1、Energy Policy ReviewNew Zealand 2023The IEA examines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side management and much more.Through its work,the IEA advocates policies t
2、hat will enhance the reliability,affordability and sustainability of energy in its 31 member countries,11 association countries and beyond.Please note that this publication is subject to specific restrictions that limit its use and distribution.The terms and conditions are available online at www.ie
3、a.org/t&c/This publication and any map included herein are without prejudice to the status of or sovereignty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territory,city or area.Source:IEA.All rights reserved.International Energy Agency Websi
4、te:www.iea.orgIEA member countries:Australia Austria Belgium CanadaCzech Republic Denmark EstoniaFinland France Germany Greece HungaryIreland ItalyJapanKoreaLithuania Luxembourg Mexico Netherlands New Zealand NorwayPoland Portugal Slovak Republic Spain Sweden Switzerland Republic of TrkiyeUnited Kin
5、gdom United StatesThe European Commission also participates in the work of the IEAIEA association countries:INTERNATIONAL ENERGYAGENCYArgentinaBrazilChinaEgyptIndiaIndonesiaMoroccoSingaporeSouth AfricaThailandUkraine 3 FOREWORD Foreword The mission of the International Energy Agency(IEA)is to shape
6、a secure and sustainable energy future for all.We work with countries around the world on strengthening energy security and reaching net zero emissions.Our in-depth reviews are an essential IEA tool for providing insight and advice to governments on how to best achieve their energy and climate goals
7、.Under the leadership of Minister of Energy and Resources Dr Megan Woods,New Zealand has made considerable progress in addressing climate change and has increased its support for global efforts on clean energy transitions.I am grateful to Dr Woods for her multilateral engagement through IEA work,inc
8、luding as a member of our Global Commission for Urgent Action on Energy Efficiency.New Zealand has set ambitious targets for reducing domestic greenhouse gas emissions,including bringing them down to net zero by 2050.New Zealand is starting from a strong position with its low-emissions electricity s
9、ystem in which over 80%of electricity comes from renewable sources.The task for New Zealand now is to leverage its renewables-based electricity system to decarbonise other sectors,notably transport and industry.Not only will this require sizeable investments in technology,but it will also entail a c
10、onsiderable buildout of additional renewable generation capacity,along with new investments in grids and storage.Major energy efficiency upgrades will also be needed to decarbonise the buildings sector.New Zealand has already made progress to enable this energy system transformation.Its domestic cli
11、mate legislation requires the government to set emissions budgets underpinned by emissions reduction plans that include comprehensive measures across all economic sectors.Such strategic planning for energy and climate policy will help provide long-term investment signals to the energy sector.The gov
12、ernment has also committed to developing a long-term energy strategy by 2024 to establish sectoral pathways for shifting New Zealands energy system away from fossil fuels toward low-emissions alternatives.Therefore,the most pressing task is to finalise these policy decisions and proceed with impleme
13、ntation.New Zealands energy transition offers lessons for other countries facing similar issues.In particular,the NZ Battery Project will provide insight into the viability of a large-scale pumped hydro solution to balance a power grid based heavily on renewables and led by hydropower,which is vulne
14、rable to dry weather challenges.Government-backed efforts to decarbonise heat for industrial processes can also help unlock important decarbonisation solutions for the world.I hope that the recommendations proposed in this report will help inform key policies in New Zealand,including its aspiration
15、to reach 100%renewables in electricity and the upcoming long-term Energy Strategy.Dr.Fatih Birol Executive Director International Energy Agency IEA.CC BY 4.0.5 TABLE OF CONTENTS ENERGY INSIGHTS 1.Executive summary.9 Overview.9 Climate change policies.10 Energy strategy.10 Electricity in the energy t
16、ransition.11 Phasing out fossil fuels.12 Key recommendations.12 2.General energy policy.15 Country overview.15 Energy production,supply and demand.16 Key institutions and energy players.19 Key energy and climate policies.19 Assessment.27 Key recommendations.30 ENERGY SYSTEM TRANSFORMATION 3.Energy a
17、nd climate change.33 Overview.33 Energy-related greenhouse gas emissions.34 Emission drivers and carbon intensity.35 Emissions targets and policies.36 Assessment.44 Recommendations.48 4.Energy efficiency.51 Overview.51 Industry.53 Buildings.55 Transport.58 Assessment.62 Recommendations.66 5.Renewabl
18、e energy.69 Overview.69 Renewable electricity generation.70 IEA.CC BY 4.0.TABLE OF CONTENTS 6 Renewable energy policies.71 Assessment.78 Recommendations.83 6.Energy research,development and innovation.85 Overview.85 Key actors in the energy innovation ecosystem.86 Energy innovation priorities and gu
19、iding documents.86 Resource push.88 Monitoring,evaluation and tracking of results.91 Knowledge management.92 Assessment.93 Recommendations.94 ENERGY SECURITY 7.Electricity.97 Overview.97 Electricity generation.98 Electricity generation capacity.98 Electricity trade.99 Electricity demand.99 Electrici
20、ty market structure and operation.100 Electricity policy.107 Electricity retail prices and taxes.112 Electricity security.114 Assessment.116 Recommendations.121 8.Coal.123 Overview.123 Coal supply and demand.124 Coal policy.125 Assessment.127 Recommendations.128 9.Natural gas.129 Overview.129 Natura
21、l gas supply and demand.130 Natural gas industry structure.131 IEA.CC BY 4.0.TABLE OF CONTENTS 7 TABLE OF CONTENTS Natural gas regulation and policy.133 Natural gas infrastructure.134 Storage.137 Gas emergency policy.137 Assessment.139 Recommendations.141 10.Oil.143 Overview.143 Oil supply and deman
22、d.144 Oil policy and institutions.147 Market structure.148 Oil infrastructure.151 Oil emergency policy and stockholding.152 Emergency oil reserves.154 Assessment.154 Recommendations.156 ANNEXES ANNEX A:Review team and supporting stakeholders.157 ANNEX B:Energy balances and key statistical data.160 A
23、NNEX C:Glossary and list of abbreviations.164 LIST OF FIGURES,TABLES AND BOXES Figures Figure 2.1 Overview of New Zealands energy production,supply and demand,2021.16 Figure 2.2 Total energy supply by source in New Zealand,2005-2021.17 Figure 2.3 Total final consumption by source in New Zealand,2005
24、-2021.18 Figure 2.4 Energy demand per sector and per fuel,and electricity generation by fuel in New Zealand,2021.18 Figure 2.5 Quarterly energy prices in New Zealand,June 2013 to March 2022.24 Figure 3.1 Greenhouse gas emissions by sector in New Zealand,1990-2020 and targets.34 Figure 3.2 Energy-rel
25、ated greenhouse gas emissions by sector in New Zealand,2005-2021.35 Figure 3.3 Energy-related greenhouse gas emissions by energy source in New Zealand,2005-2021.35 Figure 3.4 Energy-related greenhouse gas emissions and main drivers in New Zealand,2005-2021.36 IEA.CC BY 4.0.TABLE OF CONTENTS 8 Figure
26、 4.1 Energy demand and drivers in New Zealand,2005-2021.51 Figure 4.2 Total final consumption by sector in New Zealand,2005-2021.52 Figure 4.3 Total final consumption in industry by source in New Zealand,2005-2021.53 Figure 4.4 Total final consumption in the buildings sector by source in New Zealand
27、,2005-2021.55 Figure 4.5 Total final consumption in transport by energy source in New Zealand,2005-2021.59 Figure 4.6 Registered electric vehicles and public charging points in New Zealand,2012-2022.59 Figure 5.1 Renewable energy in total final consumption in New Zealand,2005-2021.69 Figure 5.2 Rene
28、wable energy by sector in New Zealand,2021.70 Figure 5.3 Renewable energy in electricity generation in New Zealand,2005-2021.71 Figure 6.1 Energy-related public RD&I budget by sector in New Zealand,2010-2020.88 Figure 6.2 Energy-related public RD&I spending per GDP in IEA countries,2020.89 Figure 6.
