During COVID-19, New Zealand’s team of 5 million worked together to keep people safe. We demonstrated that the best economic response was in fact the best health response. It's time to learn that lesson and realise that the best climate strategy is the best economic strategy. One that protects future generations from the devastating impacts of harsher weather events, rising sea levels and supply chain issues.
In 2019, Labour in government passed the Zero Carbon Act, making a commitment to net zero carbon emissions by 2050. In 2020, they declared a climate emergency.
“The climate crisis is both the easiest and the hardest issue we have ever faced. The easiest because we know what we must do. We must stop the emissions of greenhouse gases. The hardest because our current economics are still totally dependent on burning fossil fuels, and thereby destroying ecosystems in order to create everlasting economic growth.”
Greta Thunberg, In an address to the British Parliament on April 23, 2019.
Changes must be made alongside a Just Transition that ensures no community is left behind and that benefits and costs are equitably distributed. A Just Transition proactively shapes the economy to minimise the impacts of change, and builds our social, economic, and environmental capacity to respond and adapt. A Just Transition ensures the costs of economic change do not fall disproportionately on one group, nor do the benefits accrue to a small group.
Fortunately, investing in green infrastructure not only creates jobs, it creates more jobs per dollar invested than fossil fuel jobs.[1] They also create more high-skilled jobs because many fossil fuel industries are highly automated and capital intensive.
On the other hand, clean energy or sustainable infrastructure jobs require more urban planners, engineers and construction workers per dollar invested — that is according to a recent study by the World Resources Institute, the International Trade Union Confederation, and the New Climate Economy.[2] Their study found that:
- Mass transit creates 1.4 times as many jobs as road construction per dollar.
- EV owners use electricity which is more labour intensive than the oil sector. They save on the cost of fuel and inject those savings back into the overall economy, which is again more labour intensive than the oil sector.
- Investing in solar photovoltaic energy creates an average of 1.5 times as many jobs as investing the same amount of money in fossil fuels.
- Ecosystem restoration creates 3.7 times as many jobs as oil and gas production per dollar.
- Building efficiency retrofits create 2.8 times as many jobs as fossil fuels per dollar.
The evidence is clear, transitioning from fossil fuels to green energy and investing in new green infrastructure is a win-win for the economy, workforces, governments, and communities.
Challenge: Climate Change
New Zealand is well past due for an economy that is both low carbon and climate resilient. Our current reliance on fossil fuels is not working, and we need a pathway to transition to alternative modes of power generation. An energy revolution is an opportunity to put New Zealand on the global stage, producing business opportunities and good jobs for all.
“The market left uncontrolled is destroying families and will destroy the very earth we rely on to survive. We need a new way of living, a new leadership and a sharp change in the incentives to do the right thing"
Helen Kelly, New Zealand Council of Trade Unions
Under our current climate trajectory, research shows that if the Paris Agreement and 2050 net-zero emissions targets are not met, climate change could cost the global economy 10% of GDP (equivalent to $23 trillion) by 2050.[3] That research also predicts that if global temperature rises reach 2.6 degrees Celsius it will cost the New Zealand economy 10.4% of GDP by 2050. However, if the Paris agreement targets are met, global GDP and New Zealand’s GDP are estimated to reduce by a much smaller 4.2% and 3.7% by 20250 respectively.[4]
Recent modelling shows New Zealand can achieve low emissions or even net-zero greenhouse gases emissions by 2050, through a combination of initiatives including afforestation and a low-emissions electricity system to decarbonise the wider energy sector.[5] [6]
According to the Productivity Commission, New Zealand’s demand for electricity will grow by more than 45% by 2050.[7] Transpower estimates electricity demand will increase 70% by 2050, and 25% by 2035.[8] Currently, New Zealand’s hydropower catchments are prone to dry years where they don’t receive enough rainfall or snowmelt, leaving lake levels running low and fossil-fuel generated power from Huntly is often used to plug the energy deficit.[9]
The Climate Change Commission has examined the costs of activities necessary to deliver on our obligations. Their estimate of 1% of GDP over the next 13 years means spending $34 billion.[10] That cost will fall on everyone, but the benefits of change may not. We must ensure that we are delivering a ‘Just Transition’ for workforces and that working people are centred in these discussions.
