First impression of National’s national energy strategy

The NZ Herald has just posted up the points raised by National in its energy strategy, and I have to say, I agree with a lot of it (however, note that I have not read the actual policy document – so this is just a discussion of “the concepts”)

There are three main policies:

  1. Remove the ban on new gas power stations and introduce an ETS,
  2. Look at security of supply with greater demand estimates than the government currently uses,
  3. Loosen the RMA to take into account “national interest”.

Let me say what I think below the tab.

The removal of the pointless ban on new power stations, and the continued implementation of a ETS is a good move.

Why? The ETS prices carbon, such that the producer has to pay the whole social cost of producing energy in this way. As a result any gas or coal power plants that are built would be social preferable to alternative, renewable, providers (as they would be so much cheaper that even with the social cost of producing carbon, the new factories would still be built).

Also I was glad to hear this:

National feared that the Government was underestimating future demand and the ban was dangerous political symbolism.

Because there is a general feeling our here that the government is substantially underestimating future demand for energy!

Now if policy is currently being based on unrealistic assumptions, the policy is going to be rubbish – so having another look at this is a very good idea.

The final point is the most contentious.

I understand that consent decisions should take into account the national interest – however, this has to be the national interest in terms of sustainability and environment, as well as the national interest in terms of security of supply. These competing factors will be hard to balance in a re-jig, and I have concerns that policy might head too far in one direction.

Furthermore, councils and property owners do have a property right which supersedes the simple “national interest” – at least for borderline decisions. If we are willing to ignore peoples property rights then we will cause other issues down the line – this needs to be taken into account as well.

Overall, I think the 1st and 2nd points are straight out better policies – while the 3rd point is a little fuzzy at present, so I can’t really have much of a view on it.

Now I’ll go have a look at what other blogs have to say – and I will post links to it below.

Kiwiblog, The Standard, No Right Turn (*), Not PC, Frog Blog, Greenpeace, Colin Espiner,

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

  • “Because there is a general feeling our here that the government is substantially underestimating future demand for energy!”

    In a previous lifestyle I was the operations manager at a rural electricity lines company. It never ceased to amaze me how people underestimated the importance of a reliable electricity supply until it wasn’t. My concern with the Labour Party and the Green Party approach is that they are putting their ideological aversion to fossil fuels and hydro-electric generation ahead of a rational approach to security of electricity of supply and the contribution of electricity to economic growth.

    I think there is a failure on the part of the greens (not necessarily just the Green Party) to recognise that economic well being is important for environmental wellbeing.

  • “I think there is a failure on the part of the greens (not necessarily just the Green Party) to recognise that economic well being is important for environmental wellbeing.”

    Nice quote 🙂 It is a focus on the means ahead of the ends methinks.

    The goal is to maximise the happiness of everyone in society – I think sometimes political groups forget that.

  • Michael Kluge

    “My concern with the Labour Party and the Green Party approach is that they are putting their ideological aversion to fossil fuels and hydro-electric generation ahead of a rational approach to security of electricity of supply and the contribution of electricity to economic growth.”

    Absolutely. A great example is the recent threat by the owners to shift the aluminium smelter overseas if we can’t maintain a realiable and affordable supply of electricity. This smelter ‘provides NZ$3.65 billion worth of economic benefit to the New Zealand economy.’ The smelter was obliging with cutting back production when lake levels looked dangerous, but this comes with obvious economic consequences.

    It’s a sad but unavoidable reality that green energy still isn’t cost-effective energy. If we are to continue to avoid nuclear energy then we pretty much have to rely on gas to meet our demands, or at least to have it as a backup for times of low rainfall.

  • Matt: my thinking might be more simplistic than that. Conservation of flora and fauna & environmental protection cost money, for that we need to be making money.

  • “Conservation of flora and fauna & environmental protection cost money, for that we need to be making money”

    By the same logic we should stop consuming – as consumption costs money, which we could use to make more money 😉

    There is some value to conservation – if we could price it, we would understand the trade-off. However, people on both sides of the political divide want to avoid the trade-off completely 😛

  • John

    Gerry Brownlee talks about wanting to maintain an reliable energy supply to New Zealand households while developers develop large subdivisions and market them overseas. Although (answering myself) the increase in demand appears to be from industry.
    One problem with maintaining supply to maintain economic growth is that many people hog resources. If people could afford them many would buy their own 747’s (like John Travolta). There has been little effort amongst developers to build energy efficient homes so far and property developers seem to be over represented amongst climate change and peak oil doubters. [based on Kiwibloggers and several prominent proerty developers… small sample]
    What we need is this type of development:
    http://www.inhabitat.com/2008/07/24/a-unique-solar-powered-community-in-canada/

  • Pingback: Is National’s energy policy “ideological spite” « The visible hand in economics()

  • “One problem with maintaining supply to maintain economic growth is that many people hog resources. If people could afford them many would buy their own 747’s”

    This is ultimately a matter of price isn’t it. As long as prices are set in line with the full social cost of the product (which an ETS helps ensure) then the consumption of electricity is where we would want it to be.

    If the government has some control over the supply, then it must surrender control over the price – or else we will have blackouts. Similarly, if the government wants to control the price in some respect – it must be willing to provide sufficient supply.

    The government currently uses SOE’s to keep the price down, and then wants to assume that demand will magically ease itself – thereby justifying lower energy supply. However, this isn’t a realistic assumption – and could eventually lead to blackouts.

    I’ve noticed that a bunch of numbers have started appearing saying that supply is going to head through the roof – however, I have heard from a number of people that these supply numbers are exaggerated in the same way that the demand numbers are under-cooked. This is a bad way to run policy – and makes me partially question the neutrality of sections of the public service (something I don’t want to do).