Policy papers late release underlines 2020 will be busy

Sunday, 2 February 2020, 1:07 pm
Article: NZ Energy and Environment Business Week

Late release of policy papers underlines 2020 will be a busy year

First published in Energy and Environment on January 23, 2020.

The energy and environment sector is still coming to terms with voluminous discussion documents released by the Government in December as it wrapped up the political year.

The papers on Emissions Trading Scheme regulations and renewable energy policy cover large policy areas and while some of the suggestions have been signalled others will have come out of left field for many.

Climate Change Minister James Shaw and Energy and Resources Minister Megan Woods defended the release on December 19 saying it was better the sector had time to contemplate the implications over summer rather than being given less time to make submissions ahead of the February 28 deadline.

The ETS paper puts firm numbers around what a cap and trade emissions scheme will look like and the technical difficulties faced. It also shows how much NZ will overshoot its current pledged targets under the Paris Agreement.

Some will argue the work undercuts the Climate Change Commission process, but Shaw says emissions projections show work has to start now.

The renewable energy paper emphasises beefing up current work on energy efficiency and shifting industrial heating processes away from coal. It also proposes a ban on new coal burning plant for low and medium temperature processes, phasing out existing plant and a new levy on coal use.

There are also more details on plans to streamline consent processes for renewable energy including sidestepping current resource management regulation. The paper also floats intervention to remove gas fired generation from baseload and suggests other ideas such as a renewable energy state owned enterprise. These issues are covered in more detail elsewhere in E&E.

The papers come as submissions close on legislation reforming the ETS and work implementing Electricity Price Review recommendations. Elsewhere, officials are working through Crown Minerals Act review submissions and trying to get a discussion document released on proposals to ban mining on the Conservation estate.

Adding to the mix is the Resource Management Act reform legislation currently before Parliament and work underway on wider resource management legislation reform. On top of this are water quality regulation changes, managing intensive farming practices and how to bring farm biological emission into the ETS.

Another surprise was the announcement late last year. Shaw was reviewing the way the ETS treats electricity use – the electricity allocation factor - when granting free emission credits to firms competing against overseas producers.

Shaw said he believes 84 firms – ranging from NZ Steel to tomato growers – are making windfall gains due to overcompensation and current proposals to phase down the industrial allocation would not solve this.

He said there should be a further review about eligibility and baselines, but since “stakeholders and decision-makers already face a heavy workload on climate change policies, I do not intend to seek decisions on policy changes to industrial allocation other than to the EAF.” Another pressure point coming up is the future of the Tiwai Point aluminium smelter. Over the summer break senior Rio Tinto executives made their way to Wellington to discuss the implications of closure and what they want to avoid that.

The message from ministers and senior officials was they can see as many benefits from closure as negatives. They were given little hope of any Government assistance or even ministerial intervention in the vexed issue of transmission pricing . There are interesting times ahead.

First published in Energy and Environment on January 23, 2020.

© Scoop Media