Net Zero

New Zealand must map out a path to carbon neutrality by 2050 as our challenges are harbingers for the rest of the world. We already have a 85% renewable power mix, but we must figure out how to close this gap. Transport is responsible for most of New Zealand’s carbon dioxide emissions and 20% of total emissions, as is the case globally. Agricultural emissions make up more than half of our emissions profile. Dairy, meat, crops and horticultural products are exported, so international dietary preferences must figure in our national debate on climate change. We must also ask ourselves if aluminium production still has a place in New Zealand, and how many trees we should plant each year.

I moved home to New Zealand late in 2017, just a few weeks after a new centre-left government was formed. The Labour Party entered into a coalition with New Zealand First and a confidence-and-supply agreement with the Greens. Before Christmas, the new climate change minister and Greens’ party leader announced the Government’s intention to pass a Zero Carbon Act, whereby the New Zealand economy would achieve carbon neutrality by 2050. Industry, think-tanks and public sector officials have produced huge volumes of data, modelling, analyses and arguments since then. Within the last few weeks, the Interim Climate Change Commission was announced and the Productivity Commission published a 500-page draft report on the transition to a low-emissions economy. We all want to know what do we need to do to reach net zero.

I am reviving this blog with the aim of discussing climate change issues in New Zealand as I believe what we do here matters greatly. Small-emitting nations are responsible for up to 30% of total global greenhouse gas emissions. Given the nature of our challenges, decarbonising power, transport, agriculture and industry in New Zealand can provide a blueprint for decarbonising the world. We have the opportunity to demonstrate how to reach net zero.

100% renewables

Around 85% of New Zealand’s annual electricity supply is generated from renewable sources. Gas or coal-fired generation is used to meet winter demand peaks and back up supply in low rainfall years.  Hydroelectricity constitutes more than half of the national power mix. In a high hydrology scenario, with good seasonal rainfall and snow melt, hydro-power can meet up to 65% of our annual power needs, but dry years present a great challenge and a barrier to reaching 100% renewables.1

Norway is often held up as an example, given its comparable population size and reliance on hydro-power. However, the tiny Nordic nation has almost six times the amount of lake storage available in New Zealand. That’s just geography and topography. We can’t build another lake. Or we could, but the major legacy hydro-power schemes in New Zealand already disturb our ecosystems and divert major waterways so as to generate power. Under current resource management laws, it is highly unlikely that a new large-scale hydro-power scheme would get built in New Zealand. We could feasibly expand lake storage in current schemes, but not double it, which is what would be required. Further, this would do little to address the main barrier to reaching a 100% renewable power supply, which is our dry-year risk.

Wind power

At an emissions price of $75 or greater it will be economic to build enough wind farms to reach about 95% renewables in New Zealand, according to Concept Consulting. Wind farms will be important to ousting baseload gas and coal power plants over the next decade. This means that fossil fuels will never need be burnt to meet electricity demand when wind is available. Wind power only comprises around 6% of current supply, so resource consent and project permitting should be fast-tracked to encourage new build. Today, a significant number of wind projects have actually been consented, over 2.5GW according to the NZ Wind Energy Association, but project developers are waiting for prices to rise before starting construction. However, wind power cannot ensure our power supply is 100% renewable in a dry year since it is not guaranteed to be available during winter peaks when demand is at its highest. Grid-scale or rooftop solar exacerbates the seasonal storage challenge as it only generates during periods of low demand and has a much higher output during the summer. We need power sources that are as flexible as coal and gas-fired power plants to meet seasonal demand.

Another important issue is that wind is highly correlated throughout New Zealand. To simplify, if it is a windy day in Auckland it is likely to be a windy day in Wellington. When south-westerlies or westerlies, or any given weather system, move across New Zealand we get high volumes of generation at all or most wind farms, but when the weather is mild then wind generation is generally low throughout the country. More geographically diverse locations can be selected for future wind farms to reduce the effect of this correlation. Nevertheless, New Zealand is an island nation lacking any electricity interconnectors to other countries, so we cannot import electricity from a neighbour as happens in the European Union or the United States when wind power cuts out. We are on our own.

