Towards ENERGY SUSTAINABILITY in New Zealand

Forest and Bird, Volume 21, Issue 1, 1 February 1990, Page 16

Towards ENERGY SUSTAINABILITY in New Zealand

by

and

Bill Brander

Molly Melhuish

NERGY IS THE LIFEBLOOD of modern society, which would collapse without a continuous supply of oil, gas, coal and electricity. It has long been recognised that our voracious appetite for finite reserves of fossil fuels would never last. The message of recent years is that the waste products of excessive energy use will place a much earlier limit on the use of fossil fuels than will resource depletion. Fossil carbon which took up to 200 million years to accumulate is being discharged into the planet's atmosphere, which is no thicker, in proportion, than a film of dew on an apple. The buildup of carbon dioxide and other gases now threaten to destroy the very land and life support systems on which humans and many other species depend.

NZ Energy Options

We New Zealanders, although lucky to have significant hydro and geothermal resources, rely on fossil fuels for the balance of our electricity, almost all our transportation, and most of our heating requirements in commerce and industry. In the last 20 years New Zealand's primary energy consumption has more than doubled, and electricity generation has grown by a factor of 2.3. During this period we have become increasingly dependent on fossil fuels, particularly Maui gas. Spurred on by Electricorp’s advertising, electricity consumption grew by 2.5 percent in 1988-89, compared to an average of 2.0 percent per year in the previous three years. If this tend continues unchecked, new power stations will need to be built, leading to price rises as well as adverse environmental impacts. New Zealand is one of the few OECD countries which has continued to increase its energy intensity (that is, to use more energy to produce a dollar of Gross Domestic Product (GDP). Over 15 years our energy intensity rose 16 percent, as a result of the "think big" projects and the substitution of cheap energy for labour, while the OECD's decreased 20 percent. We are now at a crossroad. We could take the "business as usual" path, which would lock us into unavoidable dependence on new energy projects or imports at a time when the low-cost sources are running out. North Island open cast coal would be depleted early next century. The Maui field may be depleted within 15 years under the present gas allocation regime, if the reserves are at the low end of current estimates. In a decade or two this route will lead inevitably to giant coal mines in the Waikato and possibly Southland and Taranaki. Promoters of big industry would undoubtedly renew the call to develop nuclear power.

The other path, described as the "soft path" by American energy efficiency expert Amory Lovins, is marked by different signs, blindly ignored by mining and power engineers. The signs mark the needs which energy provides — warmth, hot water, light, mobility. The path is the route of least resistance — the cheapest way to meet those needs. It recognises energy efficiency as a fuel in its own right — an alternative to new power stations, oil wells and pipelines. A fuel that reduces pollution, protects the environment from further

development projects, and can generate jobs and extra disposable income wherever energy is consumed. Such a path lengthens the lifetime of our fossil fuels, makes the most of our existing hydro electricity, and permits an orderly transition to renewable resources. The path recognises not only the social cost of damaging the environment but also the cost of denying to our descendants the fossil fuels and unpolluted atmosphere that we have enjoyed.

This path is not without problems. It involves valuing our resources to reflect the social costs of their use rather than pricing them at the cost of extraction. It requires energy suppliers to make difficult changes to corporate goals. Profits must be decoupled from energy sales, and sought instead from cost savings through increased efficiency. The total power tariff might be higher than before, but the customer’s power bill will be less. The focus of development must move from doing more with more to doing more with less. Although challenging, these problems are certainly more manageable than those which are likely to result from pursuing "business as usual’.

The Potential For Energy Efficiency

Energy efficiency is like eating a lobster, Lovins told New Zealand audiences. Almost half of it comes in large chunks; the other half in little pieces that are just as nice. Energy efficiency can be marketed, just like energy, but perhaps by different sellers. Lovins advocates that markets be set up to sell "negawatts’’ — watts saved because energyefficient equipment is sold — in competition with megawatts. Some negawatts cost less than nothing, for example long-life fluorescent light bulbs which use a quarter to a sixth the energy and last up to 12 times as long as ordinary incandescent bulbs. In commercial buildings, they save more than their capital cost by eliminating the need for frequent bulb replacements.

We do not yet know the full potential of the energy efficiency resource. Despite the hundreds of millions of dollars spent on exploration and assessing the megawatts available from energy resources, relatively little has been spent on assessing the "negawatts" available in our homes, offices, industries and transport. What has emerged from a few New Zealand studies and a growing base of overseas research indicates that negawatts are becoming cheaper and better every year, rather like personal computers.

