IEA: Improved policy settings can unlock investment in the transition
The International Energy Agency (IEA) New Zealand 2023 Energy Policy Review has highlighted how better policy settings can leverage more effectively off our renewable advantages.
Calling out the 100% renewable electricity target and the prospect of the Lake Onslow project, the IEA has noted how such policies are stifling much-needed energy investment. This follows the Climate Change Commission’s draft advice earlier this week which also identified these policies as barriers to leveraging New Zealand’s natural renewable advantages as we transition.
Of the 100% renewable electricity target, the IEA says:
New Zealand should weigh its aspiration to achieve 100% renewable electricity by 2030 against the potentially considerable costs associated with achieving the last 2-5% of the target.
On Lake Onslow, the IEA says:
Until a final investment decision is taken on the project in 2023-2024, the prospect of government intervention in the electricity market is creating short-term investment uncertainty, especially for new generation.
Responding to the IEA’s New Zealand 2023 Energy Policy Review, Energy Resources Aotearoa Chief Executive John Carnegie says:
"The IEA’s global perspective adds further pause for thought on the Government’s 100% renewable electricity target. We’re also pleased to see it add its voice to the chorus of industry analysts concerned by the prospect of Lake Onslow going ahead. These policies are holding back investment and jeopardising New Zealand’s ongoing electrification."
The IEA report also takes up the call for New Zealand to embrace carbon capture technologies:
As such, the government could investigate whether continued gas use for electricity generation, coupled with carbon capture, utilisation and storage, could be an option to provide flexibility to the grid when penetration of variable renewables becomes mainstream and to overcome the "dry year" problem when water inflows to hydropower stations are lower.
"Across the world, carbon capture technologies are being used to reduce countries’ carbon footprints. But in New Zealand we do not even have an enabling regime. We are heartened to see the IEA single out New Zealand as a place where carbon capture should be explored. They join a growing list of organisations in making this recommendation, including the Climate Change Commission, Ara Ake, the New Zealand Initiative, the Aotearoa Circle, and the New Zealand Geothermal Association," says Carnegie.
Policy settings that provide investment confidence can unlock a more affordable, secure, and sustainable energy future. Recent reports including Castalia’s 2035/2050 Vision for Gas all note that investment in natural gas, carbon capture, and gas storage all have a role to play in this future.