Big batteries

Grid-scale battery storage projects have been making headlines around the world. Tesla installed a massive battery in South Australia after Elon Musk made a promise to do it in 100 days or for free on Twitter. Bloomberg New Energy Finance’s (BNEF) lithium-ion battery price index shows a fall from US$1,000 per kWh in 2010 to US$209 per kWh in 2017. This fantastic cost decline is a cause for celebration. It will bring more storage into our homes and bring more flexible services to our power grids. It has already brought us mass-market electric vehicles. Nevertheless, this technology cannot economically provide seasonal or dry-year power storage of the scale required at present. They just do not pack as much punch as hydro storage.

Let’s make some optimistic assumptions. Suppose, Tesla can manufacture a 10kW battery next year. The buffer that we might need in a dry year is 4000 GWh in New Zealand – this is the extra energy we can store in hydro lakes during wet years. We have around 1.5 million households. This suggests we need 400 million batteries, or over 250 Tesla Powerwalls per household. Even at a discounted price of just US$2000 this would require an investment of over US$500,000 per household or US$800 trillion in total. More than four times our current GDP. We could spend that money more wisely to reduce our greenhouse gas emissions.

Car culture

Power sector emissions have declined 13% since 1990 and make up less than 10% of total emissions. In the same period, transport emissions rose 70% and constitute 20% to New Zealand’s emissions. Car ownership reached its highest level ever last year, at 774 light vehicles for every 1,000 New Zealanders. This is almost the highest vehicle ownership per person worldwide (Ministry of Transport).

This is the beast we must tackle. Electrification is the key pathway with existing technology to cut the majority of transport emissions. To charge electric passenger vehicles and e-buses, electrify trains, and reduce fossil fuel usage for heating, a reliable and affordable electricity supply is crucial. Rising power prices or an uncertain supply could frustrate decarbonisation in these emissions-intensive sectors and lead to worse overall outcomes (Concept Consulting). That’s why it is vital to not prematurely force a 100% renewables goal in the power sector.

Nevertheless, with more wind, batteries and additional geothermal power plants, it is technically feasible to reach the 100% renewables target when we have average or high rainfall. This would be achieved at great expense and put significant upwards pressure on power prices. Other flexible technologies, such as demand response or renewable power-to-gas, hold great potential to help New Zealand reach 100% renewables. Biomass or tidal power generation could emerge as affordable means to generate electricity in New Zealand in the next few decades. Solar and wind offer a comparatively low-cost pathway to reduce emissions in most countries that currently have a high share of coal and gas-fired generation, but how we plug the gap between 95% and 100% in New Zealand isn’t obvious yet.

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Farming

The New Zealand Emissions Trading Scheme (ETS) is our main tool for encouraging decarbonisation. The scheme requires emitters to pay for each tonne of carbon dioxide or other greenhouse gas produced – this is called an emissions unit. Farmers are currently exempt from participating in the ETS, which covers energy, waste and industry. To achieve net zero this will have to change since agriculture contributes over half of our emissions. To ensure a gradual transition for farmers, they should receive free emissions units upfront and have trading at the full emissions price phased in over time.

Carbon dioxide is not the culprit in the agricultural sector. In New Zealand, the main agricultural greenhouse gases are nitrous oxide and methane.
Nitrous oxide is a potent, long-lived greenhouse gas with over 200 times the global warming potential of carbon dioxide. Produced from livestock urine and dung, NO2 emissions rose 48.5% between 1990 and 2015, and make up 10% of our total emissions.1

Methane is a short-lived gas in the atmosphere. In other countries it is mainly generated as a byproduct of oil and gas exploration. These are called ‘fugitive’ emissions. In New Zealand, methane is biological in origin stemming from cattle and sheep. It has a very powerful heating effect in the short-term and can serve to accelerate or delay peak temperature or tipping points in the climate system.

Changing land-use from dairy, sheep and cattle farming to new forests or low-emissions crops and horticulture (growing fruit, vegetables and flowers) is key to achieving carbon neutrality in New Zealand by 2050. This implies that fewer sheep and cattle will be farmed in the future. Reducing, though perhaps not eliminating, dairy and meat exports raises important questions about food production. The carbon footprint associated with a diet rich in animal protein is an issue that is likely to loom larger in public debate.

