New Zealand

128 Pages·2002·5.955 MB·English

by  OECD

prepaNew Zea 1 19/03/01 16:23 Page 1
INTERNATIONAL ENERGY AGENCY
Energy
Policies
of IEA
Countries
New Zealand
2001 Review
garde new zea 19/03/01 17:03 Page 1
INTERNATIONAL ENERGY AGENCY
Energy
Policies
of IEA
Countries
New Zealand
2001 Review
INTERNATIONAL ENERGY AGENCY ORGANISATION FOR
9, rue de la Fédération, ECONOMIC CO-OPERATION
75739 Paris, cedex 15, France AND DEVELOPMENT
The International Energy Agency (IEA) is an Pursuant to Article 1 of the Convention signed
autonomous body which was established in November in Paris on 14th December 1960, and which
1974 within the framework of the Organisation for came into force on 30th September 1961, the
Economic Co-operation and Development (OECD) to Organisation for Economic Co-operation and
implement an international energy programme. Development (OECD) shall promote policies designed:
It carries out a comprehensive programme of energy co- • To achieve the highest sustainable economic
operation among twenty-five* of the OECD’s thirty growth and employment and a rising standard of
Member countries. The basic aims of the IEA are: living in Member countries, while maintaining
financial stability, and thus to contribute to the
• To maintain and improve systems for coping with development of the world economy;
oil supply disruptions;
• To contribute to sound economic expansion in
• To promote rational energy policies in a global Member as well as non-member countries in the
context through co-operative relations with non- process of economic development; and
member countries, industry and international
organisations; • To contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance
• To operate a permanent information system on the with international obligations.
international oil market;
The original Member countries of the OECD are Austria,
• To improve the world’s energy supply and demand Belgium, Canada, Denmark, France, Germany, Greece,
structure by developing alternative energy sources Iceland, Ireland, Italy, Luxembourg, the Netherlands,
and increasing the efficiency of energy use; Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States. The following
• To assist in the integration of environmental and countries became Members subsequently through
energy policies. accession at the dates indicated hereafter: Japan
(28th April 1964), Finland (28th January 1969), Australia
(7th June 1971), New Zealand (29th May 1973), Mexico
* IEA Member countries: Australia, Austria, Belgium, (18th May 1994), the Czech Republic (21st December
Canada, the Czech Republic, Denmark, Finland, France, 1995), Hungary (7th May 1996), Poland (22nd
Germany, Greece, Hungary, Ireland, Italy, Japan, November 1996), the Republic of Korea (12th December
Luxembourg, the Netherlands, New Zealand, Norway, 1996) and Slovakia (28th September 2000). The
Portugal, Spain, Sweden, Switzerland, Turkey, the Commission of the European Communities takes part in
United Kingdom, the United States. The European the work of the OECD (Article 13 of the OECD
Commission also takes part in the work of the IEA. Convention).
© OECD/IEA, 2001
Applications for permission to reproduce or translate all or part of this publication
should be made to:
Head of Publications Service, OECD
2, rue André-Pascal, 75775 Paris cedex 16, France.
TABLE OF CONTENTS
1 SUMMARY AND RECOMMENDATIONS ......................... 7
2 CONDUCT OF THE REVIEW .................................... 17
3 GENERAL ENERGY POLICY ..................................... 19
4 ENERGY AND THE ENVIRONMENT ............................. 35
5 ENERGY EFFICIENCY .......................................... 45
6 ELECTRICITY ................................................... 63
7 OIL, GAS AND COAL .......................................... 85
8 ENERGY RESEARCH AND DEVELOPMENT ....................... 109
A ANNEX: ENERGY BALANCES AND KEY STATISTICAL DATA ......... 117
B ANNEX: INTERNATIONAL ENERGY AGENCY “SHARED GOALS” ... 121
C ANNEX: GLOSSARY AND LIST OF ABBREVIATIONS ............... 123
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Tables and Figures
TABLES
1. Changes in Generation Capacity since 1992 ....................... 73
2. Market Share – Generation and Retail ............................. 74
3. New Zealand’s Petroleum Reserves as at 1 July 1999 ................ 88
4. Oil Consumption in 1998 and 1999 ............................... 90
5. Hard Coal Exports, 1978 to 1999 ................................. 104
FIGURES
1. Map of New Zealand – Key Energy Sources ........................ 6
2. Fuel Prices, 1999 ................................................. 23
3. Energy Production by Fuel, 1973-2020 ............................ 24
4. Primary Energy Supply, 1973-2020 ................................ 25
5. Total Primary Energy Supply in IEA Countries, 1999 ................. 25
6. Total Final Consumption by Fuel, 1973-2020 ....................... 27
7. Total Final Consumption by Sector, 1973-2020 ...................... 27
8. Final Consumption by Sector and by Fuel, 1973-2020 ............... 28
9. Carbon Dioxide Emissions by Fuel, 1973-1998 ..................... 35
10. Carbon Dioxide Emissions by Sector, 1973-1998 ................... 36
11. Energy-related Carbon Dioxide Emissions per GDP (PPP) in New Zealand
and in Other Selected IEA Countries, 1973-2010 ................... 37
12. Per Capita Energy Use in New Zealand, 1980-1995 ................ 45
13. Energy Use per Capita by Major End-Use .......................... 46
14. Energy Intensity in New Zealand and in Other Selected IEA Countries,
1973-2010 ...................................................... 46
