Real climate strategy, not aspirational thinking

Thirty energy sector leaders with different perspectives agree on one thing – New Zealand will not meet the government’s aspirational goal of 100% renewable electricity generation by 2030.

KPMG interviewed a wide cross-section of energy sector leaders representing those who generate, sell or distribute electricity, major energy consumers, gas and oil producers, large scale consumers, industry bodies and regulators.

The result is 30 Voices on 2030, a range of views from well-informed professionals on what New Zealand can do – and might do better – as we move towards the dual targets of 100% renewable electricity generation, and the Paris Agreement climate commitment to reduce net greenhouse gas emissions to 50% of gross 2005 levels, by 2030.

KPMG National Energy Industry Co-leader Greg Bishop, who co-authored the report, says New Zealand needs a more strategic approach to climate action and that boards need to be alert to the challenges the country will face as we transition to a net-zero economy.

Under current settings, reaching 98% renewable electricity by 2030 will be difficult due to the timeframes of planning, consent and construction.  Bishop says even that requires us to “build the equivalent of six Manapouri stations in the next seven years”.

In order to decarbonise the energy economy, the industry needs to be supported to make significant infrastructure investment and attract and upskill the right talent he says. This may require a review of regulatory settings and the current multi-agency approach.

“We’re potentially talking up to 10 years from now just to get from ‘an idea’ to having something producing electricity. So we need to do something to shortcut that consenting process to be able to get the stuff built.”

Issues raised by contributors to the report included that policy and market uncertainties are currently hindering investment, that the Emissions Trading Scheme (ETS) was ineffective, and that the consenting process was a hindrance to rapid action. Resolving these issues is necessary to meet our decarbonisation commitments, Bishop says.

New Zealand currently has laws in place requiring the country to reach net zero greenhouse gas emissions (excluding agricultural methane) by 2050.

“I don't think people realise just how much electrification needs to happen between now and 2050.”

Greg Bishop, KPMG National Energy Industry Co-leader

Alongside industry concerns about the ability to innovate at pace, the report revealed a widespread fear that the transition to a zero-carbon economy may exacerbate inequality if not handled carefully. For example, those who can afford to purchase an EV or solar panels are likely to receive government subsidies or lower energy costs while those who are least able to afford energy face higher costs of both fossil fuels and electricity.

“Almost everybody we spoke to was worried about the social impact of this change – this wave of electrification that's coming won’t affect people equally.

“It'll get worse as we go through the energy transition and it's going to change over time. We're going to need to be fleet footed about how we deal with this and we're going to need to be very, very thoughtful because just having clean car discounts – for example – is not the right thing going forward,” Bishop says.

Bishop says there is a lack of understanding in terms of what the energy transition will require.

“I don't think the country realises just how much investment needs to happen in the electricity system to be able to decarbonise the country to meet our 2050 targets. It's huge. It's absolutely huge. The investment required in transmission and distribution alone is $100 billion, and then there’s the cost of the additional generation. 

“But that level of investment also creates a huge opportunity for employment and for those businesses working with the industry.

“It’s definitely not all doom and gloom out there” he said.  “The Voices we spoke to were all very positive about the future for New Zealand, and one even pointed to an opportunity they were progressing which would see lightweight solar panels being manufactured here for the Australasian market”.

Read the perspectives from energy sector leaders in the 30 Voices on 2030 report.