Planting trees

Planting forests, also known as afforestation, currently offsets about 30% of New Zealand’s greenhouse gas emissions annually.1 At the moment, foresters can voluntarily participate in the ETS and profit from offsetting emissions. However, the registration fees and complexities of trading discourage small foresters from joining the scheme. Facilitating forest-owners participation in the ETS will provide new sources of income to agricultural regions, as farmers switch from pastoral farming and dairying to horticulture, crops or forestry.

All pathways to net zero, require forestry to play a major role. Afforestation is like a credit card, buying us time to develop alternative technologies to replace current agricultural and industrial processes. A methane vaccine for animals or other biological inhibitors that can be mixed with their feed are being researched, but these technologies remain unproven. Selective breeding, though it can take decades, will also continue reduce the amount of methane produced per animal.

Beyond 2050, when all economically viable land for new forests has been used, emissions offsets or reductions will have to come from elsewhere, so research and development funding is important. Government funding for research into emissions mitigation technologies is about NZ$20m per year, with roughly NZ$16m going to agricultural programmes. Given the contribution of agriculture to GDP (6% in 2015), and its proportion of total emissions, this is a small sum. More than NZ$1.5 billion is spent funding innovation in other areas.1 One option is to use revenues from the auctioning of emissions units to fund new mitigation technologies and research.

There are few affordable means to cut emissions from pastoral and dairy farming without reducing herd populations at present. Forestry, cropping and horticulture will offer alternatives. If all sectors are covered by the Emissions Trading Scheme, businesses that reduce their emissions will be rewarded and pay for fewer emissions units. It is the main tool we have to encourage the changes and innovation required in all sectors to dramatically cut our emissions and reach net zero by 2050 in New Zealand.


[1] Statistics & figures sourced from the Productivity Commission’s draft report unless otherwise referenced, Low-emissions economy, 27 April 2018.

As the largest nation in the Pacific region, and a second home to many whose first home will all but disappear below rising seas, we have a duty to achieve net zero in New Zealand by 2050. If you agree that we have a duty to address climate change locally and globally I welcome your comments below.

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New Zealand’s contribution

Last year at the 21st United Nations Conference of Parties (COP21) in Paris, 195 countries negotiated a global agreement to address climate change. The agreement does not stipulate specific emissions reduction targets, unlike its predecessor, the expired Kyoto Protocol. Instead each negotiating party was asked to voluntarily submit their Intended Nationally Determined Contributions (INDC) for reducing global emissions.

New Zealand’s INDC commits to reducing greenhouse gas (GHG) emissions to 30-percent below 2005 levels by 2030. Currently, renewables comprise around eighty-percent of New Zealand’s electricity mix. The government plans to increase this to ninety-percent by 2025, following the closure of the two remaining large-scale coal-fired power plants before 2018.

This low-carbon electricity generation is a huge advantage. It might be exploited to decarbonise the transport sector, which produces seventeen-percent of New Zealand’s total GHG emissions. New Zealanders depend heavily on road transport. This is due in part to having a widely dispersed population. Fuel efficiency standards already apply, targeting heavy diesel vehicles for road freight in particular. Fully electrifying public transport networks in Auckland and Wellington, as well as providing incentives for private ownership of electric vehicles, would go some way to reducing GHG emissions from the transport sector.

Yet agriculture contributes almost half of New Zealand’s total GHG emissions. The sheer size of the agricultural sector is impressive given the island nation’s size and population. New Zealand produces around a fifth as much milk as the US – a country seventy times more populous. Agriculture is also behind New Zealand’s high carbon intensity per capita – fifth among industrialised nations.

Nevertheless, New Zealand is one of the world’s most efficient agricultural producers. Milk production has trebled since the 1990s though methane emissions from cattle doubled. New Zealand has been successful in researching and adopting efficient farming practices. This includes effective pasture management, and breeding and feeding animals to yield more milk and meat. The New Zealand Agricultural Greenhouse Gas Research Centre is investigating  new means to breed or feed sheep and cattle so that they produce less methane, or introduce enzymes to their stomachs, through harm-free drug treatment or vaccination, that reduce their methane emissions. The government has committed $48.5 million to the New Zealand Agricultural Greenhouse Gas Research Centre before 2019. A further  $45 million is earmarked for the Global Research Alliance on Agricultural Greenhouse Gases. These institutes promote technologies and practices to reduce agricultural GHG emissions worldwide.

