Momentous changes have occurred in New Zealand’s climate policy over the past few months.
As you are aware, the Government has now established the emission budgets for New Zealand’s first three budgetary periods and has unveiled our ambitious set of policies to reduce emissions.
Additionally, we have listed the initial investments made from the recently created Climate Emergency Response Fund (the CERF).
By taking these steps, we can safeguard New Zealand’s long-term energy needs and make sure we take advantage of the economic opportunities that come with the transition to a low-emissions society.
The first Emissions Reduction Plan outlines a number of actions to assist us fulfil our emissions budgets and decarbonize our economy.
A plan for the entirety of New Zealand is the Emissions Reduction Plan.
In order to optimise system settings and hasten the adoption of low-emissions practises and technologies, the government will be a vital player. But doing it alone won’t work.
The plan’s energy and industry chapter identifies five important sectors where we are enacting change, among them:
Utilizing energy effectively and controlling energy demand
Ensuring that the electrical infrastructure can accommodate future demands
Reducing our dependency on fossil fuels while encouraging the use of low-emissions substitutes
Lowering industrial emissions and energy consumption, and
Establishing a plan and goals to lead us to 2050
I am convinced that our plan of action in each of these areas can reduce emissions, preserve supply security, and expand availability and affordability to more New Zealand customers.
Because of the size of the change needed, I want to see government and industry working together to take advantage of opportunities to move toward our decarbonization targets.
In that vein, I’d like to briefly discuss our Government Investment in Decarbonizing Industry Fund (or GIDI Fund).
As I recently announced, the GIDI Fund will be extended and expanded with an additional $650 million over four years, allowing EECA to increase the number and type of projects it funds, including high impact decarbonization projects of national significance.
The Fund will now offer targeted funding at the regional level for initiatives that maximise the use of low-emission fuels, funding for improvements to the infrastructure supporting electricity transmission and distribution to support fuel switching, and funding for the early adoption of high-decarbonization energy technologies.
It’s a significant victory for our companies, which are relying on innovation to stay on the cutting edge.
The initial $69 million GIDI fund was a big success, contributing to 53 significant industrial decarbonization projects, all of which were committed to finishing by April 2024.
I am aware of the assistance provided by distribution firms in helping industrial consumers and the public sector shift away from huge thermal fuel boilers.
I want to thank you for your ongoing efforts because this is a really important support for our decarbonization efforts.
Distribution businesses must adopt a customer-focused strategy to enable growing process heat connections and benefit from the excellent work done thus far.
I am quite interested to see what new projects this new GIDI financing round will enable.
Regarding the need for modifications to the power system, we are aware that fossil fuel generation now contributes significantly to supply security during dry years and times of high demand, such as chilly winter evenings.
An orderly transition to a more renewable and sustainable electrical grid must be managed.
In light of this, Budget 2022 allocates roughly $5 million over two years to develop policies that promote a consistent and affordable electricity supply while accelerating the transition to a highly renewable electricity system and to investigate the possibility of public sector renewable electricity procurement through long-term power purchase agreements (or PPAs).
We must address strategic issues more directly and indicate alternative energy routes in order to map out the next steps in the energy sector’s effort to reduce emissions.
In order to realise our vision of a net-zero economy in 2050, where energy is available and affordable, secure and reliable, and supports New Zealanders’ wellbeing, we are investing in the development of significant measures.
The development of an energy plan, a regulatory framework for offshore renewable energy, and a roadmap for the production and use of hydrogen are all supported by over $18 million over three years in Budget 2022.
Additionally, we are working to enhance New Zealand’s capacity for demand response.
Demand response has the potential to support two important goals in the energy transition: controlling peak demand and intermittent renewable supply.
These two factors must work together for energy security and affordability to coexist with decarbonization. I will consider possibilities to amend the Energy Efficiency and Conservation Act 2000 to incorporate standards linked to the demand response capabilities in order to enable more demand response in energy-using goods and services.
Finally, I’d want to discuss a significant development that is currently taking place in our electrical market: the phase-out of the Low Fixed Charge (LFC) laws.
The 2019 Electricity Price Review recommended that the LFC regulations be phased out.
The Review acknowledged that restrictions stand in the way of distribution price reform and all its potential advantages.
The Government approved a five-year phase-out, with the first step being implemented on April 1 of this year.
Efficiency in distribution pricing reform has long been acknowledged to provide advantages.
It impacts many things, including how consumers use electricity, how distributors and others manage load, when distributors invest in poles and wires, and investment choices for new technology, like distributed energy resources or demand management.
This will be a crucial piece of the puzzle in sustaining rising EV demand and lowering related expenses.
I’ll be paying close attention to the creative solutions distribution companies provide when the laws are phased down to meet the problems we’ll confront.
It’s an exciting chance for the industry to actively examine non-network solutions, which might be able to provide consumers with longer-term benefits than more conventional options, which involve building more poles and wires.
I am aware that a lot of effort has already been done to discover these opportunities, and I am interested in learning more.
Finally, I want to emphasise that the sector is going through a difficult period right now.
You are putting forth effort to give New Zealand the electrical system of the future.
The shift to a decarbonized economy and the increasing electrification it entails will be difficult.
However, I am certain that the industry is responding to these difficulties in the best way possible.
A good illustration of how the sector is identifying its contribution to a low-carbon future that will benefit all New Zealanders is the ENA’s “Network Transformation Roadmap.”
To achieve decarbonization, distribution companies and other stakeholders must work together effectively and plan well.
Once again, I appreciate you inviting me to speak here today.