Wednesday 16th October 2019
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Policymakers will need to ensure electricity remains affordable and reliable if the country is to decarbonise transportation and heavy industry, Genesis Energy says.
Electricity – 84 percent renewable last year – has a key role to play in helping the country meet its Paris climate targets, Genesis chief executive Marc England told shareholders today.
But he said gas and coal will still be required in the generation system for the next decade and it's important they remain affordable as the country charts its path toward a net-zero economy in 2050.
“Don’t inadvertently disincentivise electrification by imposing unnecessary costs on industry and consumers or impact the reliability and security of supply that we’ve become used to,” he said at the firm’s annual meeting in Auckland.
“One risk as we manage this transition is that carbon pricing drives up the cost of electricity and disincentivises that electrification. It will be important that policy direction considers the interplay between industries, as well as within industries, if we are to have a transition that helps the whole economy decarbonise in the most efficient way.”
Genesis is the country’s biggest electricity and gas retailer and generates more than half its power at its coal- and gas-fired plants at Huntly. The firm’s dual-fuel Rankine units at Huntly provide key back-up supplies during dry periods and at times of peak winter demand.
Genesis shares, which shed rights to their 8.6 cents per share dividend, fell 3 percent to $3.37, trimming its gain this year to 30 percent.
England noted that the firm has already halved its own emissions in the past decade, largely by reducing its coal use, and has partnered with Tilt Renewables to build the 133-megawatt Waipipi wind farm near Waverley to help push them lower.
New generation investments like Waipipi will help push the share of renewables to more than 90 percent in the coming decade but going beyond that is likely to prove increasingly expensive, he said.
“This is the inconvenient truth that comes with being so renewable.”
The government is persisting with its goal to have power generation 100 percent renewable by 2035, despite advice from the Interim Climate Change Committee that meeting the target would be costly and would deliver little emissions reduction.
The committee believed generation would probably be 95 percent renewable by 2035 without further intervention and it urged the government to instead prioritise electrification of transport and industry to reduce emissions across the wider economy.
England likened the final push required to get to 100 percent renewable generation to the final ascent from Camp Four to the summit of Everest.
While most countries are still grappling to get up from base camp, Norway is close to 100 percent renewable but has the advantage of four-times as much hydro storage as New Zealand and power links with neighbouring countries, he said.
Its ascent to 100 percent renewables will be like climbing Everest with oxygen. New Zealand, an island state in the Pacific, will have to do it without oxygen, he said.
While technologies to help achieve that will eventually emerge “at the moment they remain intensely risky and prohibitively expensive,” England said.
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