Avoid Fuel Conversions

One of the best ways to improve the energy efficiency of the economy is avoid unnecessary fuel conversions. For example, using natural gas directly for space and water heating is twice as efficient as generating electricity for the same purposes. Even though gas appliances are less efficient than electrical ones, the loss of energy in generation (about two thirds) and distribution (about 10 percent) far outweighs the appliance losses.

Yet deregulation of the electricity industry has allowed several electric power boards to plan their own gas-fired power stations, at a time when we have a large oversupply of electricity. The Motunui synthetic petrol plant costs the taxpayer $280 million to waste Maui gas. Half the energy content of the gas is lost during the conversion process. Consequently, it takes twice as much natural gas (and carbon dioxide emissions) to run cars on synthetic petrol rather than CNG. The depletion of natural gas has been driven by the take-or-pay clause in the Maui Gas Contract which required the Crown to pay for a specified quantity of gas each year whether or not it was used. It is no surprise so much was allocated to electricity generation and synthetic petrol production (over 60 percent of our natural gas output in 1988) since they are sufficiently inefficient to deplete the resource at the required rate. But it would have been cheaper just to burn the gas to waste through the flare stack than to waste half of it at a capital cost of about 2 billion NZ dollars. Meanwhile the removal of government incentives for alternative fuels has resulted in a halving of CNG use in three years and a halt to its provision in new service stations. All this at a time when other countries are set-

ting up CNG programmes and drawing on New Zealand experience. An underlying cause of this debacle is the failure to set resource charges. Prices for natural resources are based on the cost of extraction and do not reflect their long-term scarcity nor the environmental impact of their production and use. As a result, at Waihapa Petrocorp flares gas at a rate similar to our CNG use, and gas suppliers have less incentive to leakproof their pipework. For example, the Wellington Gas Company's gas leakages reached a high of 22 percent in 1982 and are still around 9 percent.

Transport and Urban Development

Besides avoiding unnecessary energy conversions, the other main source of "negawatts" and "negajoules" is improving end-use efficiency. Road transport uses 63 percent of our fossil fuel energy. Developing an efficient transport system is the biggest hurdle to reaching a sustainable energy future. Key issues to be addressed at national level are the use of more efficient vehicles and the choice of replacement fuels. At the local government level, issues include the shape of urban development, alternative modes of transport, and reducing the need to travel.

The structure of our cities has a profound influence on transport energy use. Recent studies have shown that cities with low petrol use have a high population density, high use of public transport, and modest road development. The differences are remarkable: in low density Houston, petrol consumption per capita is more than twice that of Toronto, six times that of London, and nearly nine times that of Tokyo. Auckland, the only New Zealand city studied so far, has twice the petrol consumption per capita of European cities but half that of typical American ones. As our cities became flooded with traffic, transportation planning was caught on a treadmill of congestion, road building, sprawl, congestion and more road building. The resulting investment in roads and parking has entrenched cars as the dominant mode of transport. Public transport could not follow the move of urban development to the city fringe. This approach has left a legacy of unsustainable liquid fuels consumption, air pollution, excessive land use requirements, and massive public expenditure on the car and its tarsealed "habitat". It has also deprived those without cars of their access to city, town and countryside. Local governments need to recognise it is sometimes counter-productive for alternative modes to compete with cars. Empty buses serving low density areas use more energy than the few cars they displace. But in higher density areas where a good public transport system can be made accessible to all, it is counter-productive to widen roads, erect parking buildings, and encourage cars to compete. A positive approach by local government would foster sustainable transportation by integrating land use planning policies with public transport initiatives. One example is promoting higher residential densities close to main centres, along public transport corridors, and around interchanges.

Every capital works decision by local and regional governments shapes the patterns of energy use in our towns and cities for decades to come. Energy use must be a priority consideration in planning new motorways, buildings, subdivisions, and business areas.