29、3 Average number of patents in environment-related technology per capita in IEA countries,2010-2019.91 Figure 7.1 Electricity generation by source in New Zealand,2005-2021.98 Figure 7.2 Electricity demand by sector in New Zealand,2005-2021.99 Figure 7.3 Electricity infrastructure in New Zealand.105
30、Figure 7.4 Electricity prices for industry and households in IEA countries,2021.112 Figure 7.5 Residential electricity prices by component in New Zealand,June 2013 to June 2022.113 Figure 8.1 Share of coal in different energy flows in New Zealand,2005-2021.123 Figure 8.2 Coal supply by source in New
31、 Zealand,2005-2021.124 Figure 8.3 Coal demand by sector in New Zealand,2005-2021.125 Figure 9.1 Shares of natural gas in New Zealands energy system,2000-2021.130 Figure 9.2 Natural gas demand by sector in New Zealand,2005-2021.131 Figure 9.3 Upstream gas production in New Zealand.135 Figure 9.4 Natu
32、ral gas transmission infrastructure in New Zealand.136 Figure 10.1 Shares of oil in New Zealands energy sector,2005-2021.144 Figure 10.2 Oil products demand by sector in New Zealand,2005-2021.145 Figure 10.3 Oil products production in New Zealand,2005-2021.145 Figure 10.4 New Zealands net imports of
33、 oil products by country,2005-2021.146 Figure 10.5 Oil price comparisons in the IEA,4Q 2022.150 Figure 10.6 New Zealands oil storage locations,2022.152 Figure 10.7 Emergency oil stocks by type in New Zealand,January 2018-November 2022.154 Tables Table 3.1 New Zealands emissions budgets.39 IEA.CC BY
34、4.0.9 ENERGY INSIGHTS 1.Executive summary Overview New Zealand has a diversified energy mix,with significant production of both hydropower and geothermal.As the country embarks on an ambitious energy transition,it has many natural advantages,including an enviable renewable resource base.The key chal
35、lenge will be to decarbonise end-use sectors through clean power and support investments in new technologies to achieve deeper emissions cuts across all sectors in the most economically efficient way.New Zealand has set ambitious targets for reducing greenhouse gas(GHG)emissions,including achieving
36、net zero emissions by 2050.New Zealand already has a low-emissions electricity system,with over 80%of electricity coming from renewable sources in 2021.And this share could easily reach over 90%based on existing policies.Elsewhere,the country has more work to do to decarbonise economic sectors beyon
37、d electricity.Notably,the transport sector accounts for the highest share of emissions and is almost entirely dependent on oil as a fuel source.Industry is also a major contributor to New Zealands GHG emissions and is heavily reliant on fossil fuels.New Zealand has an attractive opportunity to lever
38、age its clean electricity sector to advance electrification as a decarbonisation strategy in other sectors.This will require not only sizeable technological investments to support electrification in transport and industry but will also necessitate a sizeable buildout of additional renewables generat
39、ion capacity to meet accelerated load growth,along with additional grid and storage investments.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.New Zealand does not ye
40、t have a long-term energy strategy in place.While work is underway on a strategy,it is not due for release until the end of 2024.A lack of clarity surrounding the pathways to meeting ambitious climate targets(including the roles that various fuels and technologies will play)creates an uncertain poli
41、cy environment,hampering the significant investment required to meet the governments 2030 targets.Overall,New Zealand has the potential to reach its emissions reduction and energy targets based on its natural resources and policy levers.But the time frames to meet the targets are very ambitious.If t
42、he targets are to be met,the energy sector will need a viable policy road map as soon as possible.Delays in providing policy clarity will likely result in the targets being met much further into the future.IEA.CC BY 4.0.1.EXECUTIVE SUMMARY 10 Climate change policies New Zealands updated climate targ
43、et under the Paris Agreement is to reduce net GHG emissions by 50%from gross 2005 levels by 2030.The most recent domestic legislation is the Climate Change Response(Zero Carbon)Amendment Act 2019,which sets a net zero GHG emissions target(exempting biogenic methane,mostly from cattle)by 2050.It also
44、 includes a target to reduce biogenic methane emissions by 10%from 2017 levels by 2030 and by 25-47%by 2050.The Act also established a Climate Change Commission to provide independent,evidence-based advice on the actions the government needs to take to address climate change.In addition,the Act requ
45、ires emissions budgets and emissions reduction plans(along with national adaptation plans).New Zealands emissions budgets cover 5-year periods and are set 10-15 years in advance,after considering the recommendations of the Climate Change Commission.The first three emissions budgets were set in May 2
46、022 for the periods 2022-2025,2026-2030 and 2031-2035.Each emissions budget must be supported by an emissions reduction plan(ERP)that contains policies and strategies for meeting the emissions budget.New Zealands first ERP was published in May 2022.The countrys primary emissions pricing tool is the
47、New Zealand Emissions Trading Scheme(NZ ETS).The point of obligation is upstream,so the impact is mainly felt through fuel prices.The government will align the NZ ETS cap with decreasing emissions budgets.The NZ ETS has comprehensive coverage across the entire economy,except for the agricultural sec
48、tor and a portion of the waste sector.To address carbon leakage,free allocation of allowances is provided to eligible industries that are emissions-intensive and trade-exposed.These allocations are planned to be phased out in the coming decades.Energy strategy New Zealand does not have a long-term e
49、nergy strategy.In its May 2022 ERP,the government committed to developing such a strategy to achieve its vision for the energy and industry sectors.The energy strategy will drive New Zealands pathways away from fossil fuels and towards greater levels of renewable electricity and other low-emissions
50、alternatives.A scoping of what the new Energy Strategy could look like is underway.The government is working with energy system stakeholders to develop the Energy Strategy by the end of 2024.Simultaneously,the government is developing several sectoral strategies that will serve as key inputs to the
51、long-term Energy Strategy.These include:a Gas Transition Plan(GTP),expected to be completed by the end of 2023,which will establish the pathway for phasing out natural gas in New Zealands energy system in line with climate targets;an updated New Zealand Energy Efficiency and Conservation Strategy to
52、 replace the existing strategy(that expired in mid-2022)and better align with the governments climate goals;and a renewable energy work programme,which will establish plans for expanding the role of renewables in New Zealands energy system.IEA.CC BY 4.0.1.EXECUTIVE SUMMARY 11 ENERGY INSIGHTS Electri
53、city in the energy transition New Zealands electricity system is the cornerstone of the governments strategy for decarbonising the energy sector.The government plans to promote the electrification of end-use sectors such as buildings,transport and industry,leveraging a renewables-based electricity s
54、ystem.The New Zealand Energy Strategy 2011-2021 set a target for 90%renewable electricity by 2025.Subsequently,the government set an aspirational goal of 100%renewable electricity by 2030.Moreover,the first ERP built on the governments aspirational goal in electricity and set a target of 50%of total
55、 final energy consumption from renewables by 2035.Making the electricity system fit-for-purpose is a top priority for the government.New Zealand is fortunate to already have a high proportion of renewable electricity,which is currently over 80%of electricity production.However,due to the electricity
56、 systems heavy reliance on hydropower,its key challenge is coping with a“dry year”,when hydro inflows are low.When a“dry year”occurs,and existing hydropower catchments do not receive enough rainfall,backup is currently provided by fossil fuel generation.This issue will become increasingly salient as
57、 the country strives to achieve a 100%renewables-based power grid and relies more on electricity to meet its decarbonisation targets.In response,the government launched the NZ Battery Project in 2020.The project will provide comprehensive advice on the technical,environmental and commercial feasibil
58、ity of potential energy storage projects,including,but not limited to,the Lake Onslow pumped hydro project.Feasibility studies for the project are expected to be completed early in 2023 and solutions to be in place in the 2030s.Reaching the aspirational 100%target for renewables in electricity by 20
59、30 and the 50%economy-wide renewables target by 2035 will require a massive buildout of new renewables generation capacity.Given limited options for large new hydro capacity and modest volumes of economically feasible geothermal,a sizeable share of the required new capacity will need to come from wi
60、nd and solar.In New Zealand,the Resource Management Act 1991(RMA)plays a major role in determining the type of electricity generation that gets consented.While the RMA sets national direction on avoiding,remedying and mitigating the adverse effects of activities on the environment,it allows communit
61、ies to decide how to manage their own environment through regional and district resource management plans.The government plans to repeal the RMA and replace it with three new pieces of legislation.The objectives of this reform are to better meet environmental protections,climate adaptation needs and
62、 Mori protections while also improving the efficiency of siting and reducing permitting complexity.Following public consultations,the aim is for the main reforms to be passed into law before the 2023 central government election.There is considerable potential in other areas of renewables development
63、,like offshore wind electricity generation.There is currently no targeted regulatory framework for offshore wind,and the country does not yet have any offshore wind sites or developments.However,a specific offshore energy regulatory regime is under development and is expected to be in place by 2024.
64、Offshore energy development will be considered as part of the 2022-2024 process of creating a long-term Energy Strategy.IEA.CC BY 4.0.1.EXECUTIVE SUMMARY 12 Phasing out fossil fuels As a step towards addressing climate change and creating a sustainable future for New Zealand,in April 2018,the govern
65、ment announced that no additional offshore oil and gas exploration permits would be granted.New Zealands more ambitious climate targets will require lower emissions from fossil fuels driven by substantial declines in consumption.Emissions reductions are likely to occur through both reduced demand(fo
66、r example,greater energy efficiency and electrification)and lower carbon intensity(for example,blending in renewable gases or biofuels).A major part of this strategy will be enacted through the Government Investment in Decarbonising Industry(GIDI)Fund,which was established in 2020 as part of the gov
67、ernments Covid Response and Recovery Fund.The aim was to accelerate the decarbonisation of industrial process heat and contribute to the Covid-19 recovery by stimulating the domestic economy and supporting employment.In addition to the previous GIDI Fund targeted at industrial process heat projects,
68、funding will now also include support for replacing inefficient industrial and commercial equipment and help replace fossil fuels in commercial space and water heating with renewable energy.The government is especially working to reduce the demand for coal for process heat and electricity generation
69、.In addition to GIDI-backed projects,this includes investigating options to manage the dry-year risk through the New Zealand Battery Project(to displace backup fossil generation),a proposed ban on new low-and medium-temperature coal boilers,as well as phasing out all existing coal boilers by 2037.Cu
70、rrently,natural gas plays an important role in the electricity sector alongside coal-fired generation in firming or backing up hydro and variable renewable generation.The pace for phasing out natural gas and the“end-state”of the electricity sector is currently uncertain.They are dependent on a range
71、 of factors,such as emissions pricing,technological adaptation and other economic factors.The GTP will help to establish transition pathways for decarbonising the gas sector in line with the first three emissions budgets defined in the ERP.To address oil demand,New Zealand also has a number of polic
72、ies to increase vehicle efficiency and promote the penetration of electric vehicles(EVs)into its transport mix.Key recommendations The government of New Zealand should:Accelerate the development of the long-term Energy Strategy and related sectoral strategies to clarify the macro level policy settin
73、gs and encourage necessary investments as soon as possible.Assess the relative cost of abatement across energy end-use sectors when developing the long-term Energy Strategy,prioritising overall abatement over the full decarbonisation of any particular sector.IEA.CC BY 4.0.1.EXECUTIVE SUMMARY 13 ENER
