Graham Kennedy: Electricity Industry Bill — Third Reading 
Graham Kennedy: Electricity Industry Bill — Third Reading 
[Volume:667;Page:14297] 
Dr KENNEDY GRAHAM (Green) 
: 
 The Electricity Industry Bill remains as flawed today as it was when it first appeared before the House. The purpose as stated in the bill is as dense as it is brief. It is “… to provide a framework for the regulation of the electricity industry.” The bill claims to reform various areas of the electricity sector to increase market competition and to ensure security of supply. It seeks to modify governance arrangements by replacing the Electricity Commission with the Electricity Authority which is to be more independent. It will allow lines businesses back into retailing and it will reconfigure some of the assets of the three State-owned enterprises—Meridian Energy Mighty River Power and Genesis—amongst themselves. 
The Finance and Expenditure Committee heard 91 submissions. Many opposed provisions of the bill or cast doubt on their likely efficacy. These warnings were largely ignored by the Government whose mind had been set long before the select committee process. We have argued before that this bill is simply another round of marginal tinkering with the problematic electricity industry. We contended that the underlying challenge was missing. This was the need for a genuine regulatory framework that would make the playing field level for more sustainable renewable energy. We said that the Government was in danger of missing the whole point. The Government ignored that as well. 
This bill is significant beyond its own terms. It is symptomatic of the general approach of the Government to energy in general. The draft energy strategy of the Minister of Energy and Resources confirms the public’s fear that ideological blinkers are preventing this Government from moving purposefully towards a low-carbon economy. The Minister’s petroleum action plan of late 2009 to unlock the potential of our fossil fuel resources was in the same vein. 
The Minister’s thinking which lies behind this electricity bill was on display at the New Zealand Petroleum Conference held in Auckland earlier this week which I attended. In Mr Brownlee’s keynote address he advanced a breathtaking comment. He invited New Zealanders to consider the potential for an accelerated oil and gas discovery programme that can be achieved in an environmentally responsible way. In fact he went further and told us to mend our ways of thinking. He said: “people need to shift their thinking on exactly this issue.” He stated: “The development of New Zealand’s natural resources and the protection of the environment are not mutually exclusive … it is only through a strong economy that New Zealand can afford the expenditure required to look after and improve our environment.” According to this suicidal logic we should mine and burn more oil and gas hastening climate change in order to become rich enough to deal with climate change. 
Recently I questioned the Minister in the House over what phased milestones he had in place to achieve his stated goal of reaching 90 percent electricity generation from renewable resources by 2025. His reply was that his Government did not determine the investment decisions needed to increase the availability of renewably generated activity; rather it sets the regulatory and policy environment in which investments are made such as an amended Resource Management Act and the moderated emissions trading scheme. He observed: “Phased milestones would be possible only if we lived in a command and control - style economy: we do not.” 
Mr Brownlee is correct. We do not live in a command and control economy; we never have although a National Prime Minister came closest three decades back. But we do live in a country that is part of an unsustainable global economy. Its most obvious symptom is dangerous climate change from excessive carbon emissions. Switching to renewable energy sources and developing a low-carbon economy within a short time period is a condition of enduring economic welfare both for New Zealand and for the world. 
It is generally recognised that this switch must be completed within two decades at the latest. New Zealand’s goal of having 90 percent renewable electricity is one part of that transformation. Identification of phased milestones is a legitimate part of obtaining that goal. It does not reflect Kremlin thinking; it reflects an agreed aspiration through consensus to ensure that a final goal is more likely to be obtained with the public and private sectors working together. Most people and most Governments and organisations do that. The Government has a phased milestone signed by the National Cabinet in 1997 in the Kyoto Protocol to achieve the goal signed by the National Government at Rio in 1992. That goal is stabilising the global climate at a level that is not dangerous to the planet’s life-support systems. The UN has phased milestones under the well-known Millennium Development Goals. They are: to halve global poverty to improve educational attainment and to increase maternal health and longevity. 
We all have milestones I say to the Minister. It is not a betrayal of the private sector as the driver of the national economy to lay down midpoint milestones to measure how well we are moving towards a stated target. In fact the Government itself has milestones or at least has access to them. The Electricity Commission’s draft statement of opportunities released in July is intended to provide interested parties with independent information to consider in assessing the potential for grid management efficiencies and in particular investment in upgrades and transmission alternatives. The chairman of the commission stated that the statement “is not a plan for the future development of the grid or of generation … Rather it is a set of scenarios as to how the transmission and generation of electricity may develop given a range of reasonable assumptions.” 
The scenarios show a trend for each year for all energy sources between 2010 and 2014. Each renewable source—geothermal hydro wind tidal solar—is expected to increase. The Government and the public will have this available to assess the effectiveness of the energy strategy over the next decade. 
The policies of the previous Government through the thermal power station moratorium and its emissions trading scheme were broadly on target for the market to deliver a 90 percent renewables goal by 2027. The Green Party’s  
Getting There 
 document of August 2009 showed how we could achieve a goal of having 90 percent renewables by 2025. This Government’s repeal of the moratorium and the weakening of the emissions trading scheme has left that goal in tatters. Without a clear signal through Government leadership the market will not deliver on time. 
The Minister’s energy strategy speaks of fostering the deployment of new renewable sources such as marine and solar. How the Government plans to foster marine energy is left unclear. I say to the Minister that if all he does is state an aspirational goal leave it to the commission to postulate scenarios based on assumptions and leave unclear how he will foster new renewables he will simply not attain the target. Yet attaining the target is an imperative for our children’s generation and the Minister has the ministerial responsibility. 
Here are a few personal thoughts on how to facilitate the attainment of a 90 percent target. Let us assume a population growth of 0.8 percent per annum and electricity generation growth of 2 percent per annum. Under that scenario national electricity generation would rise from 780 petajoules in 2010 to 1050 petajoules in 2025. Based on these assumptions it is possible to picture a scenario where a goal of 90 percent renewables can be achieved by 2025. Hydro might remain static at around 55 to 60 percent with some ageing stations being decommissioned. Geothermal might remain static at 13 percent. Wind power could with a level playing field increase over 15 years from its current 4 percent to say 12 percent. Tidal power possibly the most promising of all might with supportive action of the kind the Government extends to the petroleum industry be introduced and grow from nothing to say 10 percent. 
This is not a command plan; it is a heuristic tool to help policy makers and the public envisage a sustainable future. It also shows the magnitude of the challenge of switching to a low-carbon economy when energy consumption is growing exponentially. The reality will not be precisely like this but unless we all—householders voters farms companies local authorities and Government—have some idea of the phase-in and phase-out trend we need as a nation we shall never get there. The only way to get there is by having a robust carbon price signal for the market economy to react. There the Government is failing us as well. Instead of a whole-of-Government strategy envisaging a switch to low-carbon bases for our power sources the Minister is content to tinker with the imperfect framework of the electricity sector in the name of an outmoded notion of market competition. The Green Party will be opposing this bill.