New Zealand's quest for low-emissions energy

For the first time in our history since industrial development began here, it will set New Zealand on a path which will enable us to sustainably reduce our total CO2 emissions from energy.

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Address to the International Association for Energy Economics (IAEE)6.15pm Grand Hall, Parliament Buildings. Wellington.

Distinguished guests and participants

I am delighted and honoured to welcome you all to New Zealand and to Wellington, our capital city, for your 30th Conference.

I sincerely hope that those of you who were able to take the pre-conference technical tour yesterday thoroughly enjoyed the visits and the opportunity to see a little of our countryside.

Your second tour on Thursday morning will provide an opportunity to have a look at the greater Wellington area.

And I do hope that at least some of you, having travelled very considerable distances to be with us this week, will take the opportunity to stay on for few days and see some more of a country of which we are very proud.

Your conference programme notes the attendance of a wide range of speakers who, between them, are experts across virtually all aspects of energy and the associated economic issues.

It is indeed a credit to the organisers that they have been able to attract this level of expertise to an event which being held at a far-flung corner of the globe.

It serves to confirm the seriousness with which the international energy community regards the large number of pressing issues facing it over the next few years.

With several concurrent sessions running for most of the conference, and with so many interesting topics up for discussion, it will be quite a challenge for attendees to decide which ones to choose.

My Ministerial portfolio responsibilities range across the issues in front of you this week, and I will be very interested to hear about the major views and decisions, which will form the output of your debates and discussions.

Your conference couldn't be more timely from our country's perspective, as we are right in the middle of a major project to develop an all-encompassing New Zealand Energy Strategy - the first time that this has ever been attempted here.

Our vision is for a reliable and resilient system delivering New Zealand sustainable, low-emissions energy.

We plan to do this by:

- Providing clear direction on the future of our energy system

- Maintaining high levels of security and reliability at competitive prices

- Maximising how efficiently we use our energy to safeguard affordability, economic productivity and our environment

- Maximising the proportion of energy that comes from our abundant renewable energy resources

- Reducing our greenhouse gas emissions

- Promoting environmentally sustainable technologies.

The impact of unmitigated climate change is a serious issue facing all countries.

Given the imperative for the world to reduce greenhouse gas emissions, and the likelihood that emissions will carry an economic cost to our country in the future, it is vital that we alter our growing energy emissions.

We in New Zealand have a long tradition of providing much of our energy from local renewable sources.

Already, about 70 percent of our electricity is generated from renewable sources - the third highest level in the developed world.

The New Zealand Energy Strategy will help us do even better with electricity and make important progress with transport over the next 30 to 50 years.

The strategy will aim to ensure that New Zealanders reap the benefits of a sustainable low-emissions energy system, which will provide our economy with an enduring competitive advantage.

I expect that this transition will be cheaper in New Zealand than in almost any other country in the world.

Our abundant sources of renewable energy mean that New Zealand is already a leader in sustainable energy.

This strategy will show how New Zealand can advance towards carbon neutrality.

For the first time in our history since industrial development began here, it will set New Zealand on a path which will enable us to sustainably reduce our total CO2 emissions from energy.

New Zealanders are renowned for their ability to develop resourceful, innovative and pioneering solutions.

These qualities will be valuable as we respond to the energy challenges and opportunities of the future.

We want to protect our environment for future generations, and reinforce the values that New Zealanders share.

We all have a stake in where our energy comes from, how we use our energy, and the impact that our energy choices have on the world around us.

The challenge for the government is to persuade all New Zealanders, from the largest corporate organisation to each individual energy user, to recognise and accept the issues and do their bit to resolve them.

We released the strategy as a consultation draft during December, and plan to publish the final document around the middle of this year.

The strategy is consistent with the principles we are applying across all greenhouse gas emissions policy:

- Our policy response should start with the most achievable options and seek least-cost solutions

- A combination of sectoral and economy-wide measures, including voluntary, price-based and regulatory measures, is likely to be needed

- Short-term measures must not be inconsistent with likely long-term solutions

- All sectors of the economy should play an equitable part in the national response to climate change, reflecting the fact that some sectors will be able to reduce their emissions more easily than others.

The draft sets out an overall policy architecture, which divides the future into two phases:

- A transitional period that runs from now to 2012

- The period after 2012 which marks the end of the first Kyoto commitment period.

It focuses on three key areas:

- Principles for carbon pricing and trading

- Reducing carbon emissions from stationary energy

- Tackling the transport challenge.

In the first phase, the draft strategy focuses on options for reducing the carbon emissions from electricity and transitioning to greenhouse gas pricing in the electricity sector.

Putting a cost on carbon emissions from electricity generation will provide an incentive to develop renewable energy sources as well as managing the energy we use more effectively.

Additional measures to drive a big increase in renewable energy and energy efficiency will also deliver significant co-benefits such as industry development, better insulated, warmer homes housing healthier families.

Where transport is concerned, a broad range of measures will start to deal with what would otherwise be a rapid escalation of transport carbon emissions.

These will include the introduction of a biofuels sales obligation by 2008, tougher fuel efficiency standards for imported vehicles, and more support for public transport.

If we can make our vehicles more efficient and encourage more public transport use, we'll reduce roading and vehicle owner costs.

We'll also reduce our reliance on imported oil and provide a bit of a buffer to volatile oil prices.

We grow crops and animals very efficiently in New Zealand. First generation biodiesel from tallow, a by-product from livestock processing, may substitute 5 percent of our diesel at little, if any, additional cost.

Second generation biofuels are likely to come from converting wood waste to ethanol.

In the second phase - that is, post 2012 - we propose to extend greenhouse gas pricing into other sectors. We are already devolving carbon credits for new permanent forests and propose this for new production forests as well. We are also proposing a cap and trade scheme for deforestation from 2008 onwards.

This will drive changes across production and consumption activities, and encourage investments towards those activities with lower carbon intensities.

I would now like to touch on the question of sustainability across a broader base than just energy.

The Prime Minister Helen Clark has made sustainability a priority - and has set us the goal of becoming the first truly sustainable nation - across the economy, society, the environment and nationhood.

As part of that, this government is aspiring for our country to be carbon neutral, in our economy and way of life.

We believe this goal can become a defining aspect of our country, just as our question for a nuclear free world has been over the last two decades or more.

We won't achieve carbon neutrality overnight - it will take some time, and it will take courage. But I agree, it's worth setting our sights high.

Thank you for your time, and I hope you enjoy your time in New Zealand.

It simply remains for me to formally declare your conference open, and to wish you every success in your deliberations.

Thank you.

ENDS

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