74、GY INSIGHTS Move quickly to clarify regulatory regimes for renewables generation,such as the Resource Management Act and an offshore wind framework,to jump-start investments in additional renewables capacity.Increase policy focus on the transport sector,especially measures that will deliver structur
75、al change to diesel demand.IEA.CC BY 4.0.15 ENERGY INSIGHTS 2.General energy policy Key data (2021)Total energy supply(TES):829.3 PJ,+11%since 2011 TES by source:oil 34%,geothermal 25%,natural gas 17%,hydro 11%,coal 7.6%,bioenergy and waste 4.9%,solar and wind 1.4%Energy intensity per capita(TES/cap
76、ita):161.8 GJ/capita(IEA average:166.7 GJ/capita);-5%since 2010 Energy intensity per GDP(TES/GDP):4.11 MJ per 2015 USD PPP(IEA average:3.74 MJ per USD);-17%change since 2011 Total final consumption(TFC):559.8 PJ;+7%since 2011 TFC by sector:industry 42%,transport 36%,buildings 22%Source:IEA(2022).Cou
77、ntry overview New Zealand(Aotearoa in Mori)is located in the south-western Pacific Ocean,around 2 000 kilometres(km)east of Australia.Its territory expands over 268 021 km and is composed of two main islands,the North Island and the South Island,which are separated by the Cook Strait,as well as othe
78、r small islands.New Zealand is located on the Ring of Fire and is crossed by the Alpine fault,which makes the islands vulnerable to earthquakes and volcanic activity.The countrys remoteness explains the high number of endemic fauna and flora species.New Zealands Exclusive Economic Zone,15 times its
79、land area,is one of the largest in the world.New Zealands population was 5.1 million in 2022,16%higher than in 2012(StatsNZ,2022).Annual population growth has been steady,at around 2%since 2014,but dropped sharply in 2021 to reach 0.6%.With 19 people per square kilometre,New Zealand has a relatively
80、 low population density.Eighty-three per cent of the population lives in urban areas.The main cities are Wellington(the capital),Auckland(the most populated)and Hamilton in the North Island,and Christchurch in the South Island.Three-quarters of the population lives in the North Island.English and Mo
81、ri are the countrys official languages.Its currency is the New Zealand dollar(NZD,exchange rate of NZD 1.59 per USD 1 in August 2022).New Zealand is a constitutional monarchy Charles III is the King of New Zealand and the head of state.The King is represented by the Governor-General.The government i
82、s formed from an elected House of Representatives and advises the Prime Minister,who is the source of all executive legal authority in New Zealand and acts on the advice of the IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 16 government.The next parliamentary general election must be held before January 202
83、4.The country is divided into 16 regions:11 have their own councils and 5 have territorial authorities,both elected.The Treaty of Waitangi,signed in 1840 between the British Crown and a number of Mori chiefs,is today widely accepted to be a constitutional document laying out the relationship between
84、 the government and Mori.It includes a commitment to protect and preserve Mori culture and way of life while giving the Crown the right to govern the country(New Zealand,Ministry of Justice,2022).Economy In 2021,New Zealands gross domestic product(GDP)per capita was USD 46 389,below the OECD average
85、 of USD 48 754.The employment rate in the first quarter of 2022 was 79.1%,the fourth-highest among OECD countries(OECD,2022)after Iceland,the Netherlands and Switzerland.The Covid-19 pandemic caused GDP to fall by 1.3%in 2020,but in 2021 the annual growth rate reached 4.6%,well above pre-pandemic le
86、vels(World Bank,2021).In 2020,service industries(trade,media,finance,rent,health,education)accounted for 65.6%of GDP,goods-producing(manufacturing,electricity,gas,water and waste,construction)for 19.5%,taxes for 8.4%and the primary sector(agriculture,forestry,fishing and mining)for 6.5%(StatsNZ,2020
87、).Energy production,supply and demand New Zealands domestic production of energy covers three-quarters of total energy supply.Imported fossil fuels cover the last quarter.Geothermal is the largest single source of energy production(204 petajoules PJ in 2021),followed by natural gas(143 PJ),hydro(87
88、PJ),coal(67 PJ)and oil(43 PJ).Lower amounts of energy are also produced from wind(12 PJ).From 2011 to 2021,oil,coal and natural gas production dropped by 57%,44%and 2%,respectively,and geothermal increased by 37%.Over the same period,domestic energy production from wind and solar(from a lower base)g
89、rew by 35%.Figure 2.1 Overview of New Zealands energy production,supply and demand,2021 IEA.CC BY 4.0.Three-quarters of New Zealands total energy supply is covered by domestic production.The remaining quarter consists of imported oil.Notes:TFC=total final consumption.Source:IEA(2022).0 100 200 300 4
90、00 500 600 700 800 900ProductionTotal energy supplyTFC(by fuel)TFC(by sector)PJGeothermalWindHydroDistrict heatElectricityBiofuels and wasteNatural gasOilCoalTransformations and lossesIndustryTransportBuildingsImportsIEA.CC BY 4.0.2.GENERAL ENERGY POLICY 17 ENERGY INSIGHTS Total energy supply New Ze
91、alands total energy supply(TES)increased by 11%,from 747 PJ in 2011 to 829 PJ in 2021.In 2020,TES dropped to 824 PJ driven by the Covid-19 pandemic,but bounced back in 2021,though to a lower level than in 2019(Figure 2.2).Fossil fuels accounted for 59%of New Zealands energy supply in 2021(compared t
92、o an IEA average of 78%),a gradually declining share since the beginning of the 2010s.Oil covers the largest share of TES,and from 2011 to 2021,the share of oil in TES was constant at around 34%(with the exception of a drop in 2020 due to lower consumption in transport amid the pandemic).Over the sa
93、me period,the share of coal fluctuated at around an average of 7%,while the share of gas decreased from 19%to 17%.From 2011 to 2021,the share of wind in TES slightly grew,from 0.9%to 1.1%,while the share of bioenergy and waste slightly fell from 5.8%to 4.9%.Solar remained nearly flat at 0.1%.Figure
94、2.2 Total energy supply by source in New Zealand,2005-2021 IEA.CC BY 4.0.Fossil fuels covered 59%of New Zealands total energy supply in 2021.After a gradual increase,New Zealands energy supply has been relatively stable since 2015.Source:IEA(2022).Energy demand Total final consumption(TFC)increased
95、from 505 PJ in 2005 to 611 PJ in 2019 before falling to 561 PJ in 2020 amid the Covid-19 pandemic(Figure 2.3).In 2021,energy consumption did not rebound and remained at a similar level to 2020.New Zealands energy demand is heavily dependent on fossil fuels,with oil covering almost half(48%in 2021)of
96、 the countrys TFC,followed by natural gas(17%)and coal(4%).Electricity accounts for one-quarter of the countrys TFC.0 100 200 300 400 500 600 700 800 900PJWindGeothermalHydroBioenergy and wasteNatural gasOilCoalIEA.CC BY 4.0.2.GENERAL ENERGY POLICY 18 Figure 2.3 Total final consumption by source in
97、New Zealand,2005-2021 IEA.CC BY 4.0.In 2020,fossil fuels represented 69%of New Zealands total final consumption,which dropped in 2020 amid the Covid-19 pandemic,and did not rebound in 2021.Source:IEA(2022).In 2021,New Zealands electricity was generated mainly using hydro(54%),followed by geothermal(
98、19%),natural gas(14%),wind(5%),coal(4%),and bioenergy and waste(2%).Other sources include very small shares of solar(0.36%)and oil(0.03%).Industry,accounting for 42%of TFC in New Zealand in 2021(compared to the IEA average of 36%in 2020),has the highest share of New Zealands TFC(Figure 2.4),followed
99、 by transport(36%)and buildings(22%).Electricity dominates demand in the buildings sector(60%),yet accounts for only 25%in the industry sector.As for most IEA countries,New Zealands transport sector remains almost completely reliant on oil(99.8%of transport TFC in 2021).Bioenergy is used in industry
100、(7.3%of the sectors demand)and buildings(7.5%).Natural gas is used mainly in the industry sector(35%)and less in buildings(11%).Coal is mostly consumed in the industry sector,where it covers 9.2%of the sectors demand.Figure 2.4 Energy demand per sector and per fuel,and electricity generation by fuel
101、 in New Zealand,2021 IEA.CC BY 4.0.Electrification is high in buildings but much lower in other sectors.Hydro and geothermal were the main sources of electricity generation in 2021.Note:TWh=terawatt hour.Source:IEA(2022).0 100 200 300 400 500 600PJElectricityBioenergy and wasteNatural gasOilCoal0 50
102、 100 150 200 250Industry Buildings TransportElectricitySolarBioenergy and wasteCoalNatural gasOilEnergy demandPJOilSolarBioenergy and wasteCoalWindNatural gasGeothermalHydro0 10 20 30TWhElectricity generationIEA.CC BY 4.0.2.GENERAL ENERGY POLICY 19 ENERGY INSIGHTS Key institutions and energy players
103、 The Minister of Energy and Resources has broad responsibility across energy markets,including electricity,gas,liquid fuels and resources(including minerals and petroleum).The Ministry of Business,Innovation and Employment(MBIE)acts as the regulatory steward of resources and energy markets.It has th
104、e primary responsibility for advising the minister/government on energy and resources policy.The Commerce Commission is the primary competition regulatory agency.Its responsibilities cover economic controls on natural monopoly infrastructure services,including electricity lines,gas pipelines,telecom
105、munications and airports.The Energy Efficiency and Conservation Authority(EECA)promotes energy efficiency,conservation and renewable energy.For electricity,Transpower owns and operates the national transmission network,while the Electricity Authority governs and monitors the electricity market.The C
106、ommerce Commission regulates Transpower and grid companies because they operate with little or no competition.For natural gas,the MBIEs responsibilities include the Crown Minerals Act 1991(upstream),the Gas Act(primarily downstream)and the role of gas as a thermal fuel.In relation to the Gas Act 199
107、2,the Minister of Energy and Resources has a range of statutory powers around sector regulation.The Gas Industry Company is the industry body and co-regulator under the co-regulatory model,in which downstream gas governance arrangements are developed in a partnership between industry and the governm
108、ent.WorkSafe is New Zealands primary workplace health and safety regulator.It is responsible for energy safety,including gas pipelines and gasfitters.Key energy and climate policies Climate change targets and policies New Zealands updated climate target under the Paris Agreement is to reduce net GHG
109、 emissions by 50%from gross 2005 levels by 2030.The most recent domestic legislation is the Climate Change Response(Zero Carbon)Amendment Act 2019,which sets a net zero GHG emissions target(exempting biogenic methane,mostly from cattle)by 2050.It also includes a target to reduce biogenic methane emi
110、ssions by 10%from 2017 levels by 2030 and by 25-47%by 2050.The Act also established a Climate Change Commission to provide independent,evidence-based advice on the actions the government needs to take to address climate change.In addition,the Act requires emissions budgets and emissions reduction pl
111、ans(along with national adaptation plans).An emissions budget is the quantity of emissions allowed during a particular period.From 2022 onwards,three emissions budgets must be in place at any time,providing a pathway to the 2050 target.After considering the Climate Change Commissions recommendations
112、,New Zealand sets 5-year emissions budgets 10-15 years in advance.The first three emissions budgets were set in May 2022 for the periods 2022-2025,2026-2030 and 2031-2035.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 20 Each emissions budget must be supported by an emissions reduction plan that contains pol
113、icies and strategies for meeting the emissions budget.New Zealands first ERP was published in May 2022(see Chapter 3 for more details on emissions budgets and the ERP).The countrys primary emissions pricing tool is the New Zealand Emissions Trading Scheme.The point of obligation is upstream,so the i
114、mpact is mainly felt through fuel prices.Aligning the NZ ETS with decreasing emissions budgets,along with expectations of a rising emissions price,is aimed to flexibly encourage businesses and households to align investment decisions and choices with low-emissions alternatives(see Chapter 3 for more
115、 on carbon pricing).The NZ ETS covers the entire economy,except for the agricultural sector and a portion of the waste sector.Some sectors can opt into the NZ ETS,including forestry,for which removal units can be earned.To address carbon leakage,free allocation of New Zealand emissions units is prov
116、ided to eligible emissions-intensive and trade-exposed industries.These allocations are planned to be phased out in the coming decades.Energy strategy New Zealand does not currently have a long-term energy strategy.In the May 2022 Emissions Reduction Plan,the government committed to developing a str
117、ategy to achieve its vision for the energy and industry sectors.The vision is that by 2050 New Zealand will have a highly renewable,sustainable and efficient energy system that is accessible and affordable,secure and reliable,and supports New Zealanders well-being.The Energy Strategy will help set t
118、he pathways to navigate the energy trilemma(security,affordability and sustainability)and provide certainty for investors,industry and consumers.It will set the direction for New Zealands pathway away from fossil fuels and towards greater levels of renewable electricity and other low-emissions alter
