UABS KNOWLEDGE

IN THE MEDIA

What New Zealand should learn about renewable energy

2 May 2018

Climate change goals must be integrated into industrial policy if they are to succeed, argues Anna Berka.

Political and social science research on climate change shows some countries have been far more successful than others in orchestrating state-led transition to renewable energy over the past 40 years.  

Without exception, it is countries that have fully integrated climate change objectives into industrial policy that have succeeded. They have seen clean technology as the ticket to new domestic technology and service markets, employment, and new export markets, as well as a means of addressing specific domestic issues such as regional development and resilience of electricity supply. 

Conversely, very little tends to happen where climate change policy is not crafted around social and economic benefits directly relevant to domestic stakeholder groups. The reason? Taxpayers, established industries, and the media are consumed by the short-term costs of climate change policy, and blind to generally more diffuse and long-term benefits.

In this context, political representatives will not risk pushing through required policy frameworks. Announcing a moratorium on oil and gas exploration as the first agenda item in the Government’s climate change policy – without linking it to a broader programme that convinces New Zealanders they can and will benefit from the Government’s climate change objectives – could alienate both industry and the public and set a dangerous precedent. 

Delivering winning climate change policies is a careful balancing act that requires a willing-to-learn government with ears on the ground. The Government must serve as a knowledge broker and matchmaker, using grants and public loans to bring existing expertise out of the woodwork, putting in place incentives to invest, and regulations and public procurement programmes to guarantee demand that can scale up pilot projects.

This involves working with all stakeholders and independent research institutes to design policy instruments and set technology standards. So while market players ultimately do the heavy lifting, the role of central and local governments is essential. They need to nudge, prod, and finance for a period of years, to steer the rate and quality of technological innovation in a desirable direction before market dynamics can take over and drive down costs. 

While the New Zealand Government has targeted investment support for geothermal and electric vehicle infrastructure, these programmes have overlooked a key fact: To truly shore up public support for a climate change mitigation programme that will outlive this Government, these opportunities need to be widely seen as key elements of New Zealand’s climate change strategy, accessible to start-ups, organisations, and businesses across the country. In short, they need to touch the lives of the average Kiwi.

By consistently framing climate change as a civic opportunity since the 1970s, Germany and Denmark have single-handedly driven down the costs of wind and solar technology worldwide. All too often, New Zealanders think we are too small to replicate this process and contribute to global climate change mitigation in any meaningful way. This self-defeating narrative is repeated and reinforced by established industry players who dominate policy and media discourse, leaving little room for more positive ways of thinking about climate change policy. When you hear this in conversation or on the radio, it is worth asking who benefits from the status quo, and remembering that the most ambitious renewable energy policies did not arise from European riches, but from a context of public deficits, and economic and nuclear crisis of the 1970s and 80s. 

The truth is that island nations that are poorer, less well-endowed in natural resources, with a far less skilled labour force – from Kiribati and other Pacific Island countries, to Cape Verde – arguably have more ambitious and better established climate change mitigation programmes than New Zealand. But there is no reason for New Zealand not to excel.

The range of climate mitigation opportunities with potential social and economic benefits is vast. It includes multifunctional forest use, agricultural intensification and afforestation programmes, renewable agri-industrial heat, biofuels, battery and pumped hydro-storage, and incorporation of renewable energy in newbuilds. Inclusive energy market reforms and network and demand management systems will enable a wider range of consumers to invest in generation, storage, and demand-side management in order to support a growing electric vehicle fleet.

Targeted policy support in these domains can create new jobs and revive regions. Interestingly, a number of iwi trusts and many smaller distribution line companies know this and are at the frontiers of identifying synergies between local needs and clean energy innovation.  

Our Government is deciding on the main elements of New Zealand’s climate change strategy. Once the key objectives are confirmed, policy design must be decided at political level, leaving implementing bodies to carry out specific mandates. Countless examples show climate change policy tends to become ineffective where implementing bodies are left to their own devices to make complex trade-offs between different objectives and different stakeholder interests. 

The next challenge for the Government will be to bring ministries, key industry stakeholders, and regulators on board and in alignment. This process won’t be helped by the fact that climate and energy policy is not integrated under one ministry. For example, making the electricity market accessible to small-scale citizen-owned storage or generation assets is likely to require regulated power purchase guarantees, priority dispatch and buy-back rates as well as new channels to bridge the wholesale market with distributed electricity and ancillary services. This will require the full cooperation of MBIE, the market operator NZX, Transpower, distribution line companies and the Electricity Authority, which will need to adapt industry codes. 

Win-wins are possible: That is, if our Government is ready to believe in the mission, rally the troops, and empower its people. 

Read the published article: www.newsroom.co.nz

Anna Berka

Anna Berka is a Research Fellow in the University of Auckland Business School's Energy Centre.

a.harnmeijer@auckland.ac.nz

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