New package to drive efficiency and innovation

The government today announced a new package of measures to drive innovation within energy intensive small and medium size enterprises (SMEs).

"By employing simple no and low cost energy efficiency measures, most businesses should be able to more than offset the impact of the carbon tax that will be introduced from 2007. However some energy intensive businesses will need assistance to adjust," says Convenor of the Ministerial Group on Climate Change, Pete Hodgson.

The centrepiece of the package is a grants scheme. Pilot projects will be undertaken with firms in energy intensive sectors from 1 July 2005. Selected firms will receive cash grants to assist them to introduce and demonstrate energy efficient technologies relevant to each sector. This will be backed with training and education initiatives.

"By piloting the grants scheme from this July, business and government can work together to further assess and address the adjustment needs of industry prior to the introduction of the carbon tax in 2007. This will promote a successful transition to an economy where the cost of emissions begins to be met by those responsible for them."

The package will be jointly administered by The Ministry for the Environment (MfE) and The Energy Efficiency and Conservation Authority (EECA).

"This government is determined to play its part in the global efforts to attempt to limit the extent and impact of climate change and to preserve the New Zealand way of life for future generations. This package is part of wider government moves to structure the economy for growth in a carbon constrained world."

Other policy measures include protecting the international competitiveness of businesses through Negotiated Greenhouse Agreements, and policies that encourage investment in new technology that will boost productivity.

The sectors covered by the package are: wood processing, food processing, basic metals, non-metallic industries, paper and paper products, tourism transport, glasshouse crops, fishing and irrigated dairy and arable farming.

Background information

Work completed by MfE and EECA shows that energy intensive firms can typically reduce energy usage by up to 10 per cent by adopting no and low cost measures with pay-back periods of up two years. Further investment with longer payback period can deliver additional savings. Many firms that EECA has worked with have already realised such savings. This package is designed to help energy intensive businesses overcome barriers to the uptake of energy saving measures.

This should improve the energy efficiency, productivity and competitiveness of firms, lead to lower emissions, offset the effect of the carbon tax and lead to a net reduction in firms' energy bills against business as usual.

ECCA and MfE have worked directly with firms and sector groups to identify barriers to the uptake of energy efficiency technologies and to develop a policy package to overcome them. EECA and MfE will work with industry organisations, chambers of commerce and Employers and Manufacturers Associations to identify suitable firms and technologies for the demonstration facilities and to publicise them.

The scheme will select technologies that are capable of delivering significant energy savings and are capable of relatively widespread use in industries that use energy intensively.

Around 10 per cent of SME's can be classified as energy intensive.

The target industries and possible preferred technologies include:

Wood processing - high efficiency motors, high efficiency fans, dehumidifier driers. Food processing - high efficiency boilers, heat recovery on refrigeration plant. Basic metals - high efficiency electric motors, induction furnaces. Non-metallic products - variable speed drives, high efficiency lighting. Paper and paper products - variable speed drives, high efficiency motors. Tourism transport - driver training, bio diesel powered vehicles. Glasshouse crops - high efficiency lighting and control, greenhouse management systems including control of venting with heating use, thermal screens, twin skin plastic construction. Fishing - heat recovery on refrigeration. Irrigated dairying - heat recovery on chilled milk vats, variable speed drives on motors, soil moisture measurement to regulate irrigation. Irrigated arable crops - soil moisture measurement to regulate irrigation, variable speed drives on pumps.

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