Energy sector to Climate Change Commission: advice an improvement, but more to do

Energy Resources Aotearoa has welcomed the Climate Change Commission’s latest draft advice as more nuanced and reflective of the energy trilemma, but says there are still major areas of improvement.

Energy Resources Aotearoa Chief Executive John Carnegie says:

"The Commission's advice is far more nuanced than we saw with the previous draft advice in 2021 and reflects the views of its stakeholders. We think the whole energy sector can get behind the following:

• the recognition that moving too quickly away from natural gas could imperil the energy transition;
• the importance of retaining natural gas generation as a reliable and affordable back-up for our electricity system;
• highlighting the investment uncertainty introduced by the 100% renewable electricity target and the Lake Onslow proposal that is slowing new renewable generation build; and
• the opportunity for carbon capture and storage to play a role - if an enabling regulatory regime is put in place."

"Some of the right ingredients are there. We’ll be suggesting the Commission doesn’t mince its words in its final advice, and recommends the Government drop the 100% target and the Lake Onslow proposal once and for all."

"The Commission has joined its Australian counterpart in identifying the positive role carbon capture and storage could play - if an enabling regulatory regime is put in place. There is now no excuse for the Government not to prioritise this work ahead of the next emissions budget period."

A recent report from Castalia shows that New Zealand could reduce carbon emissions by 2 million tonnes by using a combination of domestic natural gas and carbon capture, utilisation, and storage technologies. This would deliver a significant share of the emissions reductions sought by the Climate Change Commission while keeping electricity affordable.

Energy Resources Aotearoa continues to believe further improvements can be made to the Commission's advice, in light of its continued focus on reducing gross, rather than net, emissions.

"The Commission has taken a view that New Zealand needs to prioritise reducing gross emissions. We strongly disagree. A net emissions focus is more consistent with our national commitments, and will help us chart a lower-cost transition. Treating forestry removals differently under the ETS, for example, will distort resource allocation and drive up the costs borne by households and businesses at a time they can least afford it."

"A narrow focus on gross emissions invites policies that ‘pick winners’, like the proposed return of the tone-deaf ban on new gas connections. This would restrict innovation in lower carbon gases, such as biogas and hydrogen."

"Trying to pick winners is an exercise in futility under a binding emissions cap. We suggest the Commission goes back to basics. A net emissions pathway will allow households and businesses to navigate the transition based on their own preferences and priorities including what is affordable.

"The Commission and Government should listen to the consumers, rather than impose their own preferences."

"We look forward to working closely with the Climate Change Commission as they develop their advice to the Government."