Friday, May 30, 2008

The Great Power Cock-up of 2008

It's late May. The sun is shining, there is no wind, and it's a slightly nippy 10 degrees Celsius. According to NIWA its la Nina, ( and according to the recently launched Winterpower website, it's sinking New Zealand deeply into the shit.

Winterpower ( ) shows that electricity demand is up, hydro lake storage on which we depend on for 60% of our electricity is well down, wind has not contributed significantly all winter, and Contact has been forced to re-fire a 32-year old asbestos-ridden, gas-fired station in New Plymouth to keep grid levels up. Electricityinfo ( shows that electricity prices are high and climbing.

God, it seems, is not on Energy and Climate Change Minister David Parker's side. For Mr Parker has bet his, and the country's future, on renewable energy. So much so that he has pretty much banned the development of any new thermal (that's Natural gas and coal burning) power stations. In a classic case of counting chickens, he crows that he has proposals for hundreds of megawatt/hour wind farms on his desk.

The problem is David, wind farms only produce power when the wind blows. It ain't blowing David. And when it ain't raining either that makes New Zealand's reliance on clean green renewable energy, and you, look rather dumb.

Parker's response to that is that geothermal energy is renewable and doesn't rely on the weather. That's true, and New Zealand has an abundance of potential geothermal energy. The problem is that for the past decade or so getting a resource consent to build new power stations has been very very difficult. The result has been that all the new generation has been from the expansion of thermal stations. But David, in his wisdom, has switched this option off at the mains. So now we have a choice. Either renewable power gets built or we pay whopping power bills. Unfortunately the people objecting to the renewable stations never seem to make this connection. They just don't want them in their backyards.

Unfortunately NIMBYism (Not In My Back Yard) has been elevated to almost constitutional status in New Zealand by the sacred Resource Management Act. In fact we also have NIYBYEMism as well (Not In Your Back Yard Either Mate) because anyone can object to notified developments - even if they live hundreds of miles away and just don't like the idea.

So, for example, if anyone comes up with a plan to provide a vast South Island irrigation project and generate 3,000 Gigawatt hours in the process, minority Members of Parliament living in Coromandel feel it is incumbent upon them to begin a campaign to stop it in the name of .. well NIMBY and NIYBYEMism. And they can, and they did.

The real problem is that there is a huge disconnect between the lofty idealism of Mr Parker and Green Party leader Jeanette Fitzsimons and the average kiwi or cockie who wants hot water for the shower and power to run the milking shed. David Parker talks of geothermal power, Jeanette Fitzsimons talks about tidal. Both are great ideas. The problem is we needed them installed last week and given the vaguaries of the way we do things in this country they may not happen for another 20-years.

This is the point that Bryan Leyland repeatedly tries to make. Bryan is an electricity consultant who regularly gets up Minister Parker's nose by pointing out embarrassing things like the lack of water in lakes and the stillness of the air. Despite the pillorying he gets Bryan is on record as being perfectly ideologically neutral about this. He used to get up the nose of Max "More Markets" Bradford ten years ago when theNational Party Energy Minister tried to sell everyone the notion that private power markets would solve everything . Bryan simply says electricity is too big to play ideology with. Do anything that invites supply failures and you commit political suicide as well as cost the country a fortune.

So will David Parker back down on the thermal ban? If he were sensible he would. He's been forced to back down on the Emissions Trading Scheme somewhat, although its still a lurking disaster. The question is whether he really has the sense.

The problem is not his intentions, which are certainly good, it's just that the road he is busily paving with them leads to hell, not heaven. Why? Because he doesn't understand details, he bullies experts and he just won't listen. So he will end up smiling and blinking in front of bright lights of the news cameras looking idiotic with egg on his face.

The problem is the Parker and the Government are trying too hard on climate change. Climate change really spins the props of maybe 15% of the population. It vaguely bothers 35%. But it doesn't matter at all to 50%. That isn't to say the 15% aren't right. But 15% is a minority grouping not a dominant party one. And when it comes to implementing taxes you need more than vague concern.You need broard support.

My view is that it has always been easy.

  1. Redistribute some fuel taxes (including new Jet/Avgas, Maritime bunker and diesel) into carbon taxes
  2. Fund new roads out of debt ( new roads do reduce CO2 emissions despite what the Greens say)
  3. Start a low carbon tax on electricity from gas and coal and ramp it up to the marginal cost of carbon capture and storage technologies over 40 years.
  4. Spend carbon taxes on sink Assigned Amount Units and forests on Crown Land
  5. Create a Public Private Partnership between the Crown and Private forestors to excess sell sink credits on the world market as a single desk once Kyoto targets are reached
  6. Begin a GhG intensity star-rating scheme for tourism, industry and farming.
  7. Promulgate the Ghg intensity scheme to the International Standards Organisation.

Instead of "making the taxpayer squeal" (which so delights the looney sadists in Inland Revenue) this scheme is light on the stick and long on incentives. It includes taxes on long distance travel which we can shut the Europeans up with; it provides long term price signals for those investing in thermal generation that it will either be temporary or they will have to mitigate; it provides incentives to forestry and industry rather than scourges. But more importantly it minimises resentment and rejection which is currently killing all the other schemes the Government is coming up with in this current electoral winter of discontent.

Unfortunately it is simply too easy. No officials will be able to travel to distant conferences to present papers of world leading market design. Diplomats who specialise in debating the finer points of commas in communiques could stay home. Ministers won't be able to beat their chests in UN forums. Nobody important would gain - just the voters.

It would however be quietly effective, creating a positive mood for embracing the necessary adjustments our economy needs to make in a carbon constrained world, gently and fairly, like a midwinter sun.

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