Buildings Efficiency

New Zealand cities have many commercial buildings which use three times as much energy per square metre as their more efficient counterparts. Acres of glass with no external shading ensure that, without large refrigeration and heating systems, the occupants will overheat in summer and freeze in winter. All the lights remain on regardless of occupancy and daylighting simply because one remote switch lights up an area the size of the average home. Good design can slash running costs and minimise comfort, for little or no increase in capital cost. Once built, however, many opportunities for cost-effec-tive improvements are lost until major refurbishments. The present situation is set to deteriorate as the new uniform building code being pre* pared by the Building Industry Commission will not contain provisions for energy efficiency because the Commission considers resource management issues outside its terms of reference. Overseas experience shows that government needs to give direction to prevent the energy efficiency of building stock from declining, and locking a country into high running costs for the decades that the buildings stand. Wright and Baines have estimated the economic "reserves" of conserved energy in New Zealand homes. They calculate that a number of simple electricity management measures applied throughout the country, have the economic potential to provide energy equivalent to the output of 12 power stations the size of the now scrapped Luggate dam. New and not so new technologies offer the opportunity to slash energy use. Miniature fluorescent lamps could replace incandescent bulbs and reduce the nation’s peak electricity demand. High efficiency shower heads, spray taps and hot water cylinder blankets can cut the home hot water heating bill dramatically. In homes the widespread use of these items

would be cheaper than building new power stations. But just try finding them in the hardware store. Some new refrigerators use a third the electricity of others. But now that the govern-ment-labelling scheme is inoperative, we lack the information to weigh efficiency in our purchasing. Low-income householders may require paybacks of months, not years, and tenants (commercial as well as household) are seldom willing or able to invest to save on their energy bills. Similarly in industry there are many choices available in the efficiency of equipment for raising heat and providing mechanical power. Where both heat and power are required together they can be cogenerated at an efficiency of 80-90 percent rather than in inefficient centralised power stations. Scandanavian pulp mills are run this way, the operation of the mills providing virtually all power. But most businesses would require any investment in energy efficiency to pay back in 2-3 years, and many would want a 1-year payback.

Selling Negawatts For Fun And Profit

Energy efficiency technology is now sweeping American and European markets — since 1979 the United States has obtained more than seven times as much energy from savings as from new energy supply. But most governments as well as businesses are still more interested in "corporate socialism" than in level market playing-fields. Were it not for perverse corporate goals, energy supply companies and local supply authorities would be the organisations best able to sell energy efficiency technology. The main reasons consumers do not buy into the energy-efficiency menu are the lack of information in the market place, and the quick paybacks usually required by householders and small businesses. Energy suppliers have all the information needed, and can afford substantial capital investments with long payback periods.

Energy suppliers, however, are generally too impatient to pick out lobster from the menu; they go for the biggest fish (dams and coal-fired power stations) only, and eat them whole. One answer favoured by American electricity regulators is for central government to require authorities to implement all cost-

effective conservation options before starting to build new power stations. In response, one company, [Southern California Edison], simply gave away efficient light bulbs and other power savings equipment, to save the administration cost of loans schemes. This was cheaper than burning fuel in existing power stations, and so saved money for both the company and the consumer. In deregulated and supposedly competitive New Zealand, a different approach is more politically acceptable. Independent businesses can buy the cheapest conservation options and re-sell them in competition with electricity suppliers. Indeed electrical supply authorities can and should invade their rivals’ territories and buy negawatts from the most wasteful users, and resell them at a profit. Gas companies could play the same game to undercut the profitability of their electricityselling rivals. Best of all, New Zealand's energy efficient/ greenhouse abatement campaign, "Climate for Change’, could fund itself by direct selling of energy-efficient equipment, thus abating fossil fuel use directly, and eating into electricity sales (and expansionist power planning) at the same time. At the moment, such opportunities are suppressed by pricing behaviour which amounts to predatory pricing: wherever electricity sales are at risk, suppliers tend to charge high "supply charges" for connecting a consumer

to the grid, and set per-kilowatt-hour charges just below those of the nearest competing fuel. Furthermore the retail shops owned by power boards do not sell the best efficiency options: recent inquiries to two such shops disclosed that one salesperson never heard of miniature fluorescent bulbs, and the other said they were not carried because "there was no demand for them". All that may be needed is vigorous enforcement of the Commerce Act, brought about by a strong campaign backed by conservationists and small business interests alike. Heavy regulation, whether to limit carbon emissions or charge taxes to penalise such emissions, may be needed only as a last resort if competition is successfully evaded by energy suppliers. yf Bill Brander is with Works Consultancy Services, specialising in energy management. Molly Melhuish has been an energy analyst for many years and is the editor of Energywatch. Both Bill and Molly are involved with the ‘Climate for Change" coalition. They are also both Forest & Bird members.