Kiwiblog

The Herald reports:

Commissioners who gave the green light to an 80m-high hydro dam in the Mokihinui Gorge north of Westport were overwhelmed by the gorge’s natural beauty, but said there were other equally beautiful gorges in the area.

John Lumsden, a civil engineer, and West Coast councillor Terry Archer outvoted fellow hearings commissioner Greg Ryder to say yes to the dam – the largest flooding of conservation land for hydro power ever proposed in New Zealand.

Explaining why they gave consent, the pair said: “If the Mokihinui River were to be considered in isolation, it would be difficult not to form the view that to build a dam and flood to gorge would be a travesty.

“When we walked through several sections … we could not help but be overwhelmed by its natural beauty.”

But they said that beauty was not unique on the West Coast, or even in the Buller District.

The renewable electricity the dam generated would give locals a more reliable power supply and take a load off fossil-fuelled power stations during dry years, they said.

This is the challenge facing NZ. If we want to have more renewable energy supply, then we need more dams. Yet, a dam has an environmental impact also.

What would people rather have – another coal powered power station, that only impacts a small area (yet releases huge amounts of greenhouse gases), or a renewable power hydro dam which impacts a larger area?

Some in the environmental movement are against all new energy projects. But that is a recipie for blackouts in a few years.

I’ve don’t know enough about Mokihinui to say whether the Commissioners made the right decision or not. But my challange to those who say it should not go ahead, is to specify an alternate location on the West Coast for a new power station.

The Herald reports:

A tidal power station on the Kaipara Harbour seafloor could be providing power to a quarter of a million homes by the end of the decade.

The Environment Court has made a positive recommendation to Conservation Minister Tim Groser on a plan to generate electricity from the harbour’s swift tidal flow.

I think using renewable energy is the way of the future. That doesn’t mean I think we can or should transition there overnight, as if you suddenly switch off Huntly, there will be blackouts.

Fran thinks big:

Instead of tilting at windmills, the dairy industry should think big.

If cows are housed indoors for much of the time, their poop can easily be captured for commercial biogas.

And while they are about it, why not invent a gas exchange system to extract methane from the air inside cowsheds.

We could even follow the Swedes and run a railway on biogas produced from digesting the parts of cows that usually get discarded at slaughterhouses to extract residual methane.

The big upshot is our tourism industry will also be protected. And I will get my fishing back.

Is this genius or lunacy? Or both?

Gerry Brownlee has announced an action plan for unlocking and maximising New Zealand’s petroleum potential, primarily offshore.

“New Zealand’s largely unexplored petroleum resource could be one of the country’s most significant economic opportunities. A successful and flourishing petroleum industry will be a significant and essential contributor to lifting New Zealand’s economic performance going forward and to improving the quality of life for all New Zealanders,” he said.

Currently the petroleum sector accounts for around $3 billion per annum of New Zealand’s export revenue. Should the estimated resources in our unexplored basins be developed, this could increase to $30 billion per annum in export revenue by 2025. Crown receipts alone could increase to more than $10 billion per annum over the next 40 years.

That would help take care of the deficit!

As I have said before, if we want to be able to fund the same level of healthcare, of universities, of schools as Australia, we need to be increasing our national wealth. All power to Gerry.

I now have some more info on Labour’s reaping of profits from energy SOEs, and contrasting that to Phil Goff now decrying a $236 million dividend.

I blogged earlier that over the last five years, the SOEs made $3.27b after tax. Going back for their full nine years, the figure is $4.47 billion.

I also have the dividend figures. So this is the money actually paid out to the Government, and excludes profit that was retained for investment purposes etc in new generation.

1. 2000: $255m
2. 2001: $236m
3. 2002: $290m
4. 2003: $148m
5. 2004: $154m
6. 2005: $250m
7. 2006: $949m
8. 2007: $428m
9. 2008: $383m
10. Total: $3.09b

So its okay to take a $949million dividend payout in 2006 but wrong to take dividends a quarter that amount in 2009.

Again I’m not saying that the level of dividends is right at the moment, but when you raked them in during times of massive surpluses, it is a bit rich to do a sudden mea culpa and say that they should be much lower during a time of huge deficits.

I’m very cynical of Labour’s new stance on state owned power company dividends. The reality is that during a period when the Government enjoyed massive and record surpluses, Labour took in hundreds of millions of dollar in dividends.

And then suddenly within a few months of losing office, they now say it is wrong to do so – at a time when the Government is now running massive and record deficits and any reduction in dividends would be far more difficult.

I’m not arguing for the energy SOEs to price gouge – far from it. The sector needs reform. But there does need to be a return on capital that at least matches the cost of financing crown debt.

Labour also seems to be confused about the difference between dividends and retained earnings:

“Labour can and will stop price gouging. We will not demand excessive dividends coming back into state coffers above what is needed for investment in new generation.”

