By Gerry Brownlee
Minister of Energy and Resources
Just over a year ago I was appointed Energy and Resources Minister – and, since then, time has flown as the National-led government embarked on a programme of vigorous activity.
This activity has centred on implementing our election promises - and reforms - to ensure the energy sector can both contribute to economic growth and create prosperity for New Zealanders.
One key step was commencing a wide-ranging Ministerial Review of the Electricity Market in April. There were two main drivers for the review: our concerns around the current governance arrangements in the electricity industry, and the rising electricity costs of the past nine years.
The government appointed a technical advisory group of regulatory and governance experts and asked them to consider a number of recent reports, including the Commerce Commission inquiry (the Wolak Report) into market power in the electricity market, and the Electricity Commission’s Review of Winter 2008.
The review reported back in August and made 29 recommendations to improve competition in the electricity market, to increase security of electricity supply, and to create streamlined and effective governance arrangements.
Those recommendations were released for public consultation and the government is currently considering final decisions on the exact nature of the reforms to be progressed.
Another major initiative this year has been the establishment of the Warm Up New Zealand: Heat Smarthome insulation scheme. In Budget 2009 $323.3 million was appropriated over four years to help 180,000 New Zealand homes become warmer, drier and healthier with retrofitted insulation and clean heating devices.
The scheme cuts the cost of a household’s insulation by up to a third (to a maximum of $1300) and provides $500 for a clean heating device, such as a heat pump and wood burner. It’s available to all Kiwis and significant extra assistance is provided for low-income earners.
As of the end of November, the scheme has only been operating for four months but has already provided assistance to nearly 20,000 homes. Around 65 percent of these homes are occupied by people on low incomes.
The scheme is such a runaway success the government has made the fund into a multi-year appropriation, allowing funding in years one and two of the scheme to be brought forward to meet the high levels of demand.
I’m a strong supporter of energy efficiency. In July this year I launched a new television information campaign – The Energy Spot, which gives practical advice on saving power at home and when driving a car. Most households can easily save 10 percent on their electricity bills by taking a few simple steps, highlighted in the episodes. That works out to savings of about $200 per household – a whopping $320 million in savings each year across the whole country.
We've also rolled out a series of other initiatives focusing on creating the right incentives for New Zealanders to use energy wisely. These policies include removing road user charges for electric vehicles, as well as giving $1000 grants for people to install solar hot water heaters. Since November 2008, nearly 2000 solar grants have been given out.
We’ll continue to improve the energy performance of our products and appliances through Minimum Energy Performance Standards (MEPS), energy labels, and independent information.
An area of the portfolio I’ve prioritised this year regards our natural resources. I’m firmly of the belief our minerals, oil and gas have the potential to make a significant contribution to our economy and our standard of living.
Some of the numbers are staggering. For example, it’s estimated our metallic mineral potential has a gross in-ground value in excess of $140 billion, with our lignite alone at least an additional $100 billion.
In terms of petroleum, recent analysis by GNS suggests Crown receipts alone could increase to more than $10 billion per annum over the next 40 years, should the estimated resources in our unexplored petroleum basins be developed - adding $400 billion to Government revenues. The petroleum sector could also generate over $30 billion per annum in export revenues by 2025.
We’ve announced a series of measures to improve access to mineral resources. The proposal to review the land contained within Schedule Four of the Crown Minerals Act, in which mining is effectively barred, has garnered a great deal of coverage. Some of the areas within Schedule Four are known to have significant potential for zinc, lead, copper, nickel, tin, tungsten and other metals. Around 30 percent of our most prospective land is off-limits to mining.
This review of New Zealand’s potential mineral wealth has prompted a bit of alarmist over-reaction from the usual quarters.
However, it needs to be remembered it is possible to mine conservation land responsibly; we’ve given a number of examples of where this is the case. Indeed, there are already 82 mines on conservation land around New Zealand, creating wealth and jobs for local communities.
We’ve an international reputation as a beautiful, green country – and that’s something we want to protect. However, this government believes in the possibility of allowing responsible mining on segments of the conservation estate where the conservation values of the land are far exceeded by their mineral potential.
The government has asked the Ministry of Economic Development and the Department of Conservation to undertake a stocktake of New Zealand’s mineral potential. In February 2010 the government intends publishing a discussion document with proposed changes to Schedule Four, and all New Zealanders will get the chance to have their say on the proposals.
In addition to looking at mineral wealth, we’ve also started developing our petroleum potential. We appropriated $20 million over three years (in addition to $3.75 million freed up before Christmas 2008) for seismic data acquisition in New Zealand waters.
We’ve also outlined a petroleum action planto build on work completed to date and to ensure New Zealand becomes an attractive global destination for petroleum exploration and production investment. It’s vital potential investment partners see New Zealand as a fertile ground for hydrocarbons, as a well being a good place to do business.
2010 is shaping up to be a busy year. It will also be a year of change for the sector. Decisions made on electricity sector reforms as a result of the Ministerial Review will start to take effect. We will progressively implement our action plan on petroleum and there will no doubt be further public debate and discussion about the development our natural resources. I welcome this debate and look forward to taking part in it.
I wish readers a prosperous 2010.
Energy NZ Vol.4 No.1 Energy Perspectives 2010
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