New Zealand’s energy policies are on the right track, but challenges remain, IEA says

28 March 2011

New Zealand continues to adopt a proactive approach to its energy policies and has demonstrated a visible commitment to reform, according to a review published today by the International Energy Agency (IEA) that also highlighted the challenges that remain.

The most notable achievement has been the introduction of the New Zealand ETS (NZ ETS), a comprehensive nationwide scheme, which allows unlimited trading with the international Kyoto Protocol market.

Energy Policies of IEA Countries – New Zealand 2010 Review cites the country’s impressive use of renewable energy for electricity in recent years. In 2008, around 64% of New Zealand’s electricity production was from renewable sources. This jumped to 73% a year later – the third-highest share among OECD member countries.

Despite visible progress in this and other areas, the review observes that a number of policy challenges for the country remain. It called on the country’s government to set realistic goals for energy-efficiency improvements and to increase investment in electricity infrastructure.

“While positive progress has been made in developing sound policies over the last few years, New Zealand’s energy strategy could be strengthened,” said Nobuo Tanaka, Executive Director of the IEA, at the launch of the review in Wellington on 29 March.

“Over the long term, New Zealand must continue to enhance its policies in order to ensure a secure, sustainable and decarbonised future,” he added. “Its bold goal of generating 90% of electricity from renewable sources by 2025 – providing supply security is maintained –represents a large step in the right direction.”

Energy strategy

The IEA review welcomed the publication in draft form of a revised New Zealand Energy Strategy in mid-2010. This Strategy identifies priorities for the country and is intended to form the basis of the strategic direction of its energy sector and of energys role in the economy.

The IEA urges the government to move quickly and finalise this important Strategy and commence implementation in collaboration with other relevant ministries and industry stakeholders,” the authors write. “The Strategy should include clear priorities and identify firm actions needed to meet them.”

Energy efficiency

The review also assesses the draft New Zealand Energy Efficiency and Conservation Strategy (NZEECS), which proposes energy-saving goals for the country.

The report notes that “the draft proposals lack a firm commitment to actions that will contribute to achieving the energy saving goals.” The authors add: “The government needs to assign priorities for working towards goals it can realistically achieve in order to demonstrate early effectiveness and lead to confidence building. The Strategy is missing a firm set of actions to achieve its stated goals.”

At the launch of the review, Mr. Tanaka stressed: “Detailed action plans targeted specifically on the transport, commercial buildings and industry sectors must form part of the final NZEECS”.

Infrastructure investments

Looking at the long-standing sustainability of New Zealand’s energy sector, the Executive Director said that investments in energy infrastructure are long-term considerations and require some level of national consensus and regulatory certainty before informed and efficient decisions can be taken.

The IEA report states that a low-carbon energy system – with greater levels of variable renewable energy, more small-scale generating capacity, increased interruptible load and demand participation and growth in use of electric vehicles, each supported by a smart grid – calls for significant investment.

“Energy security remains at the heart of New Zealand energy policy,” noted Mr. Tanaka, who highlighted the progress already achieved in improving the security of its electricity system. “More investment is needed, however, to build a robust system; one that meets future demand and places New Zealand on a firm path to a low-carbon energy future.”

Energy Policies of IEA Countries – New Zealand 2010 Review is available for free download. 

Key facts and terms:

Energy efficiency
Something is more energy efficient if it delivers more services for the same energy input, or the same services for less energy input. For example, when a compact florescent light (CFL) bulb uses less energy than an incandescent bulb to produce the same amount of light, the CFL is considered to be more energy efficient. For more information, click here.

Reducing emissions
The government has set two national targets for reducing greenhouse gas emissions: a medium-term responsibility target of a 10% to 20% reduction in emissions below 1990 levels by 2020 and a long-term target of a 50% reduction in net greenhouse gases from 1990 levels by 2050.

Smart grid
A smart grid is an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end users. Smart grids co-ordinate the needs and capabilities of all generators, grid operators, end users and electricity market stakeholders to operate all parts of the system as efficiently as possible, minimising costs and environmental impacts while maximising system reliability, resilience and stability.