Aspirational target not realistic

Aspirational target not realistic

The draft Energy Strategy released by the government retains an unrealistic goal for renewable electricity generation, but the good news is that this government is going to get serious about energy efficiency.

In the draft Energy Strategy, the government proposes an “aspirational”, but in its view achievable, target of 90% of electricity generation from renewable sources by 2025.

The 90% renewables target, set by the previous government is not practical unless substantial price rises were allowed to occur. By our calculations, on the assumption that over the next 10 years there will be a mix of new geothermal, wind, and thermal and a small amount of hydro constructed, the likely percentage of renewables by 2025 will rise slowly but still be much less than the aspirational target of 90%. That target could only be made realistic by substantial government financial support for renewable generation. Such an approach has been adopted in some countries with aspirational targets. Nevertheless, by international standards, New Zealand does produce a high proportion of its electricity from renewable sources.

On the other hand, the energy efficiency initiatives in the draft Strategy are to be applauded. There has been a lukewarm approach taken by successive governments to energy efficiency, conservation and demand management. Some gains have been made through the introduction of more efficient appliances, but there has not been a full realisation of the potential. This is an area where market failure occurs because consumers don’t have sufficient technical knowledge to choose, for example, high-efficiency heat pumps.

Mandatory efficiency standards allowing only the sale of products with minimum life-cycle costs would have a tangible impact over a period of time. A rigorous and interventionist approach on electric products is justified; there will be higher returns on capital for efficiency initiatives than the costs of expanding generation capacity.

New Zealand needs to reduce electricity and energy demand as this makes good economic and environmental sense, and it is better value for New Zealand than setting unrealistic “aspirational” targets without realistic means to achieve them.

ENDS

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