Mallard Trevor: Electricity (Renewable Preference) Repeal Bill — First Reading Second Reading In Committee Third Reading 
Mallard Trevor: Electricity (Renewable Preference) Repeal Bill — First Reading Second Reading In Committee Third Reading 
[Volume:651;Page:919] 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I think that was a 3-minute contribution of a possible 10-minute speech and it is fair to say that the member said almost nothing that was intelligible or intelligent during her contribution. 
It is important for the House to realise what we are doing here today. We are taking New Zealand from a position of international leadership first in the biofuels area then in the emissions trading scheme and now in the thermal generation ban which we are removing. We are moving from a position of international leadership and the possibility of having cheaper power prices to having a system where we become more and more reliant on gas. Gas prices of course are dictated very much by oil prices. The thing that we know is that in the future oil prices will go up. They have been up and they have come down but we know that over a 20-year time-scale they will go up. The thing that we also know about gas prices is that they tend to track oil on the way up but they do not fall away in quite the same way afterwards. 
What is happening is that the National Government has chosen to let power prices go up in New Zealand at the rate that they have gone up in recent years. The reason that they went up so fast in recent years was that there was effectively a strike of capital a very small amount of building of power projects as a result of the Bradford reforms of the 1990s. I might ask why we would build extra plants. If the companies knew that they could sit tight with their already established generation and as a result of a shortage of generation have prices go up that means they could get an increased return without risking any investment at all. 
But after the legislation was passed we had quite a rush towards increased generation. Contact Energy one of the companies I was not responsible for announced plans to invest about $3 billion in 1400 megawatts of increased generation over a period of 10 years. It included 500 megawatts of geothermal power. Just to let people know I can tell the House that we need about 175 to 200 megawatts of increased generation each year to keep up with growth. The Greens will disagree; they would probably say that we do not need any or that we should be running down the supply. But with the sort of economic growth that we were averaging under a Labour Government that was roughly what was needed. 
What will happen now because of the removal of this ban is that people will build the plants that are cheapest to build and most expensive to run. It is much much cheaper to build a gas-fired thermal plant than it is to build a geothermal plant for pretty obvious reasons. Companies do not have to drill 5 kilometres down in order to get the steam coming out. But the difference is— 
Chris Tremain 
: Where do you think the gas comes from? 
Hon TREVOR MALLARD 
: Pardon? 
Chris Tremain 
: Where do you think the gas comes from? 
Hon TREVOR MALLARD 
: No no. There is a lot of drilling for gas but for the next few years there is quite an available gas supply. I think in fact the member will know that the problem is somewhat the opposite: some people for a while thought they had some gas they could not get rid of. Notwithstanding the fact that we had an oversupply of gas for a period of time the oil companies managed as they generally can do—and as Todds are experts at doing—to screw the system and get some pretty good returns on it. 
Mighty River Power is probably New Zealand’s most expert company at building geothermal plants. It managed to get its latest project at Kawerau going about I think 5 months early. It is a very very good plant at Kawerau running at peak capacity and it is probably now the cheapest plant in the country to run. The company has a new site that has received consent near Taupo. People were complaining about the Resource Management Act. Do members opposite know how long that one took to go through? 
Hon Gerry Brownlee 
: It was very very fast because there was a limited number of objectors. 
Hon TREVOR MALLARD 
: Six months! It took 6 months to go totally through the Resource Management Act process and there was a limited number of objectors— 
Paul Quinn 
: That’s because all of the landowners had an interest in the plant anyway. 
Hon TREVOR MALLARD 
: That is exactly right; it is exactly the point. Paul Quinn has got it! That is the first time he has got anything in this House. The vast majority of geothermal energy in New Zealand is under Maori land in the Tuwharetoa area mainly—heading through to Waiariki—and those people are desperate to use their resources. But Paul Quinn who has never done a thing for those people in his life objects to that. He thinks that Tuwharetoa should not be allowed to develop their geothermal resources; he is going to block them by having a thermal plant built in John Key’s electorate. That is what he wants; he wants an expensive thermal plant built in John Key’s electorate. That is his preference. He wants to block Tuwharetoa. There might be some local jealousies involved; I do not know about the iwi relationships up there but why that member is so against the people around Turangi and Taupo having some more geothermal power—things that are jointly owned by iwi—I do not understand. It is a system that works very very well. It is working well in Kawerau it is working well in the Resource Management Act consent— 
Paul Quinn 
: Why would I be against it Trevor; I’m part of it. 
Hon TREVOR MALLARD 
: Hey the member will have a heart attack or start crying if he keeps going like that. It is hard to tell with that member what he is going to do. [ 
Interruption 
] Oh he has to be on his feet to cry. 
We know that as at 1 July this year 426 megawatts were under construction and it did not include the Contact plants. So that is enough for 2 or 3 years—189 megawatts of wind power and 237 of geothermal power. Those that were under construction and due by December 2009—that is those due to start in the next period—were for another 188.6 megawatts of wind power and 105 megawatts of geothermal power. There are also another 665 megawatts - worth of consented projects and consent has been applied for in respect of 2875 megawatts. 
The point I am making to the House is that an enormous amount of renewable energy is coming downstream but it will be killed by this legislation because it is cheaper to build a gas-fired plant. These companies are not stupid. If they can get a plant with a lower capital cost with almost a guarantee of the price going up—the price will go up because they are relying on gas and it is inevitable that the price of gas will go up—then these companies will go down that route. 
I find it just amazing that in this House the priority for the Government is to shift away from the things that we can give international leadership in. John Key has asked to have another meeting with Gordon Brown but whether he will get it after calling Gordon Brown a hypocrite yesterday in the House I am not sure. When John Key goes to the UK to see Prime Minister Gordon Brown to say: “Please do not put your tax for environmental reasons on people coming to New Zealand.” he has to go there in good faith. But he will have to disclose that we have removed the emissions trading scheme that we have effectively stopped people from using biodegradable fuel in New Zealand by killing the tallow plant and that at the same time we have switched our production from geothermal to dirty thermal products. I just ask how we can ask the Brits to keep our tourism industry going when we are heading in exactly the opposite direction from what everyone knows has to happen around the world.