Of passing note is the removal of any overt reference to lignite coal.  Of course bioenergy could be code for it, or ‘alternative transport fuels’ (the Energy Outlook 2010 specifically cites lignite diesel as an alternative transport fuel with potential.)

But basically the strategy is clearly bent on increasing the exploitation of oil and gas.

There are so many aspects of this strategy that are plain wrong.  First off, there is the obvious impossibility of simultaneously increasing fossil fuel production and responding effectively to the unprecedented threat of climate change.

But equally, there are the hollow claims of various immediate economic benefits the fossil strategy might bestow.  So let’s examine these:

1. We need oil and gas exploration and drilling because it will create jobs.

Two reports (commissioned by Venture Taranaki over the past 5 years) seek to quantify the economic benefits (including job creation) of the oil and gas industry in that region.

The first (PDF) is a sober, cut-and-dried analysis by BERL (Sept. ’07).  It states that there were 817 FTE employed by the entire sector in Taranaki in 2006. There are some multipliers that flow on from the industry but, overall, it was less than 2% of the workforce in the region. By comparison, over 2,000 were employed in manufacturing and well over 6,000 in dairy. There were fewer than 1,000 FTE employed in the industry throughout New Zealand that year.

Of those employed, many weren’t local. The report states:

A large portion of the oil and gas workforce are overseas experts, often with international experience.

The second report, The Wealth beneath Our Feet (2010), comes across as a PR piece extolling the virtues of the industry. It’s not clear who the authors are, or what their assumptions were, but they claim the oil and gas industry directly employed 3,730 FTEs in 2009. That’s a 400% increase in the number of people employed in the industry over just 3 years. This number keeps getting cited, and multiplied out further to be responsible for as many as 7,100 jobs in Taranaki.

However, according to Statistics NZ, the numbers haven’t changed all that muchsince 2006 (see table below).

So there are grounds to question the optimism of the second report. More importantly, we need to keep in mind the point made in the first report – many of the jobs associated with oil and gas go to overseas experts. There’s not sustainable job creation in it for New Zealanders, because once the resource is gone (or we have a catastrophic accident), there are no more jobs.

Investment in public transport, clean tech and renewable energy will also create jobs, and we have every reason to believe they will create more jobs than oil and gas.

2. We need to develop our resources so we have secure, affordable energy

Running through the Energy Strategy is the insinuation that Kiwis will benefit from affordable energy if we increase our domestic production of fossil fuels. We use a lot of oil, so we’ll be better off if we drill our own.

This is perplexing, because we don’t use any of the oil that is drilled here – we ship it offshore and import heavier crude from overseas. Even if we could refine and use the oil produced here, we would still pay the international market price for it.

There is the claim that the amount of oil we export offsets the oil we import. But New Zealand households and businesses are importing well over $6b of oil annually. Even though we’re exporting around $2b worth of oil, the Government only gets about $300-500m in royalties and taxes. So it’s not like consumers are going to get a huge reduction in their tax bill which will offset the extra they are paying to fill up their tank.

Source:  The Treasury, Budget 2011. Revenue data.

The only way to future proof our economy against rising volatile oil prices and an increasing carbon price is to reduce our dependence on fossil fuels. That requires a serious plan of action, such as Denmark has developed. We need policy, regulatory and funding changes.

This Government clearly has no interest in setting ambitious targets, or even outlining how we might get to the unambitious targets they have set. For example, the EECS strategy has the target

By 2016: The efficiency of light vehicles entering the fleet has further improved from 2010 levels.

Doesn’t say how much better… just better. How’s that for a measurable and ambitious target? That way we don’t need to explain which Government policies will facilitate the outcome.

The Green Party knows we need a plan, and we are working on the outline of what we would do if we were in Government to create thousands of clean, green jobs, and transition our economy away from fossil fuels.

That’s the kind of energy strategy New Zealand needs.

Speaking today at Solid Energy’s Annual Meeting in Auckland, Chief Executive Officer, Dr Don Elder says that in a first for New Zealand, coal seam gas is now producing enough electricity for 500 to 800 homes, using one of the world’s cleanest forms of thermal energy.

The on-site generator is currently fed by four wells taking gas from a 32 hectare section of the coalfield. Gas flow from this small pilot has the potential to power as many as 1000 homes but it is not yet known if the local network connection can accept that much electricity.

Coal seam gas can be used for industrial energy, electricity generation and could be injected into gas transmission systems to supplement gas resources.

While it ceratainly is unique to be using coal seam gas in New Zealand, burning it to produce electricity, where up to two thirds of the energy can be lost in the form of waste heat, is a poor use of a non-renewable resource. This is particularly true here, where it is common knowledge that renewables, including baseload geothermal, are cheaper than thermal baseload.

