“A society grows great when people plant trees whose shade they know they will never lie in.” – Greek Proverb
I spent the best part of Saturday planting trees, flaxes, and ferns along a stream bank with my son, Tom, and his best mate. The task was “wholesome” according to Tom, as the plantings should facilitate the recovery of a stream that was once badly polluted but now runs mostly clear following positive steps by my dairy farmer neighbor to abide by the Fonterra clean stream accords.
As I patted my own back for my newly enhanced green credentials, I turned my thoughts to the wider question of how governments wrestle with the challenge of leaving behind a better place for our grandchildren.
As part of its efforts to reduce emissions, the Government asked the Interim Climate Change Committee to provide advice on planning for the transition to 100 percent renewable electricity by 2035. The Government has also set a target for New Zealand’s economy to produce net-zero emissions by 2050.
Admirable goals, for sure, but does this approach stack up? When I run the numbers it is questionable whether going after more renewable energy is even worth it beyond a certain point.
Hang on a minute
At current rates of clean energy build, New Zealand should reach around 93 percent renewables by 2035, well short of the target set by the current Government. Going faster towards renewables would come with an uninviting economic burden. It is unlikely we will see much public demand for more hydro dams, so we are likely to be building out solar, wind and geothermal sources of energy. This would prove very costly on a national scale.
The closer we get to a reliance of 100 percent renewable energy, the more expensive it becomes to generate each unit of additional power. It’s a law of diminishing returns. The net result is that the consumer will end up paying ever-increasing energy prices as we strive for ecological nirvana.
The Government could, in this scenario, tax fossil fuels at an ever-increasing rate to keep electricity competitive, while passing laws that force consumers to switch. In the end, this would be political suicide and a market-distorting approach that could yield all sorts of unintended consequences.
Light bulb moment
On the other hand, fossil fuels used in transport and process heat offer a sensible, more economic option for change. These activities account for six times the greenhouse gas emissions of electricity production. Under this scenario, electricity prices would remain affordable and the emissions savings would be substantially higher from day one.
It was with this in mind that the Commission recommended that the Government amended its 100 percent renewal electricity future vision for the more realistic and attainable transport and process heat transformation approach. It is telling to note that this approach also offers incremental benefits, with every new electric vehicle or process heat facility reducing emissions on day one and into the future.
There are three major initiatives recommended by the Commission that, as I see them, make economic sense and deliver positive results in the short-, medium- and long-term. Those sensible recommendations are:
- Phase-out of fossil fuels for process heat by deterring the development of any new fossil fuel process heat, and setting a clearly defined timetable to phase out fossil fuels in existing process heat facilities.
- Set a target and develop incentives to reduce emissions from transport by converting to electric vehicles.
- Investigate the potential for pumped hydro storage to eliminate the use of fossil fuels in the electricity system.
Meanwhile, I am off to plant another tree or two. My great-grandchildren might enjoy it’s shade one day.