Thursday, September 28, 2006

Initial thoughts on the RSNZ Energy document

You can get Pt's I and II here .
Part II just seems to be the same as Pt I but longer. If you're not in this sort of stuff to the eyeballs, you might benefit from some background. NB it's not impartial data, just the same angle with more words. I'll just focus on Pt I.

The report makes 6 recommendations about energy policy that NZ should take up. The panel was chosen in advance and comments from external people on the draft was requested but then denied when it turned out there were 60 odd responses of interest. Hence, this report cannot be said to speak for the NZ Energy community as a whole.
So who was chosen? Mostly academics and CRI type people (Engineering and Physical Sciences) including Jim Watson of Genesis. To their credit, there is an extensive declaration of interest page for each member of the panel.
Who isn't included? Well, the big glaring ommission in the list is any input from economists. Now while i wholeheartedly agree that most economists are employed to tell you why you can't do something that seems like a good idea because if it was a good idea, someone else would have done it by now, they do have some idea of how markets and behaviour are intertwined. Market's evolve just like biological systems. To try and design an animal/policy from scratch and expect it to flourish in a real world ecosystem/market is pretty naive.
Having said that, you could argue that it is important to figure out what you want to achieve before figuring out how to implement it. It could go either way but i think the lack of input is a design flaw in their panel and some of their recommendations seem too specific to qualify as implementation neutral.

The recommendations are preceded by a 'reality check'. The first few points seem reasonable regarding our indigenous fossil fuel supply. I'm not sure i agree with points 4 and 7: we could have a biofuels industry if we legislate for it and we're going to get a lot of immigrants/population growth in the medium term and point 5: the current account deficit running at 8.9% of GDP is likely to be a quite complicated number with many underlying causes that not even economists can agree on.
If they're trying to say we should be able to do everything in NZ that NZ requires, i think you're already crazy, didn't we try that in the Muldoon years?
They assume (reasonably) that climate change is caused by burning fossil fuels and that this is going to make some winners and some losers and they pitch the magic number of 450 ppm of carbon dioxide as the right target (let's assume that they actually meant carbon dioxide equivalents which is more useful).

I'll look at each recommendation in turn.
1.
That Government set aggressive but achievable targets for renewable transport fuels, phase out the use of fossil fuels unless carbon emissions can be securely sequestered and put in place the regulatory and investment policies necessary to ensure fossil fuel free targets are met by 2020.
Given energy use tends to go up, we should aim to be as carbon-neutral and energy rich as possible. We have plenty of suitable land and renewable resources to harness other than fossil fuels, we should use them. Seems reasonable.

2.
That biofuels be introduced as soon as possible, to provide greater security of transport fuels, with an emphasis on developing local industries for their production.
Couldn't agree more but i don't like the way the report zeroes in on ethanol. I think we should let a thousand flowers bloom on the implementation, just set the objective. For instance, if you could grow a diesel equivalent that could be used with standard diesel engines - why go to the effort of fermenting and blending ethanol? We can't answer this question yet, so picking a winning technology before a 20 year race is too risky.
As for point II.16 The use of Hydrogen as an energy carrier is a stupid idea. It all hinges on fuel cells which are a very subtle subject (and i work in the FC/H2 game) with respect to energy policy. As i tell people, it's the perfect solution to just the right problem but it won't cure cancer and it won't wean you off oil in the medium term. Too much downright stupid commentary on hydrogen has been allowed to become dogma - it's the sort of thing that gives scientists a bad name. Be clear that there should be a debate, not advocate for a particular solution. For instance, electricity is a brilliant way of moving energy around. If you want to store energy, then you could make and reuse hydrogen, just remember you are only harnessing 10-15% of the energy you wanted to store in the first place. You should use electricity when you want electricity and liquid fuels when you want storage. Best of both worlds - design a plug'n'play diesel/electric hybrid transport system. You can download energy o'night when it's not wanted and if more is needed during the day, your car starts up and pumps into the grid. Now there is something challenging and useful enough for export.

3.
That the transport fleet vehicle composition be modified over time to enable the more widespread uptake of renewable fuel use and that transport systems be modified to become sustainable.
Agree but as mentioned before, i think we'd be aiming too low. Go for the hybrid plug'n'play, it has waaayyy more payback potential. Just imagine being the Google of car based buy/sell software, let alone owning a royalty from a widget that lives in every Toyota built between 2010 and 2030.
Also, we should be aiming to triple, if not quadruple, the km/litre ratings of our cars. If that means getting older cars off the road, so be it. A clunky 1975 Ford is a LOT dirtier than a recent Nissan for the same number of km's, but again, we shouldn't be policy specific, aim for something like: 'the number of km's travelled will be 4x as great using the same quantity of transport fuel as the year 2000'. That way you don't have to worry about whether it is achieved by public transport, car pooling, better cars or bicycles - it's the cummulative effect that's important.
This kind of metric will automatically lead to biofuels being used since they won't count on the balance sheet. Throw in some kind of fee-bate idea where imported petrol is taxed with the income going straight through to the biofuel people and you have a powerful incentive for change. Once agian, stay implementation neutral and state the objective! smart people will find a way.

III. 6. The twenty-first century may see an adaptation to a new type of transportation system. Rather than providing on-demand mobility based on unconstrained fuel and emissions, future systems could be based on organising better planned access to services and markets. Advances in information systems, urban design, freight organisation and integration, and economic instruments will be the key elements of adaptation to a renewable energy transportation system.

