It is in our national interest to eliminate barriers and promote the enablers of this transition. It is not about meeting international treaty obligations or taking the moral high ground or even about our responsibility to future generations, it is about what is good for us, now.
We should all expect to know who benefits from delay in rapid decarbonisation, who benefits from promoting new investment in fossil gas pipes and residential connections? Who benefits from delaying the uptake of heat pumps and low emissions vehicles? Who benefits from promoting more privately owned and operated vehicles when active mobility and shared transport is healthier and more affordable?
While over twenty countries have now shown that reducing the combustion of fossil fuels in the open air is compatible with growing GDP, no country has grown GDP without consuming more energy. What we should not do is threaten to spend billions of dollars on looking for more fossil fuels, the world already has around 50 years of proven reserves of fossil gas and oil and 150 years of coal reserves. What we should not do is create the overhang of the threat to spend billions of dollars on fossil gas import terminals or restarting the oil refinery. The uncertainty created by these musings creates the sort of uncertainty that delays investment in the low emissions energy of the future. It imposes risks and higher costs on us all. The benefits of denial, delay and obfuscation about the energy transition accrue to a few, but do you know who?
The combustion of fossil fuels in the open air – over 4 million points of oil combustion in the new Zealand fleet of light vehicles and 700,000 points of fossil gas combustion in New Zealand homes and businesses makes carbon capture and permanent storage at the point of combustion nonviable both economically and technically. Carbon capture and permanent storage appears economically and technically feasible at power stations located near geothermal fields with gas capture and reinjection. CO2 injection into depleted fossil gas fields, promoted by the fossil gas industry, extracts more fossil gas to sell and combust but is unproven as permanent storage.
In New Zealand today, behind the meter PV solar for own use in space and water heating and ground transport is economic. What we don’t need is public subsidies of any kind to look for, import, distribute or use fossil fuels. What we don’t need is market structures and regulatory settings that protect the economic rent extracted by some incumbent producers and users of fossil fuels. What we don’t need is governments that take economic rents from renewable electricity production and subsidises the capital cost of fossil fuel propelled heavy road freight. A coherent, consistent and complete set of energy policies is more than an assertion of the efficiency of markets and a ‘fuel agnostic’ electricity generation philosophy. Markets are known to be short sighted, reckless and indifferent to where costs and benefits fall. The social and environmental costs of fuels are not reflected in prices. Voters and tax payers, households and businesses are entitled to better public policy and more sophisticated leadership than faith in markets and assertions of agnosticism.