Guy Nathan: Electricity (Renewable Preference) Amendment Bill — First Reading 
Guy Nathan: Electricity (Renewable Preference) Amendment Bill — First Reading 
[Volume:664;Page:11781] 
Hon NATHAN GUY (Minister of Internal Affairs) 
: 
 I wish to make a contribution on the Electricity (Renewable Preference) Amendment Bill in the name of Chris Hipkins. National has some concerns about the bill and I will outline the reasons for those concerns. 
Let us consider New Zealand’s electricity market which is designed so that generators invest in the cheapest new electricity generation projects. We all know that that approach maximises efficiency and produces the lowest cost increases for consumers which is very very important. The ban on thermal electricity generation that was passed by the previous Labour Government was a very blunt and unnecessary instrument. For that reason all the major electricity generators were opposed to the ban along with all major lobby groups which is an important point. 
I think the member is trying to re-introduce something that nobody really wants. The definition of “fossil fuel” in new section 62C in clause 5 defines it as “(a) natural gas: (b) coal …: (c) petroleum: (d) any refined petroleum product: (e) any other obligation fuel …”. We would consider banning those electricity generation sources to be very restrictive when we think about how this country from time to time relies on thermal generation. Coal and gas-fired plants generate about one-quarter to one-third depending on the time of year of our electricity. During the winter months of 2008—and I am not sure whether the member in charge of the bill has looked back as far as that—coal and gas-fired plants were at times supplying over 50 percent of New Zealand’s electricity needs. We obviously had had a very dry autumn which we are not having at the moment. 
The member will be pleased to know that a lot of electricity is being generated from a renewable source as we speak with the lakes being full in the South Island. Just recently as you will be aware Mr Assistant Speaker Roy we have had deluges of rain down south where a lot of the hydro lakes are followed by snow. So it is looking pretty good for renewable sources of generation through this period. 
Of course new gas plants like e3p in Huntly which I visited during its construction are highly efficient and produce relatively low levels of carbon emissions. It would be foolish for the Government I believe to close off the option of more plants like e3p if the gas is available if the electricity system needs bolstering and if the plant is economic. 
The proposal of this bill is to block investment in new generation that could displace more inefficient and more carbon-emitting existing generation. An example is that the thermal ban blocks the building of new efficient gas turbines in Huntly. One of the perverse outcomes of this bill could be even greater carbon emissions. In the short time that the thermal ban was in place in 2008 petroleum explorers and investors shied away from New Zealand because they had less opportunity to offset their exploration risks and costs against gas sales to new gas-fired plants. The ban also sent a clear message to the petroleum industry that New Zealand was not interested in exploring its hydrocarbon potential. This Government has made expanding the petroleum sector a priority so it makes little sense in our minds to reinstate the ban. 
The National Government has a very aspirational target of 90 percent of our electricity being generated from renewable sources by 2025. It is interesting to note and I am sure the member in charge of the bill is aware that 73 percent of electricity generated in New Zealand in the 2009 calendar year which had the highest level of renewable generation since 2004 was primarily due to the hydro lake levels and increased geothermal and wind generation. 
I think it is also important to make a comment about the wind generation projects that are currently under way. I am sure the member is aware that Meridian Energy’s Project West Wind out in the hills behind Wellington will generate 143 megawatts when it is online. There is also Mighty River Power’s 132-megawatt Nga Awa Purua geothermal station and back in December 2008 Mighty River Power’s 100-megawatt Kawerau geothermal station came on stream. 
To conclude National cannot support this bill this evening. We believe there needs to be a practical balance of energy generation and this bill is too restrictive.