Parliamentary Commissioner for the Environment - Te Kaitiaki Taiao a Te Whare Pāremata

Letter to the International Energy Agency

Comments from the Parliamentary Commissioner for the Environment regarding the IEA’s in-depth country review of New Zealand’s energy policies

The Parliamentary Commissioner for the Environment was established as an Officer of Parliament under the Environment Act 1986.  In my role I have a unique opportunity to provide Members of Parliament with independent advice to assist in their consideration of matters that may impact on the quality of the environment.  I work hard to ensure that recommendations I make are practical and robust.

In this note, I cover four energy topics on which work continues in my office – smart electricity meters, the production of transport fuels from lignite, biofuels, and the ‘electrification’ of space heating.

Smart electricity meters

New Zealand has clear opportunities to reduce the environmental impact of electricity generation and consumption in ways that make economic sense.  I am concerned that these opportunities are not being taken.

This year I released a report on the unregulated roll-out of smart meters to the NZ residential market by the electricity retailers.  In summary:

·  Smart electricity meters can create a potential win-win for householders and the environment.  However, New Zealand households are missing out on power savings and so is the environment.

·  Most smart meters being installed now are ‘dumb’ – smart for the retailer but no one else and not as smart as they should be.  In 3 years, more than half NZ houses will have these ‘dumb’ meters installed, based on current plans. 10 percent already do

·  Adding the key smartness - a home area network (HAN) chip -- to a ‘dumb’ meter before it is installed will cost a few dollars. For a small additional cost, retailers could be installing really smart meters. This would be much cheaper than the cost of returning to each home to retrofit the technology.

·  Helping householders manage their electricity use better will help the environment as well -- by reducing carbon dioxide emissions and avoiding or delaying building new power plants and transmission lines.

·  Smart meters that are really ‘smart’ will help the market deliver better results, putting more competition into the electricity market.

·  Fully functional smart meters are a cornerstone of New Zealand’s future electricity system. This key strategic infrastructure decision, however, is being left to electricity companies who are making different decisions.

Smart meters are an essential part of a smart grid -- one far more responsive, interactive and transparent than today’s grid. Such infrastructure is also hugely important for a future containing electric vehicles.

It is claimed by some that New Zealand is leading the world in smart meter technology by allowing the different electricity retailers to respond to their customers.  I am unconvinced.  A great opportunity is being lost by not including a HAN chip in the meters before they are installed.  It is also essential that communication protocols be open access.

A copy of my report, Smart electricity meters: how households and the environment can benefit, is enclosed and more copies are available if required.  The Commerce Select Committee is currently considering this report and hearing submissions from a variety of companies and groups.  I will be appearing before the Committee again on 10^th December to respond to these submissions.

Lignite as a transport fuel

Lignite is New Zealand's largest fossil fuel energy resource. A State-Owned Enterprise, Solid Energy, has already spent many millions of dollars buying land in Southland and on exploratory drilling and pre-feasibility studies, with the intent of mining the lignite and using it to produce transport fuel.

The carbon footprint of such a plant is clearly of great concern.  There are other concerns, such as whether the scale of these plans would lock New Zealand into using it for decades to come, and shut out investment in alternative energy sources.

I will be releasing a report on this issue in 2010.

Biofuels

In 2008, New Zealand introduced a biofuel obligation, requiring a certain percentage of petrol and diesel to be biofuels.  I had recommended that this obligation not be established, and when the Government changed at the end of 2008, the legislation was repealed.

In July this year, a private member’s bill, the Sustainable Biofuel Bill, was introduced to the House.  This Bill is intended to set up three criteria for ensuring that biofuels used in New Zealand are sustainable.  I made a submission on this Bill with the intent of helping to make the criteria more workable.  My current thinking is that other approaches may be preferable and I indicated this to the Select Committee dealing with the Bill.

Currently, work is underway in my office building on the knowledge gained from the two submissions and on assessing the potential for the New Zealand agricultural and forestry sectors to produce biofuels.

I will be releasing a report on this issue in 2010.

‘Electrification’ of space heating

New Zealanders are increasingly using electricity to heat their homes.  For some time, heat pumps have been promoted as the way to improve urban air quality, and wood burners are on the decline. Unfortunately, while heat pumps are far more efficient than resistance heaters, problems are emerging. These include:

- Increasing electricity consumption:  Many New Zealand homes are cold and damp in winter and poorly insulated.  In some cases, heat pumps are being used to heat whole houses in winter, and householders are commonly being given advice that because heat-pumps are so efficient, they should be left on all the time.  They are also being used for cooling in summer, whereas home air conditioning used to be virtually non-existent in New Zealand.

- Increasing carbon dioxide emissions: Heat pumps often displace wood burners, and consume electricity at peak times when carbon dioixde emissions are generally higher.  Peak demand also drives the building of new generation and transmission infrastructure.

- Increasing strain on infrastructure: The replacement of wood burners with heat pumps is worsening the geographical generation-load mismatch, thus increasing grid losses.

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    Moreover, due to the new use of heat pumps as air conditioning units, a significant peak is developing in summer. Transpower and the network companies undertake their major maintenance of lines in summer, and this is reportedly becoming much more difficult.

    I plan to release a report on this issue in 2010.