Reducing New Zealand’s agricultural emissions is a significant challenge. Until better technology is developed and widely deployed to capture or mitigate agricultural emissions the government does not expect that aggregate agricultural emissions will be reduced substantially beyond 2030. In the same vein, low-carbon technology must be widely deployed within the transport sector to encourage further emissions reductions post-2030.

This is why the New Zealand government supports a global carbon market. Currently an Emissions Trading Scheme (ETS) operates in New Zealand. Transport fuels are included to incentivise less carbon intensive forms of transport, but the scheme excludes pastoral agriculture. The inclusion of this sector would significantly affect New Zealand’s global competitive advantage and exports.

New Zealand’s agricultural emissions are ultimately associated with meat and dairy products consumed elsewhere in the world. Almost all agricultural produce is exported. New Zealand agricultural producers could not pass on the cost of carbon to consumers even if they were required to participate in the NZ ETS, since China, the US, Australia, Japan, the UK and other importers are liable to seek lower-cost supplies in the global marketplace. If other agricultural exporting countries were required to integrate a carbon price into their sales then the playing field would be more even. In fact New Zealand would have an advantage as one of the more productive agricultural exporters. This would also incentivise low-carbon farming and food production globally.

Currently, the electricity sector is leading the charge to decarbonise the world’s economy by encouraging the uptake of renewables. Yet agriculture comprises 14.5 percent of global GHG emissions. To realise more ambitious reductions in the next decade and beyond, significant research, development and funding needs to be directed towards agricultural technology and practices.

Or we might consider the vegetarian’s solution to climate change. Demand for meat has been rapidly rising in developing and emerging economies including China, India and Brazil. Though a reversal of this trend – and reduced global demand for meat and dairy – may not be the solution that the New Zealand government pictured.

Coal condemned

During the last decade, the majority of the OECD countries decoupled their economic growth from energy consumption. Normally these rise in tandem – a trend that persists in developing countries and world’s soon-to-be fastest growing and most populous nation, India.

This decoupling happened as developed nations shifted to providing services and building knowledge economies, which is less energy-intensive than industrial production and manufacturing. China too has started down this path. Policy-makers now talk of “decarbonising” the economy. That is, only producing and consuming energy which does not release greenhouse gases into the atmosphere and contributing to climate change.

Decarbonisation is currently focussed in the electricity sector where it is being helped along by policy incentives. Subsidies, guaranteed prices for electricity and tax-breaks dramatically boosted the growth in renewable electricity generation across Europe in the last few years. The liberalisation of Europe’s electricity markets and new regulation improving competition also played a role. Although, falling prices and technology gains spurred the sector’s expansion more than any government policy, particularly for solar power.

For renewables’ expansion to make any difference to greenhouse gas emissions coal-fired power production has to be tackled. Although it is cheap, burning coal releases significantly more greenhouses gases than other fossil fuels including gas in the electricity sector and oil in transportation. Europe’s aging fleet of coal-fired plants are also extremely inefficient at generating electricity compared to newer gas-fired units. A quarter of electricity in the European Union and almost forty-percent in the United States is still generated by burning coal. It is around two-thirds of the electricity mix in China where the resulting air pollution in its major cities is fuelling a sense of urgency.

Political leaders are aware of this danger and are acting to reduce coal production and consumption in many countries around the world. By 2025 all coal-fired power in the United Kingdom will be shut down according to current plans. New Zealand will close its two remaining large-scale coal-fired power plants in 2018. The provincial government of Alberta in Canada, where the tar sands industry alone produces more emissions than Portugal, has announced plans to phase-out coal power over the next fifteen years. China’s goal is to cap coal consumption in 2025 and accelerate its decline thereafter.