119、natives.A scoping of what the new Energy Strategy could look like is underway.The MBIE is collaborating and engaging with treaty partners and working with energy system stakeholders to develop the Energy Strategy by the end of 2024.The terms of reference for the strategy were released in October 202
120、2.Simultaneously,the government is developing several energy strategies that will serve as key inputs into the long-term Energy Strategy(MBIE,2022a).These include:A Gas Transition Plan,expected to be completed by the end of 2023,which will establish the pathway for phasing out natural gas in New Zea
121、lands energy system in line with climate targets.An updated New Zealand Energy Efficiency and Conservation Strategy to replace the existing strategy(that expired in mid-2022)and better align it with the governments climate goals and strategies.A renewable energy strategy work programme,which will es
122、tablish plans for expanding the role of renewables in New Zealands energy system.The renewables work programme has eight workstreams:1)renewable electricity generation;2)Green Hydrogen Strategy;3)Resources Strategy;4)just transition work;5)Electricity Price Review;6)Gas Act changes;7)process heat;an
123、d 8)backing emerging technologies.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 21 ENERGY INSIGHTS Government Investment in Decarbonising Industry Fund The Government Investment in Decarbonising Industry Fund was first established in 2020 as part of the governments Covid Response and Recovery Fund.The aim w
124、as to accelerate the decarbonisation of industrial process heat and contribute to the Covid-19 recovery by stimulating the domestic economy and supporting employment.An NZD 69 million fund was initially allocated,matched by NZD 117 million of investment by industry,to 53 projects,all contracted for
125、completion by April 2024.The 2022 Budget allocated a further NZD 670 million over four years to business decarbonisation from the Climate Emergency Response Fund.In addition to the previous GIDI Fund targeted at industrial process heat projects,funding will now also include support for replacing ine
126、fficient industrial and commercial equipment,and help replace fossil fuels in commercial space and water heating with renewable energy.The additional funding will help get projects across the finish line,and more quickly,unlocking larger and earlier emissions reductions.The majority of this funding
127、will be administered by the EECA and allocated to prioritise investment in decarbonisation.The expanded GIDI Fund is estimated to deliver projects that will make up around 17%of the countrys total emissions reductions in emissions budget period 1,and 27%of total emissions reductions in emissions bud
128、get period 2.Electricity sector policies New Zealands electricity system is the cornerstone of the governments strategy for decarbonising the energy sector.The government plans to promote electrification of end-use sectors such as buildings,transport and industry,leveraging a renewables-based electr
129、icity system.The New Zealand Energy Strategy 2011-2021 set a target for 90%renewable electricity by 2025.Subsequently,the government set an aspirational goal of 100%renewable electricity by 2030.Moreover,the first ERP built on the governments aspirational goal in electricity and set a target of 50%o
130、f total final energy consumption(TFEC)from renewables by 2035.Making the electricity system fit-for-purpose is,therefore,a top priority for the government.NZ Battery Project New Zealand is fortunate to already have a high proportion of renewable electricity,which is currently over 80%of electricity
131、production.However,due to the electricity systems heavy reliance on hydropower with limited storage,its key challenge is coping with a“dry year”when hydro inflows are low.When a“dry year”occurs,and existing hydropower catchments do not receive enough rainfall,backup is currently provided by fossil f
132、uel generation.This issue will become increasingly salient as the country strives to achieve a 100%renewables-based power grid and relies more on electricity to meet its decarbonisation targets.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 22 In response,the government launched the NZ Battery Project in 202
133、0.The project will provide comprehensive advice on the technical,environmental and commercial feasibility of potential energy storage projects.The name NZ Battery refers to the nature of the intended solution,whether pumped storage or otherwise,to provide stored energy for New Zealands electricity s
134、ystem in an analogous manner to a battery.The first phase will evaluate the best method to resolve New Zealands dry year electricity storage problem in order to achieve 100%renewable electricity and help decarbonise the wider energy system.It will comprise a detailed investigation of possible dry ye
135、ar solutions,including,but not limited to,the Lake Onslow pumped hydro project.It is intended that other smaller pumped storage proposals,as well as alternative technologies,including demand-side solutions,will also be fully investigated.Tiwai smelter Due to its size,operations of the Tiwai smelter
136、have a significant effect on the electricity market and questions about its closure affect both investment and price.In July 2020,Rio Tinto announced the conclusion of a strategic review of the smelter and a decision to wind down operations by August 2021 due to high energy and transmission costs.Fo
137、llowing negotiations resulting in a new electricity agreement with Meridian,in January 2021,Rio Tinto committed to continue until 2024.With aluminium prices continuing to reach new heights,Rio Tinto has recently stated its intention to potentially continue operating the New Zealand Aluminium Smelter
138、(NZAS)beyond 2024.The implications of the NZAS operating beyond 2024 are complex and dynamic.In addition to non-energy emissions from the smelter,the NZAS is the single largest consumer of electricity,accounting for,on average,13%of total electricity consumption.The Climate Change Commissions modell
139、ing and government baseline modelling assume that the NZAS will close in 2024,and that this closure will bring forward the end of coal use for electricity generation,thereby lowering annual emissions from electricity generation.The size of the smelter offtake from Manapouri can have a material effec
140、t on electricity market investment and prices.Investors have been wary of large commitments to new generation projects as long as there is a risk they would be undermined by the smelters closure and the release of excess Manapouri generation onto the market at a cheaper rate.Regulatory reform for re
141、newables projects In New Zealand,the Resource Management Act 1991 plays a major role in determining the type of electricity generation that gets consented.It was enacted to achieve a more co-ordinated,streamlined and comprehensive approach to environmental management.While the RMA creates overarchin
142、g provisions on avoiding,remedying and mitigating the adverse effects of activities on the environment,with national direction on significant issues,it allows communities to decide how to manage their own environment through regional and district resource management plans.This framework means that m
143、ost decisions on resource management are taken by local governments,which also have a wider planning role in transport,infrastructure and economic development.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 23 ENERGY INSIGHTS The government plans to repeal the RMA and replace it with three new pieces of legis
144、lation(New Zealand,Ministry for the Environment,2022).This reform aims to better meet environmental protections,climate adaptation needs and Mori protections while also improving efficiency and reducing permitting complexity.The government plans to introduce three bills to replace the RMA:Natural an
145、d Built Environments Bill the main replacement for the RMA,to protect and restore the environment while better enabling development.Strategic Planning Bill requiring the development of long-term regional spatial strategies to help co-ordinate and integrate decisions taken under relevant legislation.
146、Climate Adaptation Act to help New Zealand better deal with climate change,especially complex issues associated with managed retreat(the relocation of communities or infrastructure vulnerable to natural disasters).Following public consultations,the aim is for the Natural and Built Environments Bill
147、and the Strategic Planning Act to be passed into law before January 2024(MPDC,2022).There is considerable potential in other areas for renewables development,like offshore wind electricity generation.The governments ERP commits to developing regulatory settings to enable investment in offshore renew
148、able energy(such as offshore wind farms)and innovation.Regulatory settings are expected to be in place by July 2024.The forthcoming Energy Strategy will indicate further the role envisaged for offshore renewables in New Zealands future energy mix.Electricity price reform In response to the sharp ris
149、e in electricity prices for residential consumers,in April 2018,the Minister of Energy and Resources commissioned an independent review of New Zealands electricity market(MBIE,2022b).The 2018-2019 Electricity Price Review(EPR)had some unique characteristics compared to previous reviews,as it address
150、ed the need for electricity prices to be fair and affordable,not just efficient or competitive.It was also targeted at the perspective and views of consumers.The MBIE and Electricity Authority are undertaking a number of workstreams to address the EPRs recommendations.In September 2021,Cabinet decid
151、ed to phase out the Low Fixed Charge(LFC)regulations over a five-year period.This decision implemented a key recommendation of the EPR,which found the LFC regulations were poorly targeted and had a number of unintended consequences.The first step of the phase-out began on 1 April 2022.The LFC regula
152、tions were a well-recognised barrier to distribution pricing reform.By removing the regulations,the electricity industry will more easily be able to manage the increased load on the network through new distribution pricing structures,such as time-of-use pricing.This will allow the industry to avoid
153、costly network upgrades that would otherwise see costs passed on to consumers.A phase-out period of five years has been introduced to help limit the impact on consumers electricity bills.The government has also secured the industrys commitment to fund an NZD 5 million power credits scheme to support
154、 low-income,low-use households that are struggling to pay their power bills through the phase-out,which was launched in June 2022.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 24 Figure 2.5 Quarterly energy prices in New Zealand,June 2013 to March 2022 IEA.CC BY 4.0.Energy prices have,on average,been increa
155、sing since 2019.Note:GJ=gigajoule.Source:MBIE(2022c).In addition,a new transmission pricing methodology(TPM)is due to take effect in April 2023.The TPM sets out how Transpower,as the transmission grid owner,must recover transmission costs from its customers.The updated TPM addresses three key proble
156、ms with the previous TPM,which led to inefficient outcomes and created a barrier to transitioning away from non-renewable generation.The new TPM removes effective subsidies on non-renewable generation and taxes in South Island renewable generation.Together with nodal prices,it ensures that the right
157、 generation is built in the right location and at the right time.The EPR also found that while the market is working well overall,it is not delivering for everyone,and many people struggle with the cost of power.The EPR made eight recommendations to address energy hardship.In response to the EPR,the
158、 government agreed to a work programme that progresses the majority of the energy hardship recommendations.In August 2020,the government announced an NZD 17 million,four-year package for initiatives to reduce energy hardship and improve advocacy for residential and small business consumers.In Septem
159、ber 2021,the Energy Hardship Expert Panel was created to recommend policy priorities and actions to alleviate energy hardship and provide impartial,evidence-based expert advice.The panel is required to report by 30 June 2023.Policies to reduce fossil fuel demand and improve security New Zealands mor
160、e ambitious climate targets will require lower emissions from fossil fuels driven by substantial declines in consumption.Emissions reductions are likely to occur through both reduced demand(for example,greater energy efficiency,electrification)and lower carbon intensity(for example,blending in renew
161、able gases or biofuels).Coal The government is working to reduce the demand for coal for process heat and electricity generation.This includes investigating options to manage dry year risk through the NZ Battery Project(to displace backup fossil generation),a proposed ban on new low-and medium-tempe
162、rature coal boilers,as well as phasing out existing coal boilers by 2037.0 10 20 30 40 50 60 70 80 90 100NZD per GJ(real)Electricity(residential)PetrolDieselNatural gas(households)Natural gas(commercial)Natural gas(industrial)IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 25 ENERGY INSIGHTS Initiatives that
