The BusinessNZ Energy Council (the ‘BEC’) is a multi-sectoral group of New Zealand business, government and academic organisations taking on a leading role in creating a sustainable energy future for New Zealand. Since 1 January 2013, the BusinessNZ Energy Council brings together the memberships of BusinessNZ and the former Energy Federation of New Zealand. The BEC shares energy information, represents the views of its members, promotes dialogue and networking for its members, prepares and disseminates reports and organises seminars and conferences. Its goal is to “support New Zealand’s economic well-being through the active promotion of the sustainable development and use of energy, both domestically and globally.”
The Hon. David Caygill is a former Cabinet Minister with extensive governance experience. A lawyer by profession, he served in the Lange/Palmer Labour Governments successively as Minister of Trade and Industry, Health and Finance. From 1993-96 he was Deputy-Leader of the Opposition. On retiring from politics in 1996 he became a partner in the national law firm, Buddle Findlay.
David has served on a number of governing bodies, including as chair of the ACC and the Electricity Commission and as Deputy Chair of the Commerce Commission. In 2000 he chaired the Ministerial Inquiry into the electricity industry and subsequently the industry's Electricity Governance Establishment Board. More recently he chaired the review of the Emissions Trading Scheme. He has also been a director of Infratil Ltd and is currently Deputy Chair of Environment Canterbury.
John is the Secretary-General of the BusinessNZ Energy Council., New Zealand’s peak energy advocacy body. He is an experienced regulatory economist with over two decade’s experience in public policy and energy markets. John has previously held roles at The New Zealand Treasury, the Ministry for Economic Development, the electricity market operator (the Marketplace Company), and New Zealand’s only coal fired power generator, Genesis Energy. John specialises in energy and climate change policy and its implications for business. He was a member of the Treasury-led Emissions Trading Stationary Energy and Industrial Process Technical Advisory Group, the Ministry for the Environment Electricity Allocation Factor contact group, and a member of the New Zealand official delegation to the last four end of year climate change negotiations. He is also currently a member of the electricity market regulator’s (the Electricity Authority’s) Wholesale Advisory Group and a government appointee to the New Zealand Smart Grid Forum. John has a BA (Hons) degree in Economic History, a BCA in Economics and a Diploma in Accountancy.
Energy in New Zealand
A year has passed since New Zealand’s government was elected and its energy and climate change work programme is in full swing. The Government is in the middle of an electricity price review focused on delivering fairer prices to consumers. It is drafting a Zero Carbon Bill (broadly based on the UK’s 2008 Climate Change Act) to achieve a zero-net carbon economy by 2050 and is about to update its Emissions Trading Scheme. Work is also underway on how to aim for 100% renewable electricity generation by 2035, as reflected in this year’s Issues Map. Some changes are the result of a clearer signalling of direction, while others anticipate the need for more to be done.
Energy executives remain concerned about the impact of digital technologies. Still, as we look ahead to 2019, we see the re-emergence of economic issues such as New Zealand’s climate framework, policy signals coming from the US and China. The emergence of geopolitical concerns weighs heavily on the minds of energy executives and reflects New Zealand’s trade-dominated economy and the end of a period of relative stability in world trade. The strong climate change agenda, while giving energy executives growing confidence to act, is also throwing up some substantial implementation questions.
On the other hand, New Zealand’s energy leaders are showing they are simply getting on with energy efficiency, energy storage and innovative transportation. Energy efficiency has always been, and continues to be, a valuable contributor to New Zealand’s overall market-based energy system. This year, energy efficiency is joined by transport and storage solutions as businesses increasingly have the confidence to bring these to the market in light of the stronger signals from government.
The risk of a trade war weighs heavily on the minds of New Zealand’s energy executives. As the US and China face off, with strongly nationalistic policy settings from the US and the perception that China’s economy is slowing, the risk of a domestic economic slowdown increases. The Issues Map reflects this as both a geopolitical and an energy issue. US policy and China are now closer to the right top hand corner of the map than they were in previous years.
Following the Paris Agreement, the climate framework had become more and more mainstream, something energy leaders were simply getting on with. However, that perception is clearly reversing with the climate framework shifting from an action priority back to an issue keeping energy leaders awake at night. Drivers for the shift are not only coming from the overall global climate framework (especially from the US) but also from the lack of a policy framework to accompany the Government’s greater climate ambitions for New Zealand. While the clarity around direction is welcomed, energy executives are increasingly asking “how do we get there?” – a question which to date remains unanswered.
Last year, for the first time the energy issues map showed the strong emergence of the ‘innovation cluster’, the Internet of Things (IoT), data and artificial intelligence (Data AI) and Blockchain. These issues can still be found on executives’ list of worries but seem to have dropped in importance a little, as the issues map signals a shift from uncertainties towards action priorities. In 2018, New Zealand’s energy sector kicked off a couple of pilot projects looking into different user cases for AI and IoT. At the moment, energy leaders are interested and are exploring how these technologies might benefit their businesses and customers.
On a positive note, energy leaders are signalling more clarity around energy issues such as electricity storage and innovative transport solutions and adding these to their to-do list. In previous years, there had been concerns about the life cycle of EV batteries as well as the range limitation of EVs in general. These worries have abated. Concerns are decreasing as technologies are now familiar and technicians are focusing on finding ways to integrate them rather than reasons to reject them. Also, the growth of ride-sharing schemes that can help to cut transport emissions appears to be affecting executives’ confidence positively.
Finally, renewable energies warrant a mention. A regular action priority given New Zealand’s 85%+ renewable electricity base, this year we see them in the context of the fast-moving hydrogen economy as energy executives think about how to extend our renewable advantage to the heavy vehicle fleet and the production of green liquids. Hydrogen could play an important role in supporting 100% renewable electricity generation, potentially helping to solve New Zealand’s dry year risk problem. However, today, hydrogen produced from renewable energy is about six times more expensive than hydrogen produced from natural gas, causing energy leaders headaches. Executives signal their concerns as hydrogen shifts dramatically towards the high impact high uncertainty zone.
A great deal is going on and there are many moving parts to New Zealand’s energy market that need to crystallise. Overall, executives seem to have gained more confidence in respect to energy innovation issues. Finding new energy supply and consumption opportunities keeps energy leaders busy during the day. However, there are heightened concerns not only regarding foreign policy but rather more in connection with New Zealand’s imbalance between energy targets and actual action plans. As a result, energy issues such as the climate framework and renewable energies are now reverting from political uncertainties to technical challenges for business. Without careful management, this could dampen rather than enhance future green investment.