President Obama’s Clean Power Plan intends to restrict emissions from current coal-fired power plans, substitute coal with gas-fired or zero-carbon generation and impose strict emissions standards on new plants. The goal is to cut emissions in the electricity sector by a third relative to 2005 levels. Coal mining states have fiercely contested this “war on coal”, which is bound to be difficult for certain towns and regions whose local economy and workforce are dependent on coal mining, not just in the US. Nevertheless, coal needs to eventually exit the electricity sector if the commitments made by the US and 195 other countries at COP21 in Paris late last year are to materialise.

Yet, none of the above is enough to slow climate change. India is set to contribute the greatest share of growth in global coal demand in the future, mostly from increased domestic production. How it intends to reach its goal to produce forty-percent of its electricity from non-fossil fuel sources by 2020 is unclear. In Germany, coal’s resurgence in the power sector has cast a shadow over its achievements in increased generation from renewable resources. Angela Merkel’s government is working on a plan to phase out coal by mid-century. From the European Unions’s biggest economy this is too long to wait. Decarbonising electricity production by phasing out coal remains a long way off. Coal has been condemned by the world’s leaders but not yet replaced.

La question nucléaire: à la recherche d’une énergie parfaite

En 1985, deux agents français ont sabordé le navire Rainbow Warrior de l’organisation écologiste Greenpeace dans le port d’Auckland en Nouvelle Zélande. Cette opération, effectuée dans la mer territoriale néo-zélandaise, a été conduite sur ordre explicite du Président de la République Française, François Mitterrand. Le Rainbow Warrior faisait alors cap vers l’atoll de Moruroa, situé en Polynésie française, où les militants de Greenpeace avaient tenté d’empêcher des essais nucléaires menés par les militaires français.

Cet incident a marqué un tournant décisif dans la politique néo-zélandaise puisque la résistance au nucléaire est devenue une partie importante de l’identité nationale néo-zélandaise. Cela est toujours le cas aujourd’hui. Tandis que la France se montre toujours fière de ses prouesses technologiques dans le domaine nucléaire, également en matière de production énergétique.

En France, le nucléaire constitue deux tiers de la production électrique, alors que quatre-vingt pour cent de l’électricité est produite de façon renouvelable en Nouvelle-Zélande. Cela ne signifie pas pour autant que Nouvelle Zélande produit moins d’émissions de gaz à effet de serre. Au contraire, vu son immense secteur agricole, les émissions par habitant la place en 5ème position dans le monde, soit seize places devant la France. En outre, c’est grâce à sa géographie que les néo-zélandais parviennent à générer la plupart de leur électricité de façon renouvelable, par le biais de la hydroélectricité et de la géothermie. Peu de pays bénéficient d’un tel écosystème qui permet la production d’électricité par ces moyens peu polluants. Normalement, pour augmenter leur capacité à produire de façon renouvelable, les autres pays sont obligés d’investir dans le solaire ou l’éolien, qui ne sont pas sans coûts.

L’énergie nucléaire a clairement des avantages. Elle ne produit pas d’émissions GHG en générant de l’électricité. Deuxième avantage, les français paient un prix moyen d’électricité beaucoup moins cher que les néo-zélandais. De plus, sa capacité de production est très stable, alors qu’en Nouvelle-Zélande, pendant les années de précipitations inférieures à la moyenne, le risque de coupures d’approvisionnement augmente beaucoup vu la dépendance du pays à l’hydroélectricité.

Face à l’obligation de fournir de l’électricité à une population beaucoup plus importante en France qu’en Nouvelle-Zélande, le gouvernement français a dès lors choisi de se tourner vers le nucléaire. En revanche, la consommation néo-zélandaise ne nécessite pas les gros volumes d’électricité que les centrales nucléaires sont capables de générer. Même s’ils n’étaient pas politiquement contre l’énergie nucléaire, les néo-zélandais n’en auraient pas besoin. Cela rend cette décision politique plus facile pour le petit pays qu’est la Nouvelle Zélande.