163、encourage fuel switching will further reduce demand for coal,as will GIDI-supported investments to decarbonise industrial processes.Internationally,New Zealand is a signatory to the 2017 Power Past Coal Alliance,the 2021 Global Coal to Clean Power Transition Statement,the 2021 No New Coal Power Comp
164、act and the 2021 Proposal on Ending Coal Support within the OECD Export Credit Arrangement.Natural gas Currently,natural gas plays an important role in the electricity sector,displacing coal-fired generation.The pace for phasing out natural gas and the“end-state”of the sector are currently uncertain
165、 and are dependent on a range of factors,such as emissions pricing,technological adaptation and other economic factors.As noted above,to achieve emissions reductions from natural gas,the Gas Industry Company and the MBIE are developing a Gas Transition Plan.The purpose of the GTP is to establish tra
166、nsition pathways for decarbonising the gas sector in line with the first three emissions budgets defined in the ERP.It is also expected to establish a strategic view on the potential role of renewable gases,including potential measures for accelerating their uptake and for carbon capture and utilisa
167、tion technology.The plan is expected to be completed by the end of 2023 and will be a key input into the Energy Strategy.Oil In April 2018,the government announced that no further offshore oil and gas exploration permits would be granted as a step towards addressing climate change and creating a sus
168、tainable future for New Zealand.To address oil demand,a Sustainable Biofuels Obligation was planned to come into force on 1 April 2024.It would have required liable fuel suppliers to reduce the emissions of the liquid transport fuels they supply in New Zealand by a set percentage each year.However,t
169、he government has decided not to move forward with the policy for now.In addition,New Zealand has a number of policies to increase vehicle efficiency and promote EV penetration into its transport mix.Incentives for EVs include an exemption from road user charges until 2025,a clean car discount,infor
170、mation campaigns,and a fund to encourage and support innovative low-emissions vehicle projects.The Ministry of Transport is leading the development of a long-term National EV Charging Strategy,slated for publication in early 2023.To promote fuel efficiency,the government updated its labelling scheme
171、 for vehicles and put in place a fee on high-emissions vehicles.New Zealands only oil refinery,which was located at Marsden Point(140 km north of Auckland),shut down permanently on 1 April 2022.Fuels produced from the refinery previously met 65-70%of New Zealands fuel demand.As crude oil and interme
172、diate products are no longer held and processed at the refinery,the overall level of oil and fuel stocks held onshore by the fuel industry is estimated to be lower than before the refinerys closure.The refinerys closure has instigated a review of New Zealands fuel resilience policy.The MBIE has cons
173、ulted on a proposal to impose a minimum fuel stockholding obligation on fuel wholesale suppliers with bulk storage facilities.The government is expected to take a decision on the high-level design of new fuel resilience policies shortly.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 26 A 2019 Commerce Commis
174、sion market study into the retail fuel sector identified that there was no real active competition in the wholesale fuel market.The study concluded that the countrys downstream fuel industry was essentially a vertically integrated oligopoly,and price competition in the fuel market was not working as
175、 well as it could be.The Commerce Commission identified some retail and especially wholesale market measures to promote competition.As a result,the Fuel Industry Act was passed in 2020 to address these issues.The Fuel Industry Act aims to promote competition in engine fuel markets for the long-term
176、benefit of end users.Critical minerals In November 2019,the government launched a Resource Strategy(Responsibly Delivering Value A Minerals and Petroleum Resource Strategy for Aotearoa New Zealand 2019-2029).The strategy set the governments long-term vision for the minerals(and petroleum)sector.The
177、strategy committed to specific actions to work towards this vision of delivering affordable and secure resources for the benefit of current and future New Zealanders across six areas.Action Area 2 was to secure affordable resources to meet the countrys mineral and energy needs.Through activities und
178、er this action area,the government aims to:understand the stock of strategic resources in New Zealand understand New Zealands potential for clean-tech minerals be able to more accurately value the countrys resource base understand the current and future market for resources,both domestically and int
179、ernationally ensure a secure and affordable supply of resources.One of the actions is to develop a list of critical minerals for New Zealand.These are minerals that would be considered necessary for the functioning of the economy and the well-being of New Zealanders and whose supply could be at risk
180、.The MBIE is progressing work to develop this list.While the government is learning from the work carried out by international counterparts on developing lists,it wants the list to be specific to New Zealand.Just transitions As New Zealand plans for a transition to a low-carbon economy,some regions
181、and communities will face disruptions to economic activity and livelihoods.The government recognises these impacts and has established a Just Transitions Unit within the MBIE to co-ordinate work on managing the impacts and ensuring an even distribution of opportunities from low-carbon transitions(MB
182、IE,2021a).The Just Transition Partnership team supports regional partners to understand,plan and navigate their transition in a fair and equitable way(MBIE,2021b).It works across government agencies to support regions to plan effectively in response to major economic shocks;promotes partnerships amo
183、ng Mori tribes,regions,sectors and communities toward a common vision for just transition pathways;and works alongside regional government agencies to ensure planning and implementation are aligned with central government objectives and funding streams.The two regions the partnership supports are IE
184、A.CC BY 4.0.2.GENERAL ENERGY POLICY 27 ENERGY INSIGHTS the Taranaki(where the government announced a ban on new offshore oil and gas exploration permits in 2018)and Southland(where the Tiwai aluminium smelter is planned for possible closure).The government is also working on an Equitable Transitions
185、 Strategy to ensure that New Zealands energy transition is fair and inclusive.The strategy will be informed by public engagement,with a draft due in June 2023,followed by a final document in June 2024(MBIE,2022d).Energy taxation Energy companies domiciled for tax purposes in New Zealand are generall
186、y subject to the standard company income tax rate of 28%.However,there are specific rules about when oil and gas expenditures can be deducted.New Zealand also applies a 15%goods and services tax(GST)to nearly all goods and services supplied in New Zealand,including electricity,gas,petrol and diesel.
187、GST-registered businesses claim input tax deductions to refund the GST component of purchases such as fuel and energy that they use to make taxable supplies(selling their own goods and services).Firms that supply fuel and energy to the New Zealand market must surrender emissions units to meet their
188、obligations under the New Zealand Emissions Trading Scheme(see Chapter 3 for details).The surrender,sale or other disposal of emissions units are zero-rated supplies for GST purposes.This means GST is charged at 0%,so a GST-registered person who disposes of emissions units can claim input tax deduct
189、ions on any expenses incurred in the disposal.Assessment New Zealand has a diversified energy mix,with significant production of both hydropower and geothermal.The country is also a producer of oil,gas and coal,though it relies heavily on oil imports to meet demand.As New Zealand embarks on an ambit
190、ious energy transition,it has many natural advantages,including an enviable renewable resource base.The key challenge will be to decarbonise transport and industry through clean power and support investments in new technologies to achieve deeper emissions cuts across all sectors in the most economic
191、ally efficient way.New Zealands updated climate target under the Paris Agreement is to reduce net GHG emissions by 50%from gross 2005 levels by 2030.In 2019,New Zealand amended its domestic legislation under the Climate Change Response Act 2022 to set a net zero GHG emissions target(exempting biogen
192、ic methane)by 2050.It also included a target to reduce biogenic methane emissions by 10%from 2017 levels by 2030 and by 25-47%by 2050.The Act put in place a number of mechanisms that will support New Zealand in meeting its targets.It created the Climate Change Commission to provide independent,evide
193、nce-based advice on the actions the government needs to take to address climate change.It also requires the government to establish domestic emissions budgets,emissions reduction plans and national adaptation plans,all of which will help provide clarity and pathways to achieving the targets.IEA.CC B
194、Y 4.0.2.GENERAL ENERGY POLICY 28 New Zealands first set of domestic emissions budget out to 2035 and its first Emissions Reduction Plan were released in May 2022.The ERP sets a number of key actions and targets for the energy sector.It set a target of 50%of total final energy consumption to come fro
195、m renewable sources by 2035.The target is ambitious,with New Zealands 2020 renewable energy share being 28%.Achieving the target will not only require a co-ordinated policy response,but also for New Zealand to demonstrate an attractive investment environment.The new final energy consumption target b
196、uilds on the governments aspirational target of 100%renewable electricity by 2030.A key policy mechanism for New Zealand to meet its climate targets is the New Zealand Emissions Trading Scheme,which establishes an emissions price signal across the economy to incentivise lowest cost abatement(such as
197、 through the adoption of lower emissions technologies,emissions efficiency improvements and forestry sequestration).Entities carrying out defined emitting activities(typically high in the value chain,such as mining coal or importing fossil fuels)buy and trade emissions units via auctions or the seco
198、ndary market to meet their emissions reduction obligations.Emissions-intensive,trade-exposed industries receive a free allocation of units each year,recognising their risk of emissions leakage.The level of free allocations is being phased down.To complement the carbon price stemming from the ETS,the
199、 New Zealand government has other measures in place to reduce emissions,notably the Government Investment in Decarbonising Industry Fund,established in 2020 as part of the governments Covid Response and Recovery Fund.The fund is designed for decarbonisation projects,especially to accelerate the deca
200、rbonisation of industrial process heat,and will help move the country closer to meeting its climate targets.New Zealand does not currently have a long-term Energy Strategy in place.While work is underway on a strategy,it is not due for release until the end of 2024.The strategy will aim to lay out a
201、 plan for New Zealands 2050 vision to have a highly renewable,sustainable and efficient energy system that is accessible and affordable,secure and reliable.Key elements of the Energy Strategy will include:a Gas Transition Plan a Hydrogen Roadmap an update to the Energy Efficiency and Conservation St
202、rategy.The strategy is a welcome and necessary development.However,the government should make every attempt to mobilise policies sooner.A lack of clarity surrounding the pathway to meeting ambitious climate targets(including the roles that various fuels and technologies will play)is creating an unce
203、rtain policy environment,hampering the significant investment required to meet the governments 2030 targets.The government could already indicate“no-regret”options that can be implemented now,as they will,without a doubt,be part of the strategy,such as a regulatory framework for offshore wind.The ER
204、P commits to establishing regulatory settings for offshore wind by July 2024.Beyond the energy sector reforms,New Zealand plans to repeal its primary environmental protection legislation,the Resource Management Act 1991,and enact three new pieces of legislation.The new laws will require the developm
205、ent of long-term regional spatial strategies that protect and restore the environment while better enabling economic development,including energy infrastructure,and address complex issues associated with climate adaptation.IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 29 ENERGY INSIGHTS For New Zealand to m
206、eet its emissions reduction and energy goals,the new legislation will need to find a balance between the need for local environmental protection and New Zealands ambitions under the Emissions Reduction Plan.Significant delays in the approval process for new renewable energy projects will likely blun
