While New Zealand appears to have understood the importance of clean energy for the climate and companies, Australia’s national government remains fixated on coal. But clear policies and a greater focus on innovation could ensure that both countries meet their emissions reduction targets
Australia and New Zealand both emit relatively high emissions, but while the latter under the leadership of Prime Minister Jacinda Ardern has committed to making climate action a priority, the government in Canberra is still betting on fossil fuels. “Australia is making huge strides in clean energy in some parts,” US environmental activist Bill McKibben tells FORESIGHT Climate & Energy at the end of a speaking tour around Australia and New Zealand. He highlights that power generation in the capital will be 100% from renewable sources by 2020. “[But] the government is controlled by mining interests,” leading to the continued pursuit of new coal mines, he adds. In New Zealand, though, it’s a different story, says McKibben. He underlines the country’s “progressive government” and the prime minster’s description of climate change as “the nuclear question of the age.” That said, Genesis Energy announced in February 2018 that it planned to keep burning coal in New Zealand’s last remaining coal-fired power station until 2025 under normal market conditions and possibly until 2030, which would be an eight year extension on previous plans. Both countries have relatively high per capita emissions—22 tonnes of carbon dioxide (tCO2) per person in 2017 in Australia and 17.4tCO2 in New Zealand in 2015 (the latest year for which such data are available). While the role of Australia as a significant emitter is old news, New Zealand’s high emission levels often attract less attention than its significant renewable energy provisions. In 2013, 75% of the country’s electricity generation came from renewable sources, according to the Ministry for Business, Innovation and Employment. The flip-side of this, however, is that New Zealand still has a significant number of gas-fuelled power stations that came online in the 1990s, a high per capita number of cars and a carbon emissions intensive dairy sector. Indeed, compared to 1990 levels, Australia’s 2017 emissions were down 7.5%, while New Zealand actually emitted 19.6% more because of increases in methane emissions from dairy cattle and carbon dioxide from road transport. New Zealand’s image appears a little rosier if year-on-year trends are examined. They reveal that Australia’s emissions rose by 1.5%, driven by an expansion of the liquefied natural gas industry, while New Zealand’s declined by 2.4% thanks mainly to an increase in renewable energy. Accelerating change
The challenge for both countries is how to accelerate change. New Zealand recently announced a ban on new offshore oil and gas exploration. While relatively small on a global basis, the upstream oil and gas sector nonetheless contributes over $2.5 billion to the country’s economy and oil exports are worth approximately $1.5 billion a year, according to the Petroleum Exploration and Production Association of New Zealand. Annual production is around 10 to 20 million barrels of oil, between 150 to 200 billion cubic feet of gas and one to two million barrels of liquid petroleum gas, says the association, which adds that 60% of the country’s energy supply still comes from fossil fuels. In addition to the exploration ban, at the end of May 2018, New Zealand, began consultations on a Zero Carbon Act, which will enshrine its goal of being a net-zero economy by 2050. It has also announced plans to establish an independent climate commission to set carbon budgets along this trajectory and already has a target to source 100% of its electricity from renewables by 2035; currently, this is around 85%. But this will be no mean feat, says Kristin Gillies from the country’s Sustainable Electricity Association. “It will take a lot to get that final 15%.” The biggest question is the role for distributed generation compared to the role that big generators putting in large geothermal or wind or large-scale centralised generation will play, he says. The good news is that solar is cost-competitive even without subsidies, but Gillies cautions that the outcomes of a review of electricity pricing currently underway and a review of distribution costs could potentially adversely affect the uptake of new technologies. Gillies argues against subsidies. “It’s going to be more sustainable for industry and all of the electricity sector if we let the market sort it out … if we have a truly competitive electricity market, then these new technologies will really stack up for consumers.” For John Carnegie, executive director for energy and infrastructure at lobby group BusinessNZ, the existence of a renewables target is already good news for business. “That’s your beacon on the hill,” he says. “Targets are really helpful for knowing the direction of travel.” In terms of accelerating the move to a clean energy economy, Carnegie stresses the importance of “regulatory predictability,” commenting: “You need a stable set of policies and institutions to give business the confidence to invest.”