Due to a combination of factors, more coal has been burned at Huntly in 2020-21 than any other year since 2010.[11] New Zealand has also hiked up the amount of coal being imported. For the 2021 financial year, New Zealand coal imports were up 587% on 2010.[12] Huntly Power Station had been earmarked for closure in 2018 but remains open due to a lack of alternative energy sources.[13] According to Genesis Energy, the plants' fixed costs are too high and usage too low to be economically sustainable.
In August 2021, around 34,350 homes had their power cut on one of New Zealand’s coldest evenings without warning. This was due to an increase in demand, alongside an unplanned outage of the Tokaanu hydro plant. Hydro, while not a fossil fuel and not susceptible to geo-political factors, is not necessarily a climate resilient energy source due to its reliance on the weather.
Uncertainty over the future of Tiwai Point has delayed energy companies investing in new alternative projects. Tiwai Point currently uses a seventh of New Zealand's power.[14]
A Just Transition done well, equitably shares the costs, benefits, and opportunities of change across society and the economy. It mitigates the potential for that change to create larger economic inequality. Additionally, it strengthens the ability of communities, workforces, and industry to determine their own futures and to play a role in identifying and planning for the actions that will be needed for their transition over the short-, medium- and long-term.
Over the next nine months we want to work with you to deliver not just a model of climate action but also a plan for delivery. As a country, we must deliver climate positive policies that will give our economy a competitive edge.
Policy proposal: An Energy Revolution alongside a Just Transition (Industrial Revolution 5.0)
New Zealand needs a national strategy for an energy revolution that draws on the benefits of both electricity and hydrogen to complement each other. To achieve this, we will need to invest in green energy generation and ensure the dividends of new economic growth are equitably distributed. An Energy Revolution, or any policy that draws from natural resources would require comprehensive engagement with iwi as well as a by-Māori for-Māori approach.
“In combination, electricity and hydrogen provide a robust energy system platform to decarbonise New Zealand. Their complementary characteristics can deliver benefits that neither can deliver in isolation.”
Solutions include:
- An Energy Industry Transformation Plan (ITP) - which shifts heavy transport away from fossil fuels and into green electricity or hydrogen.[15]
- Invest in new pumped hydropower at Lake Onslow.[16] [17]
- Invest in hydrogen in Taranaki and Southland - such as a hydrogen farm at Tiwa Point and Lake Manapouri. Part of Taranaki’s just transition planning includes the opportunity to transition into a market leader in hydrogen production.[18] [19] With a large-scale hydrogen facility alongside a Lake Onslow hydro plant, New Zealand would be able to avoid up to one million tonnes of carbon emissions, enhance energy security and generate millions of dollars in export revenue.[20] [21]
- Must be done as part of a Just Transition in partnership with Māori, as Te Tiriti o Waitangi partners.
- Must ensure that the workers and communities directly affected by a transition do not unfairly shoulder the burden.
- The NZCTU endorses Auckland Climate Action (ACA) and Engineers for Social Responsibility (ESR) call to:
- Give renewably generated electricity precedence in entering the market over fossil fuel generation (Following Germany's lead who implemented this regulation back in 1991), and
- Change the way the electricity market works to ensure the amount of electricity suppliers are paid is relative to their generating costs. Instead of the current system of an arbitrarily high price set by one generator usually a fossil fuel producer.[22]
- Support micro-generation and distribution, particularly where led by community and neighbourhood partnerships.
Next mission:
Decent Work and Greater Work/Life Balance
Footnotes
[1] Jaeger, J., G. Walls, E. Clarke, J.C. Altamirano, A. Harsono, H. Mountford, S. Burrow, S. Smith, and A. Tate. (2021). “The Green Jobs Advantage: How ClimateFriendly Investments are Better Job Creators.” Working Paper. Washington, DC: World Resources Institute. Available online at https://doi.org/10.46830/wriwp.20.00142.
[2] Ibid
[3] Swiss Re Institute. (2021). The economics of climate change: no action not an option. https://www.swissre.com/dam/jcr:e73ee7c3-7f83-4c17-a2b8-8ef23a8d3312/swiss-re-institute-expertise-publication-economics-of-climate-change.pdf
[4] Ibid. p. 11
[5] New Zealand Productivity Commission. (2018), p. 68.
