Green Party Energy Plan Will Damage NZ Economy

Green Party Energy Plan Will Damage NZ Economy

Posted on 16 July 2020


In putting together its Clean Energy Plan, the Green Party would do well to consider this observation – ‘I know exactly what to do, I just don’t know how to get re-elected once I’ve done it!’ according to New Zealand’s minerals sector industry organisation, Straterra.

“The Green’s 9-point Clean Energy Plan, pays scant respect to the current state of the Covid-19 battered economy, available data, existing jobs and what is required for our businesses to remain internationally competitive,” said Straterra CEO Chris Baker.

“The proposal to prematurely end fossil fuel use will damage New Zealand’s international competitiveness without achieving their aims of emissions reductions.

“We should acknowledge a harsh reality here – New Zealand can and should do our share, but whatever emissions reductions we achieve will make no material impact on global emissions.

“The Greens ‘Plan’ provides no supporting analysis. Studies by the Productivity Commission and Interim Climate Change Committee conclude that 100% renewable electricity generation would be costly and result in higher emissions. Do the Greens have other studies that challenge these findings?

“Our dairy sector is currently lifting a very heavy load for the post-Covid-19 economy. The sector must be allowed to transition away from coal as technology, prices, the ETS and international competition allow. Under the Green’s plan, jobs and competitiveness take a back seat to reducing emissions, regardless of what other countries are doing. That is not what our economy needs ever, let alone now.

“Business needs coherent policy supported by evidence and pragmatism.  The Greens are offering to interfere and second guess business to achieve a . . . wish list.

“The low carbon economy is a clear goal that we all support – but banning coal use from industrial processes and electricity generation will simply cost jobs for no commensurate environmental benefit. This is ideology versus reality.

“Right now, tomato growers and other businesses that use coal for industrial heat are complaining about the cost burden of the ETS – and the Greens want to make that worse.

“New Zealand is a bubble in terms of Covid-19, but it is not, and cannot be, a bubble in terms of our economy.  We are an export dependent economy, we rely on demand from international markets and reducing emissions will occur over time as technology, competitiveness and cost burdens allow,” Mr Baker concluded.

Critique of the relevant sections of the Green Party’s Clean Energy Plan, below.

Critique of the Green Party’s Clean Energy Plan

100% Renewable electricity target

All the evidence and advice from independent experts suggests that the 100% renewable electricity target, that the Greens are wanting to achieve by 2030, is misguided and will have the opposite effect on New Zealand’s overall emissions as intended.

Currently around 84% of our electricity is generated from renewable resources but knocking out that remaining 16% is very expensive.  Both the Productivity Commission and Interim Climate Change Committee have pointed out that removing coal and gas from the generation mix would lead to an increase in electricity prices, and this would disincentivise the electrification of transport and industrial heat.

Having no coal on the Huntly Power station stockpile and suffering blackouts is a sure way to change the government of the day.

Banning coal boilers and coal usage in industrial processes

The international competitiveness of our agriculture sector, dairy in particular, relies on the cost-effective energy that coal provides. This is changing as the ETS price rises and other technologies become more competitive. But coal is key to the competitiveness of many businesses. If they are forced to switch from coal, New Zealand’s export sectors would be damaged leading to job losses and lower export receipts without reducing global emissions. 

Many companies are transitioning to renewable fuels but it is challenging for most particularly in the South Island where reticulated natural gas is not available and coal is the only economic fuel available. In the North Island gas is frequently subject to supply disruptions. 

Biomass is proposed in the policy as an alternative to coal but contrary to the message given, the supply and cost burden and associated land use impacts of replacing coal with biomass (firewood) simply does not work at the scale the dairy sector would require.

Electricity is also proposed but this is significantly more expensive than coal per unit of heat produced and converting would require major capital investment across many operations and businesses.