Source: Steve Rotherham
The Government is developing an Equitable Transitions Strategy aimed at ensuring New Zealand’s energy transition is fair and inclusive.
Meanwhile, the World Energy Council has released its Energy Trilemma Index, which measures not only equity but also sustainability and energy security.
New Zealand continues to rank highly in all of these dimensions, especially equity. Security is our weakest point.
In recent years, falling gas production has increased reliance on coal imports. This has caused slight declines in the country’s energy security and sustainability scores that have eroded many of the gains made from a wave of geothermal developments in the first half of the last decade.
The BusinessNZ Energy Council – a member of the WEC – says the slight improvement in equity reflects retail prices, which have decreased by more than 3 per cent in real terms since 2013.
But BEC executive director Tina Schirr notes that elevated coal prices and carbon prices are now putting extra pressure upon wholesale electricity prices. The decline in local gas production and increased reliance on coal will affect all three aspects of the trilemma.
“Transitioning to a fully sustainable energy system which is secure, affordable and equitable is undoubtedly a tough balancing act,” she says.
“The question is not whether we should, but rather how to do it affordably, and what trade-offs we are willing to accept.”
Schirr says there are several ways to improve New Zealand’s weakest performing aspect of the trilemma – energy security.
“One way would be to ensure a diverse energy mix, introduce more decentralised storage and play with elements such as flexibility services – all of which are in the making as we speak.
“As a small island nation, we need to reframe the narrative from ‘how to scale’ to ‘how to provide resourceful, small and smart solutions’ where we need them the most – both today and in the future.
“That means future solutions could look quite different from how we currently produce and store energy. Energy storage remains an important element to security of supply and finding the right balance is key.”
A just transition
Meanwhile, the Government continues work on its Gas Transition Plan and its National Energy Strategy – and now its Equitable Transitions Strategy.
“A well-signalled and inclusive transition can ensure that we achieve our climate goals while helping our economy and communities prosper, leading to higher wages, improved wellbeing and more productive and resilient businesses,” the terms of reference document states.
“The purpose of the Equitable Transitions Strategy is to ensure a well-signalled and inclusive transition to a high wage, low-emissions and climate resilient future, which maximises opportunities and minimises disruption and inequities.”
The strategy is co-led by the Ministry of Business, Innovation and Employment and the Ministry of Social Development.
The terms of reference make no mention of trilemma trade-offs. But the associated online surveydoes acknowledge that the cost of living could rise and jobs will be lost.
The strategy will have six objectives.
1 – Undertake proactive transition planning developed in collaboration with Māori, local government, regional economic development agencies, workers, unions, businesses, low-income households, and community groups, particularly those most affected by the transition.
2 – Strengthen efforts to support a nimble and responsive education system with equitable access. This system must address skills needed for a low-emissions future; help key sectors transition; and provide education pathways by Māori, for Māori.
3 – Support workers to transition from high-emissions sectors to low-emissions sectors. This will include redeploying and upskilling workers, and will use interventions to avoid job loss and displacement. It will be done in collaboration with workers, unions, education providers and businesses.
4 – Consider distributional impacts when designing and implementing climate strategies and policies to minimise negative impacts, maximise co-benefits and reduce inequities. This will require real-time monitoring of impacts and developing more detailed modelling and analysis of how the transition will affect different groups.
5 – Shield households and communities from negative transition impacts and address existing inequity through climate policy co-benefits. For example, measures could be used to make access to transport more equitable.
6 – Identify measures to support continued business viability while also reducing emissions, including for small businesses.
“While transition planning and other measures are essential to ensure an equitable transition, these objectives should not be used to justify avoiding or delaying changes necessary to drive the transition to a low-emission future,” the terms of reference document says.
“Meaningful engagement will take time and some issues within the scope of the Equitable Transitions Strategy may justify action prior to the completion of the final strategy. Where there is a strong case for early intervention the strategy will seek to develop actions for implementation in parallel with the development of the overall strategy.”
MBIE says the strategy will be informed by engagement with the public and will include actions and policies to address challenges and seize opportunities.
Consultation begins now with the online survey. Workshops will be held around the country in the first half of next year.
A draft strategy will be released in June 2023 and the final Equitable Transitions Strategy will be published by June 2024.