9 May, 2014
Speech to Bioenergy Association Conference
Good morning - it’s a pleasure to be attending this conference on bioenergy at this time, when there is so much happening in this field.
Countries around the world are facing the same energy challenge.
We want to continue to grow our economies and help our people to prosper.
This means we need secure and affordable energy.
At the same time, we’ve got to reduce our carbon emissions.
There is no single solution to reducing emissions.
As examples, increased use of natural gas, energy efficiency, smart use of solar power and bioenergy all need to be part of the picture.
In global terms, bioenergy can be an important contributor to the move to a lower carbon future.
The International Energy Agency expects bioenergy to become increasingly important in electricity generation, for transport, and in providing heat for industrial applications instead of coal or gas.
In this context, there are good prospects for bioenergy in New Zealand, and the Government has played a real role here investing, as examples, $42m in advanced biofuels research between 2008 and 2014 and injecting $6.75m into the well-named ‘Stump-to-pump’ project.
New Zealand is taking a mixed and balanced approach to our energy future. We are fortunate in having an abundance of energy sources, both renewable and fossil fuel.
In addition to our hydro, wind and geothermal resources, New Zealand also benefits from extensive forestry and agricultural production.
These industries provide opportunities for a sustainable and economic supply of bioenergy, without competing with food production.
There are few, if any, countries other than New Zealand that have a combination of resources such as abundant plantation forests sitting on top of extensive geothermal energy sources.
These opportunities are all potential sources of competitive advantage for New Zealand.
In New Zealand, we are already delivering electricity generation that is 75 per cent based on renewables, making us fourth for renewable generation in the OECD.
We have an ambitious but achievable target of 90% of electricity generation from renewables by 2025, building on our strengths in hydro, geothermal and wind.
So we are in a good space in the electricity sector for reducing greenhouse gas emissions from energy.
The areas that offer the greatest opportunities to reduce carbon emissions in the New Zealand context are in the wider energy scene and particularly in road transport, industrial heat and the heating of commercial buildings.
Together these currently account for three quarters of New Zealand’s carbon emissions from energy use (which as a large category makes up just under half of New Zealand’s total emissions).
To sum up so far then, the world needs more energy from reduced emissions. In New Zealand our predominantly renewables generated electricity means it’s in other areas we should place the most focus, and I believe transport and industrial and commercial heat offer the best efficiency and emission reduction gains.
Energy efficiency projects
I recently announced three energy efficiency projects to reduce New Zealand’s carbon emissions from energy use and help businesses and households save money on energy costs.
The first project is one that works to improve the efficiency of coal and gas-fired heat plant in the meat and dairy sector. It may also involve conversions to bio-energy.
The second is about better fuel efficiency for heavy vehicle fleets, which involves training small to medium-sized heavy transport fleet operators to implement long-term fuel savings plans.
The third is the promotion of fuel efficient tyres, so motorists save more on fuel by choosing more efficient tyres.
I am confident that these projects can be worthwhile catalysts towards energy efficiency and carbon saving.
Southland renewable heat hub
Today I am pleased to announce a further project that will help improve efficiency and reduce New Zealand’s carbon emissions: a regional renewable heat hub.
As you know, heat energy used in industrial processes and commercial buildings is an area where New Zealand uses a lot of fossil fuels.
There are opportunities to make cost effective changes that benefit our economy and our environment.
One of the main renewable sources of heat energy is wood.
New Zealand has good supplies of waste wood that can be used for renewable heat, so why isn’t this being taken up?
Through the Energy Efficiency and Conservation Authority’s work in this space, it has become clear that the main barrier to uptake of the fuel is because it is difficult to develop a renewable resource without businesses committed to using it, and it is also difficult to persuade industrial and commercial heat users to switch to renewables without an assured supply.
This project aims to solve these issues by creating a network of supply and demand at a regional level.
The renewable heat hub project will be established in the Southland region.
It will be established at a regional level because it makes the most economic sense to use locally generated heat energy as close as possible to the heat source.
Southland has much going for it in this respect.
It has a high heat demand, including a significant manufacturing sector and buildings which individually have reasonable heat demand.
Often coal is the source of this heat.
Southland has good wood and forest residues resource, with an estimated 300,000 tonnes technically available each year.
There are also existing wood energy suppliers.
In addition, the heat demand and the potential wood heat source are often close together.
The Government (through EECA) will provide $1.5 million over three years for the project, and we expect that industry and businesses will more than match that contribution.
The project will help to create annual demand for 16,000 green tonnes of wood.
Through the uptake of wood energy rather than fossil fuels, EECA estimates that around 8,000 tonnes of CO2 will be saved each year, equivalent to the carbon emitted by 2,500 cars (each year).
This project will also present opportunities for forestry owners, including iwi, wood suppliers and processors, and other contractors involved in the supply chain.
Details of how it will operate will be agreed between EECA and local partners, once agreements are in place.
We will be making use of local knowledge and expertise to make it a success.
I know that your industry will watch this project with interest, and I hope that it will prove successful and pave the way for further initiatives like this in the future.
This approach reflects the Government’s view on the role it can play.
While reaching for on-going subsidies is a tempting and easy route, we need to make sure our future energy sources are economically sustainable.
Providing seed funding for projects that can be a wider catalyst for the sector and smart use of science and innovation investment, such as the ‘Stump-to-Pump’ programme, are ways the Government can encourage sectors like yours - but without trying to do the job for you.
Energy is integral to our lives and the Government’s mixed and balanced approach is making the most of all of New Zealand’s energy opportunities.
It will help New Zealand build a productive and competitive economy that delivers more jobs and higher growth for New Zealanders.
Today I have outlined a new opportunity to help us in our transition to a low carbon future.
The Government is investing $1.5 million in this project – it is estimated to save around 8,000 tonnes of carbon emissions each year.
I am confident that this initiative, and the other three which were recently announced, will help provide a catalyst toward energy efficiency and carbon saving in other regions and sectors and will be a step towards bioenergy playing an important role for New Zealand.