The dividends do not fund investment in new generation. It is almost the opposite. It is the amount of profit that you do not pay out in dividends that is used to fund new generation.

I’ve just added up the total net profit after tax for the six state owned energy companies for the last five years, and they were:

1. 2004 – $406m
2. 2005 – $561m
3. 2006 – $1,230m
4. 2007 – $622m
5. 2008 – $451m
6. Total – $3.27b

So under the last five years of Labour, the state made a profit of $3.27 billion (after tax) from the energy sector. And again, this was at a time of record crown surpluses. I don’t have handy how much was paid as dividends, but people should remember the $3.27b when Labour go on about excessive profits. Over their total nine years, it might be as high as $5b.

Good news that commissioners have given consent to Meridian Energy for a 1100Gwh to 1400GWh power station on the Waitaki River.

If we want to transition away from non-renewable energy to renewables, then projects like these are essential.

Of course this is just the first step of the consent process. There are inevitable appeals to the Environment Court. Actual construction is still four years away from beginning!

The ODT blasts Labour over high power prices:

Management inadequacies have been one of the features of the Clark Government in its leadership of the administration of public services and the guidance of enterprises whose activities have a crucial impact on our daily lives.

Yep.

One of the most obvious of these has been the failure, over most of the period from 1999, to put together as a matter of high priority a comprehensive energy plan for present and predicted demand and ensure it can be met with appropriate infrastructure.

The plan seems to be to hope for rain.

The self-serving Clark Government statement last week, that Contact Energy’s “alarming” 10%-12% planned price increases for its Dunedin consumers could not be justified, underlines the inadequacy of the response to energy supply and pricing issues.

Especially ironic as it comes at the same time they passed the ETS which will send prices up even more.

Nationally, household power prices have increased by an estimated 66% on average since 1999, when the Clark Government was elected, which is a rate way ahead of the rate of inflation.

And further increases to come.

Colin Espiner blogs on National’s energy policy:

I don’t know whether the party takes any notice of blogs or media commentary, but they have certainly concurred with advice dished out by many of us in the commentariat: forget about the secret tapes, roll out the policy, and release background papers – not just a one-page summary.

It was good to see the fuller papers. Blogs are well read in National (in fact in all of Parliament) but I would hesitate before going from a correlation to a causative effect. The fact Labour in the House tried to make the non-release of the background papers sound sinister was probably a big influence. Why make it easy for your opponents to run their secret agenda line.

Likewise, Deputy Prime Minister Michael Cullen yesterday accused John Key of “gambling your children’s future” on gas and coal in spite of an abundance of renewable energy and said National stood for “no action on climate change, no hope and no vision”.

Strong stuff. But does the rhetoric match the reality? You’d think from this level of hyperbole that the Nats had announced plans to build a large nuclear power plant on the North Shore (not a bad idea, some might say) or that Gerry “sexy coal” Brownlee had vowed to overturn the ban on coal fires in Christchurch homes.

Governments will always attack policies from the Opposition (inless they are going to adopt them themselves) but the hyperbole on this one was over the top.

It’s true National has pledged to overturn the ten-year ban on the building of new thermal power stations and promised to take a more “realistic” approach to calculating the future growth in the nation’s energy requirements.

It’s difficult to see how this equates to embracing a lump of coal or a petajoule of gas, however, particularly since Labour’s so-called moratorium was rapidly developing a distinctly “Clayton’s” feel to it. The ban, in practice, was always more hot air than reality, since the Government slipped so many caveats into it (only applies to baseload, above a certain megawattage, can be overruled in the interests of the nation’s energy security or in a crisis) that it was largely meaningless.

Key called it “damaging political symbolism” yesterday – I’d call it ineffectual political grandstanding. Industry sources have been saying Labour would have been forced to abandon the ban if it won the election anyway, given the current pressure on the national grid.

Indeed. You just have to look at the history of the last decade to know it was unrealistic to go into a total ban.

Greenpeace won’t like it, but I think National has got the mix about right. As we continue to shiver through the nastiest winter in many a year, I reckon the vast majority of people would far rather the lights stayed on and heaters warm than risk the country blowing a fuse because renewable energy sources let us down.

And God forbid if there is not enough power to keep computers connected to the Internet

It’s all very well talking the talk, as Key said yesterday – it’s another thing walking it. And while Labour’s fine ambitions are all well and good, the reality is that nothing the Government has yet done has made a blind bit of difference to our emissions levels or is likely to in the near future. In fact the only thing that has reduced our emissions profile recently has been the soaring price of petrol and diesel.

There is an irony in Labour attacking National for being pro-thermal, too, because the Nats are also promising to streamline the consents process under the RMA to get more renewable projects such as wind and hydro through the planning stages more quickly.