[6] ibid
[7] New Zealand Productivity Commission. (2018). Low-emissions economy: Final report. Available from https://www.productivity.govt.nz/assets/Documents/4e01d69a83/Productivity-Commission_Low-emissions-economy_Final-Report.pdf
[8] Purdie, J. (2021, February 16). As NZ gets serious about climate change, can electricity replace fossil fuels in time? The Conversation. https://theconversation.com/as-nz-gets-serious-about-climate-change-can-electricity-replace-fossil-fuels-in-time
[9] MBIE. (2020). NZ battery project. https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/low-emissions-economy/nz-battery/
[10] Climate Change Commission. (2021). Draft Advice for Consultation. https://ccc-production-media.s3.ap-southeast-2.amazonaws.com/public/evidence/advice-report-DRAFT-1ST-FEB/ADVICE/CCC-ADVICE-TO-GOVT-31-JAN-2021-pdf.pdf
[11] Bond, J (2021, August 12). Genesis carbon dioxide levels up 82% compared to previous years. RNZ. https://www.rnz.co.nz/news/national/448994/genesis-carbon-dioxide-levels-up-82-percent-compared-to-previous-years
[12] MBIE Data tables for coal [XLSX, 336 KB]
[13] Boot,S and Smellie,P. (2016, April 28). Genesis extends life of coal-fuelled power station to 2022. https://www.scoop.co.nz/stories/BU1604/S00826/genesis-extends-life-of-coal-fuelled-power-station-to-2022.htm
[14] “About 85 percent of the power consumed by Tiwai Point is renewably generated, with most of that supply coming from the Manapouri hydroelectric power station which is owned by Meridian Energy. The future of Tiwai Point was in jeopardy in 2020 after Rio Tinto announced plans to shut the smelter down in 2021, citing expensive electricity costs. If that happened, New Zealand would be flooded with cheap electricity and any new plant would plunge into the Pointon, N. (2022, February 8). Rio Tinto wants to keep operating Tiwai Point smelter past 2024 closure date. https://www.rnz.co.nz/news/business/461084/rio-tinto-wants-to-keep-operating-tiwai-point-smelter-past-2024-closure-date
[15] The Government currently has 8 ITPs that are focused on long-term transformation as well as near-term implementation over 1 to 3 year periods. ITPs came out of the Future of Work Tripartite Forum and are a key part of industry planning in partnership with Māori business and workers. More information on ITPs can be found on MBIEs website www.mbie.govt.nz/business-and-employment/economic-development/industry-policy/industry-transformation-plans/
[16] Last year the Government awarded an $11.5 million contract to look into the feasibility of a pumped hydro plant at Lake Onslow to generate power in dry years. This year, the Government will decide whether to go ahead with the project, which is estimated to cost $4 billion (the cost which may change once the feasibility study has been completed). The contract was awarded to Te Rōpū Matatau, led by engineering consultancy Mott MacDonald New Zealand, with engineering consultancy firm GHD, and environmental planning and design consultancy Boffa Miskell.
[17] Minister of Energy and Resources Dr Megan Woods said Lake Onslow would be the largest infrastructure project in New Zealand since the 1980s. This project could create 4,500 jobs and make wholesale electricity cheaper. Other benefits include allowing the country’s electricity grid to become 100% renewable as it would act as a buffer for dry weather seasons.
[18] Part of Taranaki’s Just Transition strategy includes an H2 Road Map. There are two H2 Taranaki Roadmap documents – a full length version and a summary. Both documents can be found on the Venture Taranaki website: www.venture.org.nz/projects/h2-taranaki-road-map/
https://www.venture.org.nz/sector-development/energy/future-energy/
[19] Hydrogen is the most abundant element in the universe. NASA started using hydrogen fuel cells to power their space capsules in the 1960s.
[20] Meridian. (2021, July 22). New Zealand (Aotearoa) could be world’s first large-scale producer of green hydrogen. https://www.meridianenergy.co.nz/news-and-events/new-zealand-aotearoa-could-be-worlds-first-large-scale-producer-of-green-hydrogen
[21] McKinsey & Company. (2021). The New Zealand hydrogen opportunity: A perspective on New Zealand’s potential role in the emerging global hydrogen economy. 1626295071-the-nz-hydrogen-opportunity.pdf (datocms-assets.com)
[22] https://www.scoop.co.nz/stories/AK2207/S00338/electricity-market-needs-urgent-attention.htm