The CEO of the Climate Change Commission, Jo Hendy; the Commission chair, Rod Carr and Climate Change Minister, James Shaw, at yesterday's unveiling of the climate change carbon budgets.

New Zealand’s nuclear-free moment, getting to net-zero greenhouse gas emissions by 2050, will depend on electric cars.

And the cars are going to depend on there being enough electricity to power them.

But as the Climate Change Commission’s final set of carbon budgets made clear yesterday, there is no guarantee that we will be able to procure the cars — or even if we do, that people will be able to afford them — and the future supply of electricity is conditional.

If all else fails, the report suggests, then maybe we could ask agriculture to do more with biogenic methane emissions.

Meanwhile, the report takes a swing at two of the Government’s flagship climate change policies and can’t resist a cheap shot at natural gas, which it says should now be called fossil gas.

At the Commission’s press conference yesterday, its chair, Rodd Carr, archly proclaimed that any discussion about barbeques losing their gas supplies as we approached 2050 “trivialised” the whole issue, though he did concede that bio-fuel derived gas might allow the grilling to continue.

But the urgency of the situation has been underlined with an increase from the draft reduction targets published in February to the final targets published yesterday.

They are now up from between seven and 13 per cent on the draft targets.

The immediate goal is to have net greenhouse gas emissions 15 per cent below where they were in 2019.

But, according to StatisticsNZ, in 2018, net greenhouse gas emissions were  57.2 per cent higher than in 1990 due to the underlying increase in gross emissions and a decrease in carbon uptake by New Zealand’s plantation forest.


Thus the size of the challenge is immense.

POLITIK the CEO of the Climate Change Commission, Jo Hendy with the Commission’s chair, Rodd Carr at yesterday’s launch.

Simply the overall plan is to end the use of fossil fuel -– including gas — and to reduce methane from agriculture.

Thus all energy would need to come from renewable resources, mainly electricity.

The new generation will be needed to meet increased electricity demand.

“We anticipate a steep increase in demand for electricity as the number of electric vehicles (EVs) on the country’s roads grows, and industrial demand electrifies,” the report says.

“The industry will need to rapidly build more renewable generation to meet this.”

But there are warnings.

Labour made much of its 100 per cent renewable energy pledge during the election campaign.

“We are setting ourselves the new goal of 2030, five years earlier than our previous goal, for us to become one of the few nations in the world with 100 per cent renewable electricity,” Energy Resources Minister Megan Woods said.

“Labour’s Clean Energy Plan is a critical element of Labour’s wider COVID-19 recovery plan that will both prepare New Zealand for the future while boosting jobs and the economy now,” Jacinda Ardern said.

However, the Climate Change Commission is sceptical that 100 per cent renewable will help meet the emissions reductions it is proposing.

“Aotearoa is unique in that its hydro lakes contribute around 60% of total electricity supply,” it says.

“However, these lakes only hold enough water for a few weeks of winter energy demand if inflows (rain and snowmelt) are very low.

“When inflows are low for long periods of time, hydro generation reduces, and the system relies on other forms of generation – such as fossil gas and coal.

“These periods of time are often referred to as ‘dry years’, and often result in very expensive wholesale electricity prices.”

The Government has proposed the New Zealand Battery Project, which would pump water from the Clutha River, near Roxburgh, to a high spot, about 600 vertical metres above, via a 24km-long pipe. There, behind a 60m-high dam, a 74 square kilometre lake would be created.

Its capacity would be about 1000 megawatts – bigger than the country’s biggest power station, coal-and-gas-fired Huntly, at 953MW. The lake would hold an incredible 5500 gigawatt-hours of storage. That’s bigger than the nominal full storage of the country’s entire hydroelectric lakes, 4409GWh.

The initial cost estimate was $4 billion.

But though the idea was originally proposed by the Interim Climate Change Commission in 2019, the report yesterday was sceptical about its viability.

“The Government’s NZ Battery project will advise on potential solutions to the challenge of dry year energy security,” it says.

“While a solution to this challenge could enable Aotearoa to reach 100% renewable electricity, it could cost taxpayers billions of dollars.”

Instead, the Commission appears to have another option in mind.

The Tiwai Point aluminium smelter consumes 10-14% of the electricity generated in Aotearoa each year. A significant amount of this electricity is generated at the Manapouri hydropower station.

If Tiwai Point aluminium smelter closes at the end of 2024, 10-14% of the electricity generated in New Zealand will become available for alternative uses, it says.