That last use mentioned in the quote is the future for natural gas in New Zealand – direct use in homes and in industry, where the heat is what is wanted, and where using electricity to create heat is in fact wasteful. The long transformative journey from gas > heat > electricity >  heat for many uses is a waste of a finite resource.

Coal seam gas does have a future in New Zealand, particularly given the rapid dwindling of our big gas fields. We can expect serious shortfalls in gas supply here in NZ by 2015 if current trends – and waste – continue. Let’s be smart about how we use it – this time.

With the likely destruction of the Electricity Commission and the gutting of the RMA, anyone will be able to build pretty much anything they want, anywhere, as long as it uses natural gas which we haven’t found yet, but which National will subsidise searching for. Jeanette summed it up as a “drill and hope” policy. I have quoted much of her release in my last post.

This means completely cutting all the Energy Efficiency programmes that the Electricity Commission (EC) manages and pays for, which are targeted at big business. Now, some may say that I am not a fan of big business. However, the assistance they get from the EC is paid for by themselves through a levy. That means businesses, which are inherently inefficient, will not get the help they need to find all the energy efficiency savings that are staring them in the face.

A typical audit for these businesses finds cost-effective savings of nearly 30%. After they capture that, follow up audits usually find a further 20% in cost-effective savings. Why would you kill a money spinning scheme like this, which raises productivity and profits? Just for ideological spite. The result is that we will need more generation to supply all that wasted energy. We will all pay for that and our security of supply will be worse off than now.

Next come the household consumers. The EC makes sure that we have enough generation and enough transmission to keep the economy going without breaking the budget. It was created because the National Party’s so called electricity reforms of the ’90s actually gave generators an incentive to build less and charge more. Thus, our higher prices are, as National claims, in part the result of capacity constraints. However, National’s policies are to blame, not the EC.

The EC was created to fix that problem and it is working. Now National wants to ditch the EC. Without the EC, we would have had blackouts this winter. They are the ones that made sure we had enough generation to cope. And it worked!

Then there is their false promise of a renewable future, all the while making firm financial commitments to a gas-fired future. Very disingenuous.

Oh, well. Same old failed policies of the past. No surprise there. The wolves will be circling around the carcasses after another round of National Party ‘reforms’. Do voters really have such short memories?

I have rarely blogged before, so it will be interesting to see how it helps me organise my thoughts.

There are so many important issues that it is difficult to know where to start. So I will blog about them in no particular order and see where the conversation leads. There are issues with allocation, with equity and with the basic trading unit called an NZU or New Zealand Unit. There are missing Kyoto emissions and there is also the complementary measure of a ten year moratorium on new thermal baseload generation. May as well start there, actually.

Frog blogged here that the National Business Review reported that the Nats had done a deal with Labour to scrap the moratorium in exchange for continued support for the Bill. While I was issuing a press release here, the Nats were vehemently denying any deal and calling for a retraction. All that drama aside, one would have to ask if the moratorium actually mattered at all as it is written.

I asked three submitters during the Select Committee hearings whether there was any kind of thermal power station at all that could not be built under the exhaustive list of exemptions within the Bill. None of the three could name a single instance of something that would actually be banned. Contact Energy even argued that was not the point – it was having to get the Minister’s permission under the exemption clauses that was onerous and time wasting!

Many are arguing that with a price on carbon, the market will take care of it (heard that one before?) and build renewables. Certainly Contact has told us geothermal is currently cheaper than building new gas fired generation, which is why they have switched their emphasis and plan to build a great deal of geothermal baseload generation.

But not Genesis. Re-packaging their proposed Rodney gas fired station (which would be the biggest in the country by a large margin) as a peaking station by changing just a few words in their resource application is incredibly cynical, but no-one, including their shareholders, is pulling them up on this.

They’ve figured out that if they build it as a peaking plant (not allowed to run more than say, 30% of the time) then whenever supply gets a little tight they can apply under the “emergency� clause to run it all the time for “security of supply�. Knowing there are 480 MW of gas station just sitting there waiting for an opportunity will discourage others from building renewables, so supply is guaranteed to get a little tight. However, if that doesn’t work there are other exemptions it can try.

Fact is, if we want to reach the 90% renewables target by 2025 we have to stop building thermal plant and start retiring it. But that won’t happen under this legislation. It’s that simple.

Peak Oil 2010, Peak Gas 2015, Peak Coal 2025.

Boy that sounds familiar! He then went on to tell us how important it was that New Zealand continues to increase its amount of cows and coal in order to take advantage. It’s right there, on slide 5. I have often accused the state sector of keeping its head in the sand regarding peak oil and coal, but clearly an apology is in order. Don Elder knows that a crunch is coming and he is planning to make a mint from it. Never mind the environmental consequences. Never mind that if we just hang on to our coal rather than shipping it to China, perhaps our children will someday have a way to use it safely.

So it would seem the government’s sustainability strategy still includes ‘dig and burn’.