This seems a bit wishful. People LIKE their mobility. Besides, consider if computer virtual reality continues at the same pace, we won't be driving anywhere in 20 years time. People will wonder what we were so worked up about, people will only drive and fly for bragging rights (the same morons that pay $100 for a super GE free, made by Florentine monks, loaf of bread) since the VR version will be indistinguishable from reality (except your luggage never gets lost). Transport emmissions will approach zero. Crazy? maybe, but why constrain your thinking decades into the future?

III. 9. Managing the transition to renewable energy transportation will require a visionary
and multidisciplinary approach to policies, science, engineering, and planning.
This however is sadly true. I think we'll have as much luck at this as we have in the past. Unless the way research is done changes, the results will continue to be much the same as our present state of affairs

4.
That our electricity sector should make the transition to renewable supply by 2020. Further fossil fuel development must incorporate a commitment to zero carbon emissions.
Electricity markets and systems must deliver a balance between supply and demand investments.
Seems like a good target. I think they have bugger all chance and it's a bit rich to tell the electricity sector what to do if they don't have a representative on their panel.
Markets just allocate resources, the regulatory regime they operate under tells them what those resources are. NZ's electricity problems are purely down to insufficient govt oversight of policy and a lack of clear direction (which is almost certainly down to NZers not wanting to pay higher prices for cleaner energy).
Is there an assumption in the above recommendation that NZers should pay the same price for electricity as now? Should we come out and say that we will start charging our expected clean energy price now (let's say 2x the current price ramping up over a 10 year period) and funnel the money into R&D so that we can get used to paying these prices at the same time as developing the technology to deliver them (including aggressive conservation strategies like mandatory insulation standards, banning incandecent light bulbs and mandatory solar hot water heating on new build houses)?
Would you want to run for office with that on your energy policy? (actually, i'd appreciate a little honesty like that) and follow it up with actual independant govt oversight ala Reserve Bank levels of independance? or would your govt just take the money and spin that you're actually doing something (which is what i suspect the NZ public would assume).

I agree we shouldn't go down the nuclear route. It's not that i hate nuclear, it's just i don't think it's the right solution for a country like NZ with so many other energy resources that could be developed (and many small generators is inherently safet to the system than 1 or few large generators). Besides, gives us a point of difference with other energy players that will be looking into it.

5.
That New Zealand continue to adhere to carbon emission agreements involving the wider international community. A shift to lower carbon emission systems will enable New Zealand to become an exporter of carbon emission reduction credits.
Bit of a no brainer this one. Cap and reduce on pollution is a valid strategy and taxing pollution would be a nicer way of raising funds than taxing income (i'd also like a flat tax but let's not get carried away). Again, i don't think people will trust a govt to do this without pocketing extremely large wads of cash and spending it somewhere else.

I am however wary of NZ thinking it is going to grow it's way to a first world economy via selling carbon credits. It hasn't worked with butter and wool over the last 25 years, i suspect growing things is a lot cheaper in 3rd world countries without all that pesky social welfare and universal health care and their plants probably grow just as well as ours.

6.
That New Zealand must undertake a sustained effort to drive indigenous innovation to address systemic energy and environmental issues. Substantial collaborative research and development is required and must involve the spectrum of industry, community, government and research.
I'm obviously biased here but once again, i agree with this.
NZ has plenty of resources and R&D should be focused on doing things that have the ability to be of benefit to NZ from energy security/supply to cow's milk. R&D should be seen as a long term investment, not some sort of advertising/marketing campaign tacked on the end of a company brochure.
Also, for those that think we should just buy technology from OS once it's developed... you're gonna get fleeced and/or ignored ('Oh yeah, the Desert Oil Weed 3000 grows brilliantly in countries like yours...'). The only way to be a smart buyer of technology is to be a smart developer of technology.

VI. 14. To ensure renewable energy and economic security progress we recommend that an Energy Taskforce be set up, with a budget to drive the development and implementation of efficient and renewable energy technologies. The Taskforce must ensure our capacity in energy research, development and deployment. Universities need support to seed that capability; CRIs need support to develop and apply that capability. The Taskforce will also drive the analysis of the behavioural changes that face society and the analysis of what sustainable energy sources imply for society, issues often ignored in developing and implementing significant technological change.
How better to end a mostly self serving document than to recommend a taskforce be set up to administer a bucket load of funding? As Einstein said, asking the same questions and expecting different answers is the essence of crazy.

Take home message for me?
Well, the debate over what we want to do hasn't even been kicked off yet.
Assume we actually had a useful debate on what NZ's energy policy was actually going to be, until the govt allocates enough funding for a dedicated NZ Energy Research Centre with a technical staff on the order of 40-50 people and a 15 year funding plan, and sends out ads worldwide looking for cutting edge energy researchers to come over, I won't hold my breath that anything will change. We'll buy in oil to drive our cars, we'll burn more coal for electricity (get a nice 5 year window when we boot Comalco out of the country but we'll suck at meeting Kyoto) and we'll have a creaky electricity system based on centralised supply and our car/train/truck/public transport/urban planning systems will run on completely seperate agendas. And it will all be funded by NZ lamb, Fonterra milk powder and tourism.

NZ doesn't do science and it barely does technology.

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