Agriculture is the largest source of emissions, primarily methane, in New Zealand. The second largest source is transport – particularly vehicles. These sources account for two-thirds of emissions, while forestry sequesters almost 30 per cent of the country’s gross emissions.
“Climate change is one of the most serious issues we face,” says Murray Sherwin, chairman of Productivity Commission. “How New Zealand responds to its international commitment to reducing GHG emissions will have major implications for our future.”
“The issues paper [on a low-emissions economy] gives us the opportunity to share what we know, and ask questions about important areas where more information and discussion is required.”
The inquiry aims to “identify options” for how New Zealand could reduce its domestic GHG emissions by moving towards a lower-emissions future. “Action to mitigate GHG emissions will require significant changes, which will have disruptive and potentially painful impacts on some businesses and households,” the issues report states.
“These changes mean the shift will be profound and widespread – transforming land use, the energy system, production methods and technology, regulatory frameworks and institutions, and business and political culture.”
Substantial and sustained reductions in global GHG emissions are required to limit rises in global temperatures and climate change.
Recently, New Zealand submitted its first nationally determined contribution under the Paris Agreement to reduce its emissions to 30 per cent below 2005 levels by 2030. The most long-term target, set in 2011, aims to cut them to 50 per cent below 1990 levels by 2050.
The commission says there are no technical barriers to generate more electricity from renewable sources. The relative cost and efficiency of renewables, such as wind power, make them a price-competitive option.
Complementary technologies, particularly batteries, are also falling in price. New Zealand’s seasonal pattern of demand favours more use of wind than solar power.
Wind generation could meet the increased demand from the uptake of electric vehicles (EVs) up to 2040, with charging of EVs when there’s lower grid demand, such as late at night. Distributed generation and possible use of batteries to even out peak load, and of EVs as “batteries”, are likely to require more flexible pricing and network capabilities than now.
Current policies include the government targeting an increase in the proportion of renewable electricity to 90 per cent by 2025. After the metal industry, the next biggest source of industrial emissions comes from HFCs used to replace ozone-depleting substances in refrigeration and air-conditioning units.
Intervention to cut emissions in some parts of the economy can have flow-on effects for demand and opportunities to reduce emissions in other parts of the economy. For instance, converting the vehicle fleet to electricity would increase the demand for electricity generation and increase demand for new renewable sources for New Zealand to meet its mitigation targets.
Effects of EVs on the overall demand for renewable electricity, could, in turn be managed through timing the charging of EVs, and the possible use of their “batteries” to store electricity for sale back to the grid.
Forests could be used to produce a renewable source of woody biomass to generate heat for industry or biofuels. Norske Skog Tasman and Z Energy recently investigated this for New Zealand. The evaluation concluded that, while technically feasible, using biomass to produce fuel was of doubtful commercial viability given “the current global economic and energy outlook”.
The viability of using biomass for energy hinges on low-value feedstocks, short transport lines and efficient digestion of biomass.
The commission will be investigate if some core policies could be used to cut emissions, such as direct regulation, market-based approaches, and support for innovation and technology. An example of a standard-based approach is 2007 Land Transport Rule on Vehicle Exhaust Emissions, which is enforced by the NZTA.
An example of regulation is France is banning the sale of petrol and diesel cars by 2040. Then there are market-based approaches, such as the Irish government linking vehicle registration and annual circulation taxes to CO2 emissions.
In New Zealand, the 2016 EVs Programme exempts light and heavy electric vehicles from RUC until they make up two per cent of their respective fleets.
As for supporting innovation, New Zealand may not need to develop many of the technologies required itself, but it needs to ensure they are able to be used effectively – for example, the country’s uptake of EVs in New Zealand illustrates this point.
Adaptive systems are also on the agenda. For example, lithium-ion battery costs have reduced by 73 per cent over the past seven years, making EVs cost-competitive with ICEs far earlier than most predictions.
Substantially reduce emissions compared with internal combustion vehicles (ICVs).
EVs already used in New Zealand.
Similar road performance to ICVs.
Substantially cheaper to use than ICVs – equivalent to about 30c per litre.
Electricity grid already established.
Most of New Zealand’s electricity is from renewable energy.
Ability to charge EVs by plugging in at home.
Cost of EV batteries likely to drop over time.
Developing on-road charging infrastructure is expensive.
At present, smaller travel ranges than ICVs.
Manufacturing an EV battery produces higher emissions than making an ICV.
Charging EVs adds demand to the electricity grid.
It’s currently slower to recharge an EV than to refuel an ICV.
Disposal of EV batteries can cause negative environmental impacts.
Making cement from tyres
In June 2017, the government announced funding of $18.6 million to shift the heat source for making cement from coal to waste tyres. New Zealand generates about five million unwanted tyres a year, making them a viable ongoing industrial fuel source.
The substitution of rubber biofuel for coal by a major grant recipient, Golden Bay Cement – New Zealand’s fifth largest single emitter of GHGs – will cut emissions by 13,000 tonnes a year. The company will burn 3.1 million waste tyres a year – the equivalent of taking about 6,000 cars off the road.