This is what puzzles me with the status quo. The Government has made it difficult for almost any power plant to get consented quickly. These things should not take five years.

I’m not trying to sound anti-green technology here. I’d like a clean, green environment as much as the next person. But I do believe the Government is on the wrong side of public opinion with its stance on energy and climate change. I think the public care about security of supply far more than they do about pollution. The simple fact is the cold, damp homes are going to kill people than climate change for many years to come.

And think about the lessons to be learnt from biofuels.

Having said that, National’s energy policy is conservative and lacking in new ideas. There’s nothing about energy efficiency, for example, or suggestions about how we are going to meet the estimated 2% a year increase in demand for electricity. What it has delivered is a short-term, pragmatic policy lacking in vision. But unlike Labour, it is probably a policy in step with current public opinion.

A damn with faint praise at the end.

This is quite amusing:

NZ Herald: Laudable unity on energy goals

The Press: Energy divide

So what do they say beyond the headlines. The Herald:

Broad long-term agreement on energy matters is a decided plus for a country that has become uncomfortably accustomed to the threat of power shortages. The National Party’s support yesterday of the Government’s 2007 energy strategy, notably the target of 90 per cent renewable electricity generation by 2025, and an emissions trading scheme is, therefore, welcome. This is not an instance where the National Party should be criticised for saying ‘me, too’. Security of supply is too important for that.

National has correctly identified that the major obstacle to such security is the lack of clear and consistent rules to encourage power companies to invest in new water, wind, geothermal, tidal and other renewable generation. Its major remedy is an urgent reworking of the Resource Management Act. It would introduce priority consenting for large power projects, as well as streamlining the working of the act and putting an end to frivolous objections. Priority consenting would mean consents would be “called in” and determined centrally, and a decision would be made within nine months. Other details have not been announced, and National must ensure the balance does not swing too far against community interests.

If we do not want more coal or thermal stations, we need to make it easier to get wind farms and hydro plants. Just vainly hoping our energy demand grows half as quickly as it has historically is not much of a strategy.

The Press:

For Labour, the focus is on renewable energy, and particularly on a new concept, “reversibility”. For National, with the memory fresh in everyone’s mind of the third winter in recent years in which energy security has skirted close to a crisis, the focus is meeting present needs and preparing for those of the future.

The reality is that Labour’s focus on renewable energy has been rhetoric. 75% of new capacity under Labour has been thermal.

The difficulty with renewable sources of energy, however, is that no matter how much people may profess to admire the concept, they run into the same problems as other energy projects no-one seems to want one anywhere near them. Wind turbine projects, large and small, up and down the country have met ferocious resistance. And the revival by Contact Energy of proposals for more hydro dams on the Clutha River, while welcomed by some, has also prompted a threat of determined opposition by others.

And David Parker has ruled any future Clutha dams out.

National is selling its energy policy as an integral part of its plan to try to lift the country’s productivity growth. Productivity growth, which is crucial to economic prosperity, has sagged badly under the present Government and National believes, probably correctly, that secure and efficient electricity supply is essential to help try to revive it. Whether it can achieve this while paying more than lip-service to environmental commitments remains to be seen.

One has to have sufficient secure electricity. The environmental issues around certain forms of energy will partly be met by a workable Emissions Trading Scheme which sets a price for carbon.

Now letThree documents on this. The speech by John Key, the press release by Gerry Brownlee and the 11 page policy document. Key aspects:

• Plan for realistic levels of future demand growth, because running out of electricity is a risk we are not prepared to take (Labour is saying growth will be only 1.2% despite historial average of 2.2%)
• Introduce priority consenting for some large energy projects
• Reverse the ban on new base-load thermal power stations
• Consider abolishing the Electricity Commission (has been mega expensive)
• Introduce an Emissions Trading Scheme within nine months of taking office
• Support a target of 90% renewables for new energy projects, but not at the expense of security of supply
• Expect no new coal stations unless technologies emerge for carbon capture and storage
• Introduce a $1,000 per household solar water heating grant and simply consent rules for solar power
• Invest $25m in seismic exploration over next three years to tap the potential 24 billion barrels of oil equivalent we have

Now let’s look at thermal generation in more detail. 75% of new generation under Labour has been thermal. To pretend you can go from 75% to 0% overnight is nuts. Even Labour sort of know this, and have left wriggle room – their ban is more of a slogan.

The Dom Post reports a leading energy lawyer saying the ban probably would have to abandoned by Labour after the election.

I think everyone agrees the long-term future is renewables, but it will take a while to get there. And the consenting process for hydro takes so long a ban on thermal will see shortages. Just look at this ODT story about David Parker saying no to any more hydro dams on the Clutha. I love wind power but wind alone is not a secure supply. We need more hydro, and until we get that hydro we will need more thermal.