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NZCPR
Guest Forum
Opinion piece by Brian Leyland
8 September 2007
Energy
Strategy - expensive, misleading and futile
The
recently released draft New Zealand Energy Strategy is
dominated by the government’s conviction that climate change
(more properly described as "man-made global
warming") is happening and that renewable energy will
save New Zealand from climate driven disaster.
The
National Energy Strategy fails to recognize that meeting our
legitimate needs for energy is important; minimizing damage to
our economy is important; and, most of all, it is important
that we know exactly what it might be costing us to meet the
government’s obsession with renewables. As it is, the
Strategy is an expensive, misleading and futile
exercise.
The
Strategy ignores the uncertainties in the evidence claimed to
support the belief that manmade global warming is real and
dangerous. It ignores the fact that the world has cooled
since 1998 and recent evidence that solar emissions related to
the sunspot cycle and cosmic rays drive our climate. This
theory explains climate change in the past and predicts that
the climate will continue to cool until 2030. One proven
effect of the increased CO2 in the last century is that it has
enhanced plant growth by about 15%. To an agricultural nation
like New Zealand, this significant economic benefit is totally
ignored.
In reality,
the Strategy is all about climate change and nothing about the
energy strategy that we need to to ensure that New
Zealand has a reliable and economic supply of energy. We can
easily get this from our huge reserves of coal and hydropower
or from or nuclear power.
The Energy
Strategy includes a chart purporting to show that wind power
costs about 7 c/kWh. The recurring theme through the Energy
Strategy is that wind power is the lowest-cost generation
available to us. Yet a recent detailed study by the
Electricity Commission shows that the real cost is in excess
of 11 c/kWh and that a carbon tax of $45 per tonne would be
needed to make it competitive with conventional generation.
Such a tax of $45 per tonne would increase the cost of
electricity to consumers by something like $1.8 billion per
year - $450 for every man, woman and child in the country!
The
predicted increase in wind generation of 5000 MW by 2030 is
huge. Laid out in a line the wind turbines would stretch for
700 kilometres, almost from Auckland to Wellington. Lots of
new transmission lines would also be needed. Most of these
windfarms will need to be in the North Island. 4000 MW or so
of thermal backup plant will be needed to provide power when
the wind doesn't blow - about 20% of the time. These will need
to be running and ready to generate if the wind drops
suddenly. It will be the consumers, not the developers of the
wind farms, who will pay the costs of transmission and the
backup.
Meridian
Energy is allowed to sell carbon credits from its Te Apiti
wind farm because they have convinced an auditor that it was
expensive compared to conventional power generation. Since it
was built, there has been a massive increase in the cost of
wind turbines so the more recent stations will be even
less economic. One can only conclude that Meridian
and the government have known for several years that wind
power was expensive compared to other forms of generation.
Therefore they knew that statements and the chart in the
Energy Strategy showing that wind is the lowest cost
generation were wrong. The Strategy also
suppresses the fact that conventional generation could provide
all our electricity needs with greater reliability and a much
lower cost. There would be an uproar if the public were
misled like this in a prospectus for a new share float. Is
there one rule for private companies and another for the
government?
The
Strategy assumes an unrealistically low load growth for
electricity and projects that only 1200 MW of new coal and gas
fired stations will be needed by 2030. It ignores the need to
replace at least 3000 MW of existing thermal stations. If, as
it predicts, the installed capacity of wind and wave power
increases from 200 MW to 6000 MW (20% more than all our hydro
stations) we will need as much as 3000 MW of thermal power
stations to backup this unpredictable supply. In
total 6000 - 8000MW of new fossil fuel, hydro or nuclear plant
will be needed. Not a word on where it will be, what it will
it burn and how much will it cost.
Nuclear
power has hit the headlines over last few days because, quite
logically, George Bush, John Howard and many other world
leaders have concluded that if man-made global warming is a
real problem, nuclear power is the only large scale technology
that can make a large reduction in carbon dioxide emissions at
a low cost.
17% of the
world's electricity is generated by nuclear power stations.
In terms of deaths per unit of electricity
generated the mortality rate associated with nuclear
power is well below that of coal or hydropower stations. Much
is made of the problems in disposing of nuclear waste
while, at the same time ignoring the far greater problems of
disposal of huge quantities of ash and other pollutants from
coal fired power stations and the huge risk associated with
dam failures at large aging hydropower dams that have filled
up with silt. Listening to talkback radio, it seems that
many New Zealanders agree that nuclear power should be among
the options we consider for future power supply. But
Helen Clark and her government have decided that New Zealand
should not even consider the possibility that nuclear power is
a better option than expensive and intermittent renewable
energy. This, to me, defies common sense and is
strongly against the best interests of this country.
We have
enough coal to provide us with low-cost electricity for more
than 200 years. Not a word about this in the Energy
Strategy. We could develop more than 1000 MW of
hydropower generation at a low-cost and with minimal
environmental impact. Hardly a word about this in the
Energy Strategy.
The
Strategy also makes much of biofuels even though all the
evidence points to the fact that growing crops to make
biofuels is bad for the environment, can increase air
pollution from motor vehicles, deprives people of much needed
food and in most cases, does nothing to reduce carbon
emissions. The only beneficiaries are those that grow rich on
the billions of dollars in subsidies paid for biofuel
production. As Fred Pearce wrote in the New Scientist
(23/9/06) "Biofuels will trash rainforest, suck water
reserves dry, kill off species and, worst of all barely slow
down global warming."
There
appears to be a lot of support for carbon trading - or cap and
trade. But most of it comes from those that expect to
benefit financially or politically from it. When I first heard
about carbon trading at a conference 10 years ago I got up and
said "If I was the financial adviser to the Mafia, I
would recommend that they get into carbon trading".
When you
buy electricity on the spot market, you know exactly what you
are getting - electrical energy - and you know exactly how
much you are getting because the accuracy of measurement is
better than 0.5%. When you buy "carbon credits" you
are buying something that has no real substance and
cannot perform any useful purpose. In fact, what you are
buying is a piece of paper which has more in common with the
Papal indulgences that were sold in the Middle Ages than with
almost anything else. In most cases, the purchase of
carbon credits is not associated with a real reduction in
carbon emissions. The whole process is wide open to
fraud and corruption because the measuring errors are huge -
especially if you are buying carbon credits arising from plant
growth - and also because both the buyer and the seller
benefit if they bribe the auditor to exaggerate the amount
that is being bought and sold. There is ample evidence of
millions and millions of dollars worth of fraudulent
transactions already.
Even if
man-made carbon dioxide does cause dangerous global warming,
all the effort, expenditure and economic damage that will be
visited on New Zealand by the Energy Strategy will
make hardly any difference to our carbon dioxide emissions,
will possibly increase world-wide emissions and, most
certainly, will have no effect on our climate.
For all
these reasons, New Zealand would be better off without a
strategy than it would be with the one outlined in “Powering
Our Future”. Support for it comes mostly from those who
believe that economic development is incompatible with the
environment, or see it as a way of making profits from carbon
trading or, like Al Gore and his Generation Investment
Management company push heavily subsidized renewable energy
projects because, without subsidies their projects would bite
the dust. Many academics see it as a bottomless source
of research money and an excellent way of getting recognition,
promotion and income. The government sees it as a way of
reaping windfall profits from Meridian, Genesis and Mighty
River Power, gaining votes and exerting more control over
the economy and our lives.
No-one
shows any concern for domestic and industrial consumers who
will pay more and more for an increasingly unreliable power
supply. It is about time that someone did just
that.
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