207、t the strong investment signals required to meet the 2030 and 2035 renewable energy targets.New Zealand has some natural advantages with respect to its energy system.In particular,its electricity sector is already highly decarbonised,with a large contribution from hydropower,which accounts for nearl
208、y 60%of electricity generation.Together with other sources such as geothermal and wind,over 80%of the countrys power generation already comes from renewables.Though the government has no official policy to phase out coal-fired generation,the share of coal(along with natural gas)has decreased over th
209、e past decades.However,recent data show that gas market shortfalls and low hydro availability have resulted in increased coal use since 2017.New Zealand can leverage its clean electricity sector to advance electrification as a decarbonisation strategy in other fossil fuel-dependent sectors,notably t
210、ransport and industry.However,there is a significant amount of work ahead to position its electricity system for a future low-carbon world.A central piece to maintaining affordability for consumers will be gaining better long-term clarity on supply and demand outlooks(especially to update forecasts
211、in light of a fast-changing policy and market environment),including the operation of large consumers such as the Tiwai smelter and solving the“dry year problem”for hydro generation.The“dry year problem”is that New Zealands existing hydropower catchments are small and sometimes dont receive sufficie
212、nt inflows to meet generation requirements.When this occurs,some form of backup is needed.This is currently provided by fossil fuel generation.The country is currently assessing the technical,environmental and commercial feasibility of pumped hydro and other potential energy storage projects.Princip
213、al among these options is a pumped hydro scheme at Lake Onslow,which appears technically feasible at this stage,although more work is needed to assess its economic feasibility and market compatibility.Until a final investment decision is taken on the project in 2023-2024,the prospect of government i
214、ntervention in the electricity market is creating short-term investment uncertainty,especially for new generation.Despite its relatively clean electricity system,New Zealands energy demand remains heavily dependent on fossil fuels.Oil accounts for nearly half(46%)of the countrys total final consumpt
215、ion,followed by natural gas(19%)and coal(4%).Oil is dominant in the transport sector(99.7%),though it also has sizeable shares in industry(20%)and buildings(11%).Natural gas covers more than one-third of energy demand in industry,whereas coal has a share of 9%.Electrification of final energy consump
216、tion is higher(25%)than the IEA average(23%),especially in the buildings sector,where it covers more than two-thirds.The government has several policies in place to reduce the demand for oil,gas and coal in the coming years.For coal,it has proposed a ban on new low-to medium-temperature coal boilers
217、 and to phase out existing ones by 2037.For natural gas,the government has support mechanisms for energy efficiency improvements in industry.In addition,the Gas Transition Plan,currently under development,will establish transition pathways for decarbonising the gas sector in line with emissions budg
218、ets.For oil,the government has targets and support measures for electric and lower emissions vehicles.While these IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 30 measures are likely to reduce emissions from the transport sector,diesel demand continues to increase,and more direct measures are needed to meet
219、 the governments targets.In addition to these major policy developments,New Zealand is progressing with potentially significant reforms to oil emergency stockholding following the closure of the Marsden Point Refinery.These energy security reforms complement those implemented following the Commerce
220、Commissions 2019 market study into the retail fuel sector.The Fuel Industry Act,passed in 2020,promotes competition in engine fuel markets for the long-term benefit of end users.Overall,New Zealand has the potential to reach its emissions reduction and energy targets.It has the natural resources and
221、 policy levers;however,the time frames to meet the targets are very ambitious,and a more pragmatic approach may be required to ease the costs for consumers of such a rapid change to the sector.If the targets are to be met by 2030 for electricity and 2035 for primary energy,the sector will need a via
222、ble policy road map as soon as possible.Delays in providing policy clarity will likely result in the targets being met much later in the future.Key recommendations The government of New Zealand should:Accelerate the development of the National Energy Strategy for release in 2023.Efforts should be ma
223、de to settle the macro level policy settings as soon as possible to bring on the investment required to decarbonise the energy sector.Given the outsized role that electrification will play as a decarbonisation strategy,create an enabling regulatory environment for a flexible electricity system that
224、is fit-for-purpose(such as to support demand response and storage).Ensure that reforms to the resource management legislation provide for timely approval of renewable energy projects.Increase policy focus on the transport sector;in particular,implement measures that will deliver structural change to
225、 diesel demand.References IEA(International Energy Agency)(2022),World Energy Balances(database),https:/www.iea.org/data-and-statistics/data-product/world-energy-balances(accessed on 19 September 2022)MBIE(Ministry of Business,Innovation and Employment)(2022a),Energy strategies for New Zealand,https
226、:/www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-strategies-for-new-zealand MBIE(2022b),Electricity Price Review,https:/www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-consultations-and-reviews/electricity-price MBIE(2022c)Energy prices,https:/www.m
227、bie.govt.nz/building-and-energy/energy-and-natural-resources/energy-statistics-and-modelling/energy-statistics/energy-prices(accessed on 19 September 2022)IEA.CC BY 4.0.2.GENERAL ENERGY POLICY 31 ENERGY INSIGHTS MBIE(2022d),Equitable Transitions Strategy,https:/www.mbie.govt.nz/business-and-employme
228、nt/economic-development/equitable-transitions-strategy MBIE(2021a),Just transition,https:/www.mbie.govt.nz/business-and-employment/economic-development/just-transition MBIE(2021b),The Just Transition Partnership team,https:/www.mbie.govt.nz/business-and-employment/economic-development/just-transitio
229、n/the-just-transition-partnership-team MPDC(Matamata-Piako District Council)(2022),RMA reform and managing the future impacts of climate change,https:/www.mpdc.govt.nz/news/all-news-and-public-notices/3882-rma-reform-and-managing-the-future-impacts-of-climate-change#:text=The%20new%20legislation&tex
230、t=The%20reforms%20will%20repeal%20the,NBA%20plan%20for%20each%20region New Zealand,Ministry for the Environment(2022),Resource Management System Reform,https:/environment.govt.nz/what-government-is-doing/areas-of-work/rma/resource-management-system-reform New Zealand,Ministry of Justice(2022),Treaty
231、 of Waitangi,https:/www.justice.govt.nz/about/learn-about-the-justice-system/how-the-justice-system-works/the-basis-for-all-law/treaty-of-waitangi OECD(2022)OECD data New Zealand,https:/data.oecd.org/new-zealand.htm(accessed on 19 September 2022)StatsNZ(2022)Population statistics,https:/www.stats.go
232、vt.nz/topics/population(accessed on 19 September 2022)StatsNZ(2020)National accounts(industry production and investment),https:/www.stats.govt.nz/information-releases/national-accounts-industry-production-and-investment-year-ended-march-2020(accessed on 19 September 2022)World Bank(2021)GDP growth(a
233、nnual%)New Zealand(World Bank database),https:/data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=NZ(accessed on 19 September 2022)IEA.CC BY 4.0.33 ENERGY SYSTEM TRANSFORMATION 3.Energy and climate change Key data GHG emissions with LULUCF(2020):55 Mt CO2-eq;-3%since 2005,+26%since 1990 GHG em
234、issions without LULUCF(2020):79 Mt CO2-eq;-5%since 2005,+21%since 1990 Energy-related GHG emissions from fuel combustion(2021):32 Mt CO2-eq;-8%since 2005 Energy-related GHG emissions by sector(2021):transport 48%,industry 27%,electricity and heat generation 19%,buildings 5.9%Energy-related GHG emiss
235、ions per GDP(2021):0.152 kg CO2/USD(IEA average 0.213 kg CO2/USD)Energy-related GHG emissions per capita(2021):6.15 t CO2/capita(IEA average 8.38 t CO2/capita)Overview New Zealands updated target is to cut net GHG emissions by 50%by 2030 compared to gross 2005 levels.New Zealands Nationally Determin
236、ed Contribution(NDC)is economy-wide,covering all sectors and all GHGs.New Zealands next NDC is expected in 2025,covering the period starting in 2031.GHG emissions in the base year(2005)were 82.7 million tonnes of carbon dioxide equivalent(Mt CO2-eq),excluding land use,land-use change and forestry(LU
237、LUCF),which was the countrys highest recorded emissions.In 2020,New Zealands total GHG emissions stood at 78.8 Mt CO2-eq,a 4.7%decline since 2005(Figure 3.1).Additionally,carbon removals from the LULUCF sector accounted for 23.3 Mt CO2-eq in 2020.New Zealands 2020 target was to cut GHG emissions by
238、5%compared to 1990 levels over the 2013-2020 period.New Zealands gross GHG emissions increased by 21%in 2020 compared to 1990,mainly due to increased emissions in the energy and agriculture sectors.However,it assesses that it met its 2020 target based on removals and offsets,applying the Kyoto Proto
239、col accounting framework(New Zealand,Ministry for the Environment,2022a).IEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 34 In 2020,emissions from agriculture were 39 Mt CO2-eq and accounted for 50%of total GHG emissions,one of the highest shares in the OECD.Energy sector emissions were 31 Mt CO2-eq,accou
240、nting for 40%of total GHG emissions.Industrial processes accounted for 6%of total emissions,followed by waste with 4%.Figure 3.1 Greenhouse gas emissions by sector in New Zealand,1990-2020 and targets IEA.CC BY 4.0.Most of New Zealands greenhouse gas emissions come from the agriculture and energy se
241、ctors.*The 2030 target is to achieve net emissions of 50%below the 2005 gross level.The figure assumes that LULUCF absorption in 2030 will be similar to that in 2020.The emissions target for 2050 does not include biogenic methane.Notes:Mt CO2-eq=million tonnes of carbon dioxide equivalent;LULUCF=lan
242、d use,land-use change and forestry.Source:IEA based on data from New Zealand,Ministry for the Environment(2022b).Energy-related greenhouse gas emissions In 2021,New Zealands energy-related GHG emissions were 32 Mt CO2-eq,8%less than in 2005 but 32%higher than in 1990.After peaking in 2005-06,emissio
243、ns have fallen unevenly depending on the year.There was a stronger decline in 2020,mainly due to lower emissions from the transport and industry sectors related to the Covid-19 pandemic.However,provisional data for 2021 show a strong rebound in emissions to above the previous 2006 peak.The overall s
244、low decline since 2005 is due to sharp reductions in emissions from electricity and heat generation.Emissions in this sector fell by 42%between 2005 and 2021,thanks to the increasing share of renewables and reduced share of coal and natural gas in electricity generation(see Chapter 7).On the other h
245、and,other sectors increased their emissions from 2005 to 2021:13%for buildings,8%for transport and 4%for industry.-40-200 20 40 60 80 1001990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Mt CO-eqWasteAgricultureIndustrialprocessesEnergyLULUCFGross targetNet target -50%*Net zeroIEA.CC B
246、Y 4.0.3.ENERGY AND CLIMATE CHANGE 35 ENERGY SYSTEM TRANSFORMATION Figure 3.2 Energy-related greenhouse gas emissions by sector in New Zealand,2005-2021 IEA.CC BY 4.0.Transport accounted for 45%of greenhouse gas emissions in 2020.After dropping in 2020 amid the Covid-19 pandemic,GHG emissions rebound
247、ed strongly in 2021.Note:Mt CO2-eq=million tonnes of carbon dioxide equivalent.Source:IEA(2022a).Domestic oil consumption(mainly in the transport and industry sectors)was responsible for the largest share of energy-related GHG emissions in New Zealand,accounting for 61%of the total in 2021,followed
248、by natural gas at 19%and coal at 20%(Figure 3.3).Since 2005,emissions from coal have fallen by 29%,while emissions from oil have increased by 5%.Natural gas emissions have dropped by 15%.Emission drivers and carbon intensity Over the period 2005-2021,New Zealands GDP increased by 45%while GHG emissi
249、ons decreased by 8%.Overall,the GHG intensity of New Zealands energy supply(GHG/TES),GDP(GHG/GDP)and electricity production have been declining compared to 2005 levels.In 2021,GHG emissions per unit of GDP in New Zealand were 0.152 kilogrammes of carbon dioxide per USD(kg CO2 per USD),below the IEA
250、average of 0.213 kg CO2/USD.Figure 3.3 Energy-related greenhouse gas emissions by energy source in New Zealand,2005-2021 IEA.CC BY 4.0.Natural gas greenhouse gas emissions have declined since 2005,whereas oil and coal emissions rebounded slightly in 2021.Note:Mt CO2-eq=million tonnes of carbon dioxi
251、de equivalent.Source:IEA(2022a).0 5 10 15 20 25 30 35Mt CO-eqBuildingsElectricity andheat generationIndustryTransport0 5 10 15 20 25Mt CO-eqCoalOilNatural gasIEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 36 Figure 3.4 Energy-related greenhouse gas emissions and main drivers in New Zealand,2005-2021 IEA.