Increasing renewables
McKibben believes the greatest opportunities for reducing emissions in New Zealand are around transportation. The sector is responsible for around 20% of its total annual greenhouse gas emissions and over 40% of emissions from the energy sector. McKibben cites the example of Norway, which is similar in size, population and share of hydroelectricity to New Zealand, and its pledge to ban the sale of fossil-fuel powered cars after 2025. “New Zealand hasn’t done that yet, but it could if it supplemented hydropower with new solar and wind,” says McKibben. In 2016, wind generated around 6% of the electricity consumed in the country, equivalent to the amount of electricity used by 300,000 home in a year. And, most unusually, this generation was built without a hint of government subsidies. But progress has slowed in recent years, highlights the New Zealand Wind Energy Association. No new wind farms have been developed since 2015 and in 2017 the association rolled back its vision of wind energy providing 20% of the country’s electricity requirements by 2030 to 2035. This was, “To reflect the lack of recent new wind development following a period of reducing electricity demand and high reserve margins limiting the requirement for new generation investment,” claims the association. Solar, meanwhile, still plays a very small role in the country’s energy mix. The government acknowledges the issue of transportation. “Domestic transport accounts for 82% of demand from oil products,” says the Ministry of Business, Innovation and Employment. “The government is encouraging the uptake of electric vehicles and has a target for these to be 2% of the fleet by the end of 2021,” which equates to around 78,000 vehicles, based on 2015 vehicle levels — about ten times the current level. Steps to encourage the switch to cleaner cars include converting the Crown fleet to electric vehicles, training courses for the maintenance of electric vehicles and servicing, and developing a charging infrastructure. But the ministry adds that the country’s vehicle fleet is heavily reliant on the import of second-hand cars from Japan and there are, therefore, “No plans to bring in a Norway style ban.”
If we’re serious about the transition, then we need to become more serious about research and development, and more serious about the adoption and adaptation of new technologies
Policy action lacking
Australia, meanwhile, continues to maintain it is on track to meet its pledge under the 2015 Paris climate agreement to cut emissions to between 26% and 28% below 2005 levels by 2030. “Australia has a strong suite of policies in place to meet its international targets,” insists the government’s energy department, pointing to a phase-out of hydrofluorocarbons, a public fund to buy domestic emissions offset credits and a renewable energy target, among other things. The country is also working through the details of a national energy guarantee, developed in response to spiralling power prices following years of stalled investment due to policy flip-flops. This is expected to impose new reliability and emissions reduction guarantees on energy retailers and large energy users from 2020. “A sector by sector approach remains the best way to meet our 2030 target,” it states. “No country in the world is relying on a single policy. Emissions projections released in 2017 show that Australia continues to make progress towards our 2030 target.” And the country is making progress in terms of renewables. “While 2017 was a record year on many fronts for the renewable energy industry, it is just a glimpse of the unprecedented level of activity expected in the next couple of years,” said Kane Thornton, chief executive of Australia’s Clean Energy Council, launching the non-for-profit’s latest report at the end of May 2018. The report highlights the 700 MW of renewable projects that were completed or began generation last year with large-scale wind and solar project activity pushing investment in the sector in Australia up 150% to a record $9 billion. Four large-scale solar projects were completed in 2017, boosting the country’s total solar capacity to 450 MW compared to 34 MW at the end of 2014. Total wind generation capacity reached 4816 MW with 15 new wind farms either under construction or financially committed at the end of 2017. And for the first time, wind and hydro generation contributed an almost identical amount of electricity of around 5.7% each, to total national electricity generation during the year. Thornton welcomed the developments, but insisted that, “Policy certainty beyond 2020” was becoming “increasingly urgent.” Independent analysts at Climate Action Tracker agree that policy action is sadly lacking and believe the government’s faith in the country’s ability to meet emissions reductions targets is misplaced. “While the federal government continues to maintain, most recently in its 2017 Review of Climate Change Policies, that Australia is on track to meet the 2030 target, [we are] not aware of any factual basis, published by any analyst or government agency, to support this,” they write in their April 2018 update. “To the contrary, Australia’s emissions are increasing and the latest projection published by the government at the same time as the 2017 review shows that emissions are still projected to grow instead of leading to a reduction in line with the 2030 target.” Innovation focus
Carnegie believes that ultimately climate action can only be increased if countries focus more on innovation. “If we’re serious about the transition, then we need to become more serious about research and development, and more serious about the adoption and adaptation of new technologies,” he says. “There’s plenty of technology either on or just beyond the horizon — the question is whether or not it is commercial.” Australia has the potential to lead the way. At the end of 2017, Tesla creator and innovator Elon Musk delivered the world’s largest lithium-ion battery (100 MW) for grid support at the 315 MW Hornsdale Power Reserve wind farm in South Australia. The state will also host the giant 150 MW Aurora thermal solar plant, being developed at a cost of $650 million by SolarReserve. The Aurora plant combined with a similar storage facility could be quite the showpiece, says McKibben. “Australia is uniquely blessed with sun and wind,” but the politics are locked in coal, he adds. “The thing with climate change is we have to move quickly — and we’re not.”
TEXT
Katie Kouchakji