Speeches

Address to APEC Energy Ministerial Meeting – climate-proofing energy infrastructure

Tuesday, October 13, 2015 - 17:16
Energy and Resources
Transport

As Energy Ministers, the delivery of resilient energy infrastructure is at the heart of what we do.

Climate-proofing that infrastructure is an increasingly important part of that work as we seek to understand the growing uncertainties and challenges presented by climate change and extreme weather events.

In New Zealand, the 2011 Canterbury Earthquake was a stark reminder of the devastating impact a natural disaster can have.  Here in the Philippines, Typhoon Haiyan wreaked havoc just two years ago.

While there are obviously limits to what we can do to prevent events such as these occurring, our ability to minimise the impacts of them and to expedite recovery are highly dependent on the resilience of our infrastructure, particularly our electricity networks.

The Intergovernmental Panel on Climate Change Working Group II report last year concluded that Australasia continues to demonstrate long-term trends towards higher surface air and sea surface temperatures, more hot extremes and changed rainfall patterns.

The combination of rising sea levels and increasingly heavy rainfall will have significant implications for long-life infrastructure in New Zealand, with increasing erosion projected.

This all requires us to think harder about how we develop and manage our infrastructure and manage our natural resources efficiently.

At last year’s APEC Energy Ministers’ Meeting an aspirational goal of doubling the share of renewable energy in the APEC energy mix by 2030 was set.  In my view this is a really important step in the climate-proofing quest. 

As the world transitions to a low carbon future, energy diversity is the key to achieving energy security, accessibility and affordability, and environmental sustainability.

In pursuing the goal of energy diversity, we also need to ensure that we do so in a way that is resilient.  Best practice policy settings are fundamental to helping navigate an uncertain future and ensuring appropriate roles for the private and public sectors.

The introduction and refinement of a liberalised electricity market has been key to ensuring that New Zealand’s energy further diversifies and is increasingly renewable.

At nearly 80 per cent, New Zealand’s share of renewable electricity generation in 2014 was the highest annually it has been since 1996 – and the fourth highest in the world. 

We’re making strong progress towards our ambitious goal of having 90 per cent of our electricity supply generated by renewables by 2025.

Renewable energy made up 39.5 per cent of New Zealand’s total primary energy supply in 2014, a record high that places New Zealand third in the world, behind only Iceland and Norway – countries which have long been considered world leaders on this important measure.

Hydroelectricity has been the backbone of our electricity supply system for decades and today almost 60 per cent of New Zealand’s electricity supply is generated by large hydropower schemes.

New Zealand is a world leader in geothermal.  Our first geothermal plant opened in 1958 and the last decade has seen a period of unprecedented growth in the use of geothermal energy in New Zealand, particularly for electricity generation.

The availability of high temperature, productive geothermal resources means these are the lowest cost electricity generation facilities to construct and operate and it is also one of the most resilient and reliable – if managed sustainably it provides a consistent energy flow day and night, in any climate and in any weather.

Geothermal now accounts for over 16 per cent of New Zealand's total electricity supply. We are now the fourth largest geothermal power generator in the world, after the United States, Indonesia, and our hosts, the Philippines.

New Zealand’s world-class expertise in renewable energy – our renewable advantage – and integrating it into the grid makes us a natural partner for countries looking for innovative assistance and advanced technology to harness and realise their own renewable energy potential.

The introduction of competition in the electricity market in 1996, led to geothermal projects being economically viable in the long run, and being favoured over gas generation, which was vulnerable to price fluctuations and security of supply issues.

New Zealand’s market-led approach to regulating the electricity sector, supported by significant recent investment into the national grid, also means we are well-placed to advance the development of a smart electricity network.

This will empower customers to use data to make better decisions about their electricity use and help decision-makers to improve asset management, resilience and demand management that will improve energy efficiency.

Consistent with New Zealand’s focus on best practice policy settings in order to promote energy diversity and resilience, New Zealand believes that it is important to address inefficiencies. 

Fossil Fuel Subsidy Reforms (FFSR)

This is why New Zealand believes that more needs to be done globally to remove inefficient fossil fuel subsidies. Fossil-fuel subsidies encourage wasteful consumption, disadvantage renewable energy and drain scarce public resources that could be better spent on other sustainable development goals.

The APEC Inefficient Fossil Fuel Subsidy Reform Peer Review Process has been highlighted as a key lever for delivering a level playing field for clean energy investment. With heightened interest in the peer review process from G20 countries and interest from China and the US in undertaking peer reviews, the process is gaining momentum as an important step on the path to clean energy development.

By identifying and phasing out inefficient fossil fuel subsidies, economies can redirect investment, alleviating the perverse effects of such subsidies. 

Undertaking the APEC peer review process provides transparency, encourages cooperation, and helps ensure that mechanisms in place to protect the most vulnerable sectors of society are well targeted.

As some of you may know, New Zealand volunteered to undergo the peer review process in March this year, and I am pleased to announce the completion and publication of that report today.

We believe that New Zealand’s peer review was a robust road test of the APEC Guidelines, and the panel and host economy used these to draft a blueprint for future peer reviews. Greater participation in the peer review process will increase transparency, generate expert advice and share reform experiences and best practice.

The Friends of FFSR Communiqué to Paris COP 21

I’d also like to ask APEC members to help lead the way to fossil-fuel subsidy reform by individually endorsing the Fossil Fuel Subsidy Reform Communiqué that will be delivered to the Paris climate conference in December. 

The Communiqué was launched this year by New Zealand and the ‘Friends of Fossil Fuel Subsidy Reform’, together with the United States and France. 

The statement recalls APEC and G20 Leaders’ commitments and invites others to support the elimination of inefficient fossil fuel subsidies as a major contribution to climate change mitigation with clear economic, social and energy co-benefits.  Research suggests that subsidies to fossil-fuels drove 36 per cent of global carbon emissions between 1980 and 2010.

Every year governments around the world spend more than US$500billion to subsidise fossil fuels.  That’s four times the amount spent on subsidies for renewable energy.  Some countries spend more money on these subsidies than they do on health or education.

By keeping prices artificially low, fossil-fuel subsidies encourage wasteful consumption, disadvantage renewable energy, and depress investment in energy efficiency.

By endorsing the Communiqué members will be joining a broad base of supporters including governments such as the UK, Costa Rica, the Netherlands and Morocco; as well as high profile international organisations like the International Energy Agency; and the Prince of Wales’s Corporate Leaders’ Group. 

Now is the time to act while oil prices are low and the impact of reducing subsidies will be felt less.

Removing the subsidies would be another important step to both reducing emissions and climate-proofing our countries by facilitating the development of more sustainable energy infrastructure – I’d like to urge you all here today to join us in our mission.