“Some of these new sources of demand could produce widespread benefits for the transition to a thriving, climate-resilient and low-emissions economy in Aotearoa, for example, replacing the fossil fuels used in transport and process heat with renewable electricity.”

And there would be another bonus.

“Modelling shows the change in dynamics of supply and demand could lower wholesale electricity prices by as much as $20 per MWh, for as much as a decade,” it says.

“This does not necessarily translate to an equivalent drop in electricity bills.”

The Commission suggests that it would be beneficial for the Government to assess and communicate to the public the potential impact of a significant change in the balance of supply and demand on the accelerated electrification of transport and process heat.

This should involve an evaluation of the costs, benefits, risks and opportunities of how and when this electricity is used, it says.

New Zealand Aluminium Smelters were not willing to comment on the report’s proposal. All a spokesperson would say was that the company had a contract for the supply of electricity until the end of 2023.

But all of this power is going to mostly be needed for electric vehicles, and they may not be able to come on stream as quickly as might be hoped.

POLITIK Climate Change Minister James Shaw with the Prime Minister

The report says that to meet the 2050 net-zero target, the country will have to “almost completely” decarbonise the transport system.

For a start, that might begin to be achieved by assuming the average household travel distance per person can be reduced by around 3% by 2030.

“This could be achieved, for example, through more compact urban development and encouraging remote working for those who can,” it says.

“We also assume that the mode share of total distance travelled by low-emissions options – walking, cycling, public transport, and emerging options such as e-scooters – can be increased, from around 6% nationally in 2019, to 11% by 2030 and 14% by 2035.

“Within this, we assume that cycling grows from around 0.6% of household travel distance in 2019 to 1.5% in 2030, and public transport grows from around 3.5% to 7.7%.

“These figures are built up from regional-level assumptions.

“For example, we assume that share of travel distance by public transport nearly triples in Auckland by 2030, compared with growing by around 60% in Wellington and 20% in the rest of Aotearoa.”

But simply switching to Electric Vehicles will not be as simple as it may sound.

The Commission says barriers to people choosing EVs include higher up-front costs, lack of choice and supply volumes, range anxiety, charging network access and expected battery life also affect demand.

The country’s limited leverage for accessing future EV supplies contributes to the lack of choice and supply.

 The availability of EVs is also a potential constraint.

“The Aotearoa vehicle market is small, remote, right-hand drive, and is heavily dependent on used vehicle imports from Japan,” it says.

“We heard from some industry submitters that EV manufacturers currently have limited production capacity globally and that they are likely to prioritise markets with stronger low emissions vehicle policies than Aotearoa currently has.”

But what happens if there isn’t enough electricity available for the EVs or the uptake is slower than hoped?

It appears that there is a contingency that would see some of the carbon dioxide emissions target transferred to agriculture’s methane target.

But because methane is a short-lived gas in the atmosphere, its long term impact on climate change is much less than carbon dioxide.

That is why the Commission is proposing that it will only need to reduce by 17 per cent below 2019 by 2035, whereas carbon dioxide will have to be reduced by 78 per cent over the same period.

However, the Commission says that looking out ahead to the net-zero by 2050 target, “the combination of these factors – the quantity of emissions, their duration in the atmosphere and the warming effect of each greenhouse gas all interact with each other to affect global temperature.”

“This means the reductions in biogenic methane required for the global 1.5°C effort are  dependent on the levels of other greenhouse gas emissions and emissions removals.”

“Dairy NZ CEO, Dr Tim Mackle,  sounded a warning last night about looking for disproportionately big methane reductions from dairying.

He said farmers were committed to doing their fair share and playing their part alongside the rest of the economy – but the work needed to be fairly spread.

“We do remain concerned agriculture may be asked to do the heavy lifting if we don’t see urgent action to reduce CO2 emissions,” he said. ‘

”We are all in this together, and we must have a fair and balanced plan that requires our communities to contribute equally.”

There was little doubting the significance of the Commission’s document.

It will shape the New Zealand economy – and our landscape — for the next three decades.

The Prime Minister said she viewed it as one of the most significant documents she would receive in her time as Prime Minister.

The report now becomes her property, and the Government must prepare a response to it.

Though the legislation requires that the Government respond by the end of the year, the United Nations Climate Conference in Edinburgh in November is a real deadline because New Zealand will have to submit its carbon budgets to that conference.