15. Energy Intensity by Sector in New Zealand and in Other Selected IEA
Countries, 1973-2010 ............................................ 47
16. Electricity Consumption by Sector, 1973-2020 ...................... 65
17. Electricity Generation by Fuel, 1973-2020 .......................... 65
18. Industrial Electricity Prices in IEA Countries, 1999 ................... 75
19. Domestic Electricity Prices in IEA Countries, 1999 ................... 75
20. Electricity Prices in New Zealand and in Other Selected IEA Countries,
1980-1999, Industry Sector ....................................... 76
21. Electricity Prices in New Zealand and in Other Selected IEA Countries,
1980-1999, Household Sector .................................... 76
22. Oil Ownership Flows in New Zealand .............................. 86
23. Final Consumption of Oil by Sector, 1973-2020 .................... 90
24. OECD Gasoline Prices and Taxes, 3rd Quarter 2000 ................. 92
25. OECD Automotive Diesel Prices and Taxes, 3rd Quarter 2000 ......... 93
26. Natural Gas Ownership Flows in New Zealand ..................... 95
27. Maui Contracted Gas Commitments ................................ 96
28. Natural Gas Network ............................................. 97
29. Natural Gas Consumption, 1973-2020 ............................ 98
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30. Gas Prices in New Zealand and in Other Selected IEA Countries,
1980-1999 ..................................................... 100
31. Gas Prices in IEA Countries, 1999 ................................. 101
32. Coal Ownership Flows in New Zealand ............................ 103
33. Coal Consumption by Sector, 1973-2020 ........................... 105
34. Energy Research and Development Public Budget (excluding Nuclear)
vs GDP in IEA Countries, 1999 .................................... 111
Note
This report was approved for publication in February 2001. Several
developments subsequently should be taken into account when reading the
report. These include the following.
The US position on the Kyoto Protocol which was announced in March is an
important consideration for all IEA Member countries in developing energy-
environment policy.
The draft National Energy Efficiency and Conservation Strategy was published,as
planned, in April 2001. At the time of the review (October 2000), little was
known by the review team of the likely contents of the strategy,so the report
offers suggestions for consideration that were known by the government at the
time the strategy was being formulated.
On 15 March 2001,the government announced an enquiry into the gas industry.
The terms of reference for the enquiry are consistent with the views expressed
in this report which recommends an investigation of the benefits of regulatory
reform in the gas industry notwithstanding the small size of the insustry.
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Figure 1
New Zealand – Key Energy Sources
MarsdenPoint
OilRefinery
AUSTRALIA
Imports
NEW Auckland
ZEALAND
ThermalPower
HuntlyCoal
Hamilton
Geothermal
Petrochemicals
Power
NorthIsland
OffshoreGas
HydroPower
andCondensate
Tasman
Onshore
OilandGas
Sea
Wellington
WestCoast
Coal
Christchurch
Pacific
SouthIsland
HydroPower Ocean
SouthlandCoal
andLignite
Km
0 100 200
Source: Ministry of Economic Development,New Zealand.
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SUMMARY AND RECOMMENDATIONS
SUMMARY
New Zealand faces challenges in several major areas of energy policy.
Energy policy has been innovative and strongly market-oriented: New
Zealand has shown leadership.
To date,energy policy has been developed as part of a wider economic development
strategy,with a particular focus on regulatory reform. These reforms have possibly
contributed to the recent marked improvement in New Zealand’s economic
performance,which appears likely to be sustained at a steady rate of economic growth
of about 3 per cent per year. Energy policy is now placing more emphasis on energy
efficiency and environmental objectives that are primarily the responsibility of the
Ministry for the Environment and the Energy Efficiency and Conservation Authority. It
will be important to ensure that energy policy continues to achieve economic
efficiency objectives as well as environmental objectives,and that the agencies involved
continue to work towards common goals. Energy security objectives might be given
more attention,in light of both the importance of gas depletion in the energy outlook
and the experience of the Auckland power failure in 1998.
Energy-environment policies have made rapid progress. A timetable for ratifi-
cation of the Kyoto Protocol has been set and there is now an urgent need to
agree on a cost-effective package of policies and measures; but crucial
decisions may not be possible before the ratification deadline because of the
need for international agreement on emissions trading and credits for sinks.
By undertaking to ratify the Kyoto Protocol by mid-2002 New Zealand has taken a
significant step ahead of many other IEA countries.New Zealand is the only OECD
country to make such a commitment outside the European Union,where individual
countries have a degree of protection from adverse impacts as all members must ratify
together. New Zealand has a commitment to achieve 1990 level emissions by 2008-
2012. Total greenhouse gas emissions are currently estimated to rise to 9 per cent
above 1990 levels by 2008-2012 unless new policies and measures are introduced. In
1999,carbon dioxide emissions,primarily from the energy and transport sectors,were
19 per cent higher than in 1990.