252、CC BY 4.0.Since 2005,there has been a progressive but limited decoupling between greenhouse gas emissions and economic and population growth.Notes:GDP=gross domestic production;GHG=greenhouse gas;TES=total energy supply;kWh=kilowatt hour.Source:IEA(2022a).Emissions targets and policies Under the Par
253、is Agreement,New Zealand set an NDC of reducing net emissions by 50%below gross 2005 levels by 2030.The target is expressed as an emissions budget for the period 2021-2030.The Climate Change Response Act 2002 provides a legal framework for New Zealand to meet its international obligations under the
254、United Nations Framework Convention on Climate Change(UNFCCC),including the Kyoto Protocol and the Paris Agreement.The Climate Change Response(Zero Carbon)Amendment Act 2019 updates the framework and includes domestic emissions reduction targets to 2050 such that:net GHG emissions,with the exception
255、 of biogenic methane,will reach zero by 2050 biogenic methane emissions will be 10%lower than 2017 emissions by 2030 and 24-47%lower than 2017 levels by 2050.The 2019 Act also required the government to:establish a system of emissions budgets toward the long-term target develop and implement policie
256、s for climate change adaptation and mitigation establish a new,independent Climate Change Commission to provide expert advice and monitoring to help keep successive governments on track to meeting long-term goals.Carbon pricing The countrys primary carbon pricing tool is the New Zealand Emissions Tr
257、ading Scheme.The NZ ETS creates a price signal by setting a“cap”on net emissions and letting covered 0.40.60.81.01.21.41.62005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Index 1=2005GDPPopulationGHG emissionsGHGemissions/TESGHGemissions/GDPGHG/kWh elecand heatIEA.
258、CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 37 ENERGY SYSTEM TRANSFORMATION entities purchase,receive and trade allowances for the right to emit New Zealand emissions units(NZUs).Over time,the cap will decrease in line with national emissions budgets,reducing the number of NZUs available and consequently
259、increasing the incentive for cost-effective emissions abatement.Tightening the schemes cap in line with decreasing emissions budgets can drive expectations of a rising allowance price and allows it to shape future economic development by flexibly encouraging businesses and households to align invest
260、ment decisions and choices with low-emissions alternatives.The NZ ETS has comprehensive coverage across GHGs and all sectors of the economy,except for the agricultural sector and a portion of the waste sector.The agricultural sector,which has reporting requirements but no surrender obligations,can o
261、pt into the NZ ETS(post-1989),for which removal units can be earned.Work is ongoing to price emissions in the agricultural sector,but decisions are yet to be taken,and the pricing system could be within the NZ ETS or outside.The NZ ETS is a domestic scheme;as such,it does not account for emissions t
262、hat occur outside New Zealands boundaries,such as international aviation or maritime shipping.Following its introduction in 2008,the NZ ETS underwent a major reform in 2021 following a public consultation.The resulting Climate Change Response(Emissions Trading Reform)Amendment Act 2020 included a nu
263、mber of key changes,such as:penalties for failing to meet emissions return deadlines phasing out industrial allocations from 2021 publishing participants emissions and removal data increasing the fixed price option for 2020 emissions obligations from NZD 25 to NZD 35 per unit,and removing the fixed
264、price option on the introduction of NZU auctions from 2021 cancelling legacy units from the first commitment period(Environmental Protection Authority,2022).Free allocation of NZUs is provided to eligible emissions-intensive and trade-exposed industries.These free units reduce the impact of the emis
265、sions price on these industries,which in turn reduces the risk of emissions leakage.There are 26 activities eligible for free allocation in the NZ ETS.The total number of units allocated freely in 2020 was approximately 7.7 million(roughly equivalent to 10%of total emissions).There are two classes o
266、f eligibility:moderately emissions-intensive and highly emissions-intensive industries.These activity classes received,respectively,58%and 88%of their emissions allowances for free in 2022,though these are being phased out over 2021-2050.NZ ETS allocation settings are currently being updated to addr
267、ess overallocation,reassess the eligibility of industries,update data and undertake technical changes to improve allocation(New Zealand,Ministry for the Environment,2022c).The NZ ETS also has price controls to serve as safety valves.These settings were updated in December 2022 to align with emission
268、s budgets and adjust for inflation.The updated NZ ETS price controls include an auction reserve price of NZD 33.06 in 2023(which serves as a floor)and a trigger price for activating a cost containment reserve of NZD 80.64 in 2022(which acts as a“soft”ceiling price)(New Zealand,Ministry for the Envir
269、onment,2022d).The current price on the secondary market for NZUs is around NZD 88(November 2022).The government also has a confidential reserve price,which prevents NZUs from being sold at auction at a price significantly below the secondary IEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 38 market price.
270、If the auction clearing price is less than the confidential reserve price,no NZUs are sold at the auction.Unsold NZUs are rolled forward to be sold at the next auction if it is in the same calendar year(New Zealand,Ministry for the Environment,2022e).NZ ETS participants can“bank”NZUs,or hold them in
271、 an account for future use.This feature was established to mitigate against price volatility and help participating entities manage their future obligations.As a result,a sizeable volume of banked units is now present in private accounts.The Climate Change Commission estimated the surplus(the number
272、 of stockpiled units not needed for future obligations)to be around 49 million NZUs and recommended reducing auction volumes to draw down surplus units in line with emissions budgets(New Zealand,Ministry for the Environment,2022f).The NZ ETS earned NZD 2.38 billion in unit auction revenues in 2021,w
273、hich have historically been directed to the general budget.Based on the first Emissions Reduction Plan,from 2022,revenues will be earmarked for emissions reduction measures,including through the Climate Emergency Response Fund(see below)(ICAP,2022).The NDC requires more reductions than the domestic
274、2021-2030 emissions budgets are expected to achieve.New Zealand,therefore,expects to access offshore mitigation using international co-operation under Article 6 of the Paris Agreement as an additional contribution to meeting its NDC.New Zealand may use the NZ ETS to access international carbon marke
275、ts in the future.While the NZ ETS was open to Kyoto markets in the past,it has been closed to these since 2015 and is currently a domestic-only scheme.Legislative reforms to the NZ ETS,passed in 2020,included provision for possible future use of offshore emission units,subject to quantitative and qu
276、alitative limits.Climate Emergency Response Fund While emissions pricing plays a central role in reducing emissions,New Zealand also has complementary measures to support low-cost emissions reduction opportunities.In addition to targeted and sector-specific policies outlined in the ERP,the Climate E
277、mergency Response Fund(CERF)was established in 2021 at a size proportional to forecasted cash proceeds from the auctioning of units under the New Zealand ETS over a four-year period.This multi-year fund is intended to support climate-related spending under each budget and can also be drawn from outs
278、ide the budget cycle.Budget 2022 was the inaugural year for the CERF,with an expected NZD 4.5 billion allocation,which was revised upward by NZD 800 million in the Budget Economic and Fiscal Update(New Zealand Government,2022a).Spending in Budget 2022 focused on mitigation policies,in particular tho
279、se contained within New Zealands first ERP.This included policies within the energy sector,such as the GIDI Fund,and measures to transition the electricity system.In the future,there is flexibility for the CERFs eligibility criteria to be amended to reflect the governments approach to New Zealands c
280、limate response.To this end,in May 2022,the government announced expanded funding of around NZD 650 million over four years for the GIDI,coming from the CERF.Beyond the CERF,a number of other funding mechanisms are available for climate mitigation measures,including the National Land Transport Fund
281、and institutions like New Zealand Green Investment Finance(New Zealand Treasury,2022).IEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 39 ENERGY SYSTEM TRANSFORMATION Climate Change Commission The Climate Change Commission was established under the Climate Change Response(Zero Carbon)Amendment Act 2019 to
282、provide independent,evidence-based advice on the governments actions to address climate change.To undertake its work,the commission held extensive consultations with the public,meeting with over 4 000 stakeholders and receiving over 15 000 submissions(Climate Change Commission,2021).The Climate Chan
283、ge Commission found that New Zealand is not on track to meet its GHG reduction targets,noting that past policy has focused on forestry measures to generate offsets through carbon removals,resulting in growth in gross GHG emissions since 1990 of 26%.In May 2021,the Commission provided its advice to t
284、he government,which covered:1.the levels of the first three emissions budgets,which step down the total amount of GHG emissions allowed in New Zealand over five-year periods to 2035,charting a course toward meeting the 2050 emissions reduction targets 2.direction on the policies and strategies neede
285、d in the governments ERP,which will detail actions for meeting the first emissions budget 3.advice on the NDC and eventual reduction in biogenic methane,as requested by the Minister of Climate Change.Based on extensive modelling and sensitivity analysis,in addition to issuing proposals for emissions
286、 budgets,the Commission also issued a set of recommendations that includes developing a long-term Energy Strategy,scaling up energy efficiency investments,a massive expansion of the electricity system to underpin decarbonisation in other sectors,large-scale EV roll-out,a phase-out of coal in electri
287、city generation,planning for a phase-out of natural gas in buildings,and adapting regulatory frameworks to technology advances,among many others.While it is the Commissions role to provide advice on climate action,it is the governments responsibility to determine the specific policies and set the fi