Néanmoins, nombreux sont les peuples qui ne soutiennent pas non plus l’énergie nucléaire, compte tenu des risques associés trop graves pour être ignorés. C’est le cas notamment aujourd’hui en Allemagne et au Japon, où la majorité de citoyens s’élève contre l’énergie nucléaire, ainsi qu’en Nouvelle-Zélande. En plus de nombreux décès causés par une explosion nucléaire, des maladies graves frapperaient par la suite tous ceux se trouvant à proximité. Après une telle catastrophe, l’environnement local resterait toxique pour des décennies. L’économie agricole de la région serait détruite. Aucune compensation ne suffirait à couvrir les pertes humaines et les dégradations de qualité de la vie pour les survivants. Même si le risque d’accident est statiquement faible, cela ne règle en rien le problème des déchets radioactifs produits lors de la production d’électricité.

Pourtant, le nombre de gens tué dans les explosions des mines de charbon ou affecté par les maladies pulmonaires est plus important que le nombre de victimes des accidents et des bombes nucléaires combinés. À la fin, il faut comprendre que tous les choix ont leur compromis en énergie. Le peuple français ainsi que le peuple néo-zélandais, comme tant d’autres, font face à cette problématique et essaie d’allier l’abordabilité, l’accessibilité et la sécurité tout en limitant les polluants.

En reconnaissant sa violation de la loi internationale par rapport à le naufrage du Rainbow Warrior, la France s’est excusée officiellement en 1988 et les relations diplomatiques avec la Nouvelle-Zélande ont été rétablies. En 1991 un accord d’amitié a été signé entre la France et la Nouvelle-Zélande. Depuis cet accord les deux gouvernements consacrent des fonds à la promotion d’échanges culturels. Les bourses scolaires font partie de ce programme culturel. L’auteure de ce blog était bénéficiaire de cette bourse en 2013 et elle est venue en France pour étudier la politique énergétique. Ce blog vise à comprendre les choix politiques en matière d’énergie sans condamner pour autant, tout en réalisant que l’énergie parfaite n’existe pas.

The New Zealand test

When machines permitting payment by credit or debit card were first developed New Zealand was one of the first countries within which this EFTPOS technology was deployed. Today one can buy a coffee or even a 50c bag of sweets with their VISA or Mastercard. Most businesses do not have a minimum purchase for which you can use your bank card. Few of us carry cash.

New Zealand’s market is often considered something of a test environment for new technologies. Our small island nation is isolated in the middle of the Pacific Ocean, but we have an advanced economy and large middle class. This, our small population and an open, competitive marketplace makes New Zealand the perfect place to trial new products and innovations. If the product meets a certain need it will rapidly penetrate the market. You will soon know if whether it can be profitable or not – and whether you should launch the product elsewhere in the world.

In May, US company Tesla teamed up with Vector, New Zealand’s biggest electricity distributor, to bring their much lauded lithium-ion batteries to New Zealand homes and businesses.

Like cellphones these batteries do not require heavy investments in supporting infrastructure networks. They permit households and businesses to install PV solar panels whilst managing solar power’s intermittency. The main problem with solar power is that the sun does not shine all of the time. When the skies are cloudy or night falls your photovoltaic rooftop panels stop generating electricity. So households and businesses still need to be connected to the main electricity grid to guarantee their supply, in spite of solar panels installations.

You can resolve this issue by stockpiling electricity during daylight hours to use at night. This seems simple enough. However, batteries boasting the voltage and lifespan needed to supply an average household with enough electricity to keep the lights on have not been brought to market. Basically it is too expensive. Prototypes are also massive in size.

In principle if compact, powerful and affordable batteries hit the market then you would not need to be connected to the electricity distribution network. In fact you or your local community could go off grid.

How many households do not bother to install a landline phone these days? Could new houses avoid connecting to the main electricity grid in the near future? It is only a matter of time before battery technology hits that sweet spot. You can read about how Tesla plans to achieve economies of scale that surmount the current cost problem here.

To take a residence off-grid you would also need a smart monitoring system that conserves energy and warns you to turn off unnecessary devices when the household is running low on juice. Vector is investing in energy management systems that would provide this kind of service. They’ve also been investing in photovoltaic solar power and micro wind turbines. The company is future-proofing its main business – just in case distribution services are no longer needed in New Zealand.

If a decentralised electricity supply model works in New Zealand it will probably fly elsewhere. I still can’t pay for a coffee by credit card in Europe though.