Growth in carbon dioxide emissions is primarily from transport and thermal
electricity generation. Emissions of methane from agriculture are also important
and must be taken into account in developing a cost-effective package of response
measures based on emissions from all sectors and all gases.
In electricity generation, the share of hydro and gas are currently projected to
decline,and the share of coal could rise,even if new gas discoveries are made and
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additional gas is made available for power generation by closing the existing
petrochemical plants. The outcome of gas exploration and development will be a
crucial influence on the outlook for the energy sector.
The immediate focus of energy-environment policy is on information,advisory and some
regulatory energy efficiency measures. These additional measures,agreed over the last
year,are almost certainly insufficient to have a major impact,particularly on transport.
Further measures are expected to come from the implementation of the National Energy
Efficiency and Conservation Strategy and from targeted measures to address carbon
dioxide emissions from transport. Further options under consideration include a carbon
charge,binding negotiated agreements with industry,and domestic and international
trading in emissions permits. International emissions trading and credits for carbon sinks
are both crucial to New Zealand’s future approach to emissions reductions.
Ratification will be subject to the establishment of a credible set of policies and
measures,and full implementation is not expected before the Kyoto Protocol comes
into force. Before ratifying the Kyoto Protocol New Zealand should ensure that it
has fully analysed the impacts and quantified the costs and benefits of its actions.
Work is under way to define the credits attributable to sinks and the scope for
emissions trading,where more information is needed.
Energy sector emissions are important,and should be addressed,but attention should
also be given to emissions from transport and agriculture. The transport sector is
responsible for 34 per cent of total carbon dioxide emissions and is the main source of
growth in carbon dioxide emissions. Methane and nitrous oxide emissions from
agriculture are currently the largest source of greenhouse gas emissions in New Zealand.
Electricity generation offers little scope for action because of the already high proportion
of generation from hydro and geothermal sources. The share of gas-fired power
generation is growing and the share of coal-fired power may also grow if significant new
gas reserves are not found. Fundamental change would be required in the transport
sector,and possibly in electricity generation,if the Kyoto target is to be achieved by
domestic measures alone. Emissions trading and credits for sinks will be crucial,and may
possibly be sufficient,to achieve New Zealand’s target. Nonetheless,the government is
not expected to rely exclusively on credits from New Zealand’s substantial carbon sinks,
and domestic policies and measures are also being applied and further developed.
Clearly there is a continuing need to quantify the contribution of each instrument and its
cost-effectiveness in deciding the mix of policies and measures to use.
Energy efficiency is a priority for policy development as an early response
to the Kyoto commitment.
Energy consumption per capita and per unit of GDP is low because of New
Zealand’s mild climate,the relatively low level of GDP per capita,the low share of
manufacturing in GDP,and relatively short travel distances. Government “business-
as-usual”scenarios to 2020 suggest that the growth rate of energy consumption will
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average 1.1 per cent assuming GDP growth is 3 per cent per year. These forecasts
assume significant changes from the historical trend over the coming 20years.
Stronger measures need to be put in place to improve efficiency if they are to
make a substantial contribution to reducing greenhouse gas emissions. A recent
IEA study of energy efficiency in New Zealand1 shows that there is a need to
improve the information base to assist in designing cost-effective measures and to
monitor progress. The IEA’s report suggests:
(cid:2) There is potential for further improvements in domestic space heating,water
heating and electrical appliances. Use of space heating is at a low level by
international standards. Particular attention should be directed to avoiding a
close correlation between growth in GDP and space heating.
(cid:2) Per capita energy use for travel is high because of the large number of cars,but
is offset by relatively short driving distances and fuel economy. The transport
sector is by far the most important area to address because of its contribution to
carbon dioxide emissions compared with the energy sector.
(cid:2) New Zealand’s manufacturing structure has become more energy-intensive and
efficiency of energy use is low.
(cid:2) Performance in the commercial and services sector is already good, probably
because of the mild climate.
The Energy Efficiency and Conservation Act 2000,the establishment of the Energy
Efficiency and Conservation Authority (EECA) as a Crown entity,and the requirement
to produce a National Energy Efficiency and Conservation Strategy by October 2001
are important developments since the last review. The Minister for Energy is
responsible for the strategy which is being developed by EECA and the Ministry for
the Environment with wide public and stakeholder input. There will be a process of
formal consultation on a draft strategy to be notified by April 2001. The IEA’s report
suggests some points that might be taken into account in developing the strategy.
Electricity liberalisation policy has been successful in reducing wholesale
prices and in improving efficiency in the sector. Further reforms are
designed to strengthen industry self-governance and to bring the benefits
of market reform to the retail market. Regulation remains an issue. Care
will be required to avoid distortions that may arise from simultaneously
seeking to achieve economic, environmental and social goals in the sector.
The electricity supply industry in New Zealand is based on large-scale hydro. Also
important are gas,geothermal,and coal.
1. “Energy Use and Efficiency in New Zealand in an International Perspective: Comparison of Trends
through 1995”,International Energy Agency and the Lawrence Berkeley National Laboratory (1999,
unpublished).
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