288、rst three emissions budgets to 2035.Emissions budgets An emissions budget is the quantity of emissions allowed during a particular period.From 2022 onwards,there must be three emissions budgets in place at any time,providing a pathway to the 2050 target.New Zealands emissions budgets cover five-year
289、 periods and are set 10-15 years in advance,after considering the recommendations of the Climate Change Commission.In May 2022,the government published the first three emissions budgets.The total of the emissions budgets for the first three budget periods is 20 Mt CO2-eq(2.3%)lower than the Climate
290、Change Commissions proposed budgets.Table 3.1 New Zealands emissions budgets Budget period 2022-2025 2026-2030 2031-2035 All gases,net 290 Mt CO2-eq 305 Mt CO2-eq 240 Mt CO2-eq Annual average 72.5 Mt CO2-eq 61 Mt CO2-eq 48 Mt CO2-eq Note:Mt CO2-eq=million tonnes of carbon dioxide equivalent.IEA.CC B
291、Y 4.0.3.ENERGY AND CLIMATE CHANGE 40 Emissions reduction plan Each emissions budget will be supported by an emissions reduction plan that contains policies and strategies for meeting the emissions budget.The Climate Change Response Act 2019 requires that the ERP include sector-specific policies to r
292、educe emissions and increase removals,multi-sector strategies to meet emissions budgets,and a strategy to mitigate the negative impacts of emissions reduction measures on local populations.New Zealands Emissions Reduction Plan from May 2022 sets out the pathway for how New Zealand will meet its firs
293、t emissions budget(2022-2035)and achieve long-term climate targets.Actions outlined in the plan include:increasing EV access,supporting business to improve energy efficiency,banning new coal boilers and phasing out existing ones,introducing emissions pricing in agriculture,accelerating agricultural
294、emissions reduction technologies,reducing waste,establishing native forests to develop long-term carbon sinks,accelerating the supply of woody biomass,and driving mission-led innovation in hard-to-abate sectors(New Zealand,Ministry for the Environment,2022g).To oversee the implementation of the ERP,
295、the government set up a dedicated governance structure.The Climate Change Commission and central government agencies are responsible for monitoring and regularly reporting on progress toward the sub-sector targets and emissions budgets,as well as the success and implementation of the ERP.The governm
296、ent established the Climate Change Chief Executive Board to support the implementation and co-ordination of the ERP.The board will provide strategic advice on how New Zealand is progressing and where adjustments on the approach are needed.The Climate Response Ministerial Group was established in 202
297、0.Chaired by the Prime Minister,this group of ministers meets regularly to advance the climate change work programme,including the emissions budgets and sector sub-targets.A new ERP will be published before the start of each emissions budget period.The next one is scheduled to be issued by 31 Decemb
298、er 2024.Sectoral emissions reductions Within the energy sector,New Zealands emissions vary across sectors.While buildings and electricity have relatively lower shares of emissions,the bulk of the countrys emissions come from the transport and industry sectors.Under the ERP,a critical component of Ne
299、w Zealands decarbonisation strategy is to increase the role of renewables-based electricity in other sectors.This will require not only an expansion of renewables generation capacity to meet load growth but also policy support to incentivise the switch to electricity across sectors.Electricity Given
300、 the high proportion of renewables in New Zealands electricity mix,electrification represents an overarching strategy for New Zealand to increase the penetration of renewables and reduce GHG emissions across all sectors of the economy.In 2021,85%of the countrys electricity generation came from renew
301、able energy sources:55%from hydro and 23%from geothermal.A renewable electricity target was defined in the New Zealand Energy Strategy 2011-2021 at 90%renewable electricity by 2025.Subsequently,the government has set an aspirational goal of 100%renewable electricity by 2030.IEA.CC BY 4.0.3.ENERGY AN
302、D CLIMATE CHANGE 41 ENERGY SYSTEM TRANSFORMATION More recently,the Emissions Reduction Plan defined targets to build on the governments aspirational goal of 100%renewable electricity by 2030.These targets include setting a target of 50%of TFEC from renewables by 2035,monitoring progress toward the a
303、spirational target of 100%renewable electricity by 2030 and reviewing this target in 2024 before developing the second emissions plan(see Chapter 5).Transport New Zealand has a number of measures in place to promote the uptake of EVs,including an exemption from road user charges(RUC)for EVs until 20
304、25.In May 2016,the government announced a package of measures to increase the uptake of EVs,which included:a goal of reaching 64 000 EVs by 2021;extending the RUC exemption on light EVs until they account for 2%of the fleet;a RUC for heavy EVs until they make up 2%of the fleet;investigate the bulk p
305、urchase of EVs across government and the private sector;and NZD 1 million annually for EV information campaigns over five years.More recently,the ERP set a target to increase zero-emissions vehicles to 30%of the light-duty fleet by 2035.The Ministry of Transport is leading the development of a long-
306、term National EV Charging Strategy.A draft of this strategy is due to be released for public consultation in February 2023,with the final strategy to be published by 30 June 2023.To encourage the purchase of lower emissions light vehicles,in 2022,the government legislated a Clean Car Standard that s
307、ets ambitious targets and financial penalties on vehicle distributors to reduce average emissions to 63 grammes of CO2 per kilometre for passenger cars and 87 grammes for commercial vehicles entering New Zealand by 2027,which is approximately a two-thirds reduction on emissions levels recorded in 20
308、21.This is supported by a Vehicle Emissions and Energy Economy Label scheme and a Clean Car Discount(that offers rebates to zero-and low-emissions vehicles and places a higher fee on high-emissions vehicles).The ERP also includes targets to reduce emissions from freight transport by 35%and to reduce
309、 the emissions intensity of transport fuels by 10%by 2035.The government also plans to promote alternative modes of transportation,such as public transit,walking and bicycling in urban areas through urban development plans and incentives for consumers.The ERP sets a target to reduce kilometres trave
310、lled by the light-duty fleet by 20%by 2035 through urban modal shifts(see Chapter 4).New Zealand has endorsed the global transition to zero-emission vehicles by signing a non-binding global declaration at COP26 in 2021.This strives for all new light vehicle sales to be zero emissions by 2035-2040 an
311、d for heavy vehicles by 2040.Industry The New Zealand Energy Efficiency and Conservation Strategy 2017-2022 included a target to decrease industrial emissions intensity(kg CO2-eq/NZD real GDP)by at least 1%per annum on average between 2017 and 2022.The 1%rate is relatively low compared to the approx
312、imately 2%gains seen in economy-wide energy efficiency globally over the 2010-2020 decade and well below the 4%required under the IEAs net zero emissions scenario(IEA,2022b).In July 2020,the government announced an NZD 70 million investment to decarbonise industrial and process heat,including suppor
313、t for energy efficiency,fuel switching and transmission line upgrades(where electrification is the appropriate solution).This GIDI IEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 42 Fund is administered by the EECA and aims to accelerate the decarbonisation of industrial process heat by assisting private
314、sector businesses with the upfront capital costs of switching from fossil fuels to renewables.Through Budget 2022,the EECA received a significant increase to expand the GIDI Fund.Approximately NZD 1 billion over seven years is currently undergoing programme design.The EECA also provides co-investmen
315、t,advice and technical assistance to businesses to encourage the adoption of energy-saving technologies and process improvements,and the prioritisation of energy management and lower emissions.In addition,the EECA administers a fund for technology demonstration projects in New Zealand,contributing t
316、o the cost of demonstrating proven technology or an innovative process improvement opportunity that has yet to be widely adopted in New Zealand(see Chapter 4).Methane emissions Compared to other countries,New Zealand has a relatively high contribution of methane emissions to its total GHG emissions,
317、at 43.5%.However,unlike many other countries with sizeable methane emissions,the bulk of New Zealands methane emissions come from the agriculture rather than the energy sector.In an effort to tackle methane emissions from agriculture,as noted above,the Climate Change Response(Zero Carbon)Amendment A
318、ct 2019 established a target for reducing biogenic methane by 10%from 2017 levels by 2030 and by 24-47%from 2017 levels by 2050.The countrys latest GHG inventory found that from 2017 to 2020,both total gross methane emissions(not including LULUCF)and biogenic methane emissions were roughly the same.
319、Nearly all methane emissions are biogenic methane(98%).Out of total biogenic methane emissions of 33.5 Mt CO2-eq in 2020,91%came from the agriculture sector and 9%from waste.Furthermore,at the COP26 summit in Glasgow,New Zealand joined over 100 countries in signing the Global Methane Pledge,which co
320、mmits countries to voluntarily reduce methane emissions by at least 30%from 2020 levels by 2030(New Zealand Government,2021).The government plans to meet its commitment both through the biogenic methane targets established in the Zero Carbon Act as well as by reducing methane emissions from fossil f
321、uel production and transport.The governments Methane Emissions Reduction Action Plan includes a planned price on agricultural emissions from 1 January 2025,a new Centre for Climate Action on Agricultural Emissions to support the development of mitigation technology and efforts to promote waste manag
322、ement(New Zealand,Ministry of Foreign Affairs and Trade,2022).The ERP from May 2022 also called for establishing an emissions pricing system to be put in place for the agriculture sector by 1 January 2025(New Zealand,Ministry for the Environment,2022g).In October 2022,the government released for pub
323、lic consultation its proposal for an emissions pricing system in the sector,taking into account input from the Climate Change Commission and agricultural groups(New Zealand Government,2022b).Hydrogen The government released its Hydrogen Vision in 2019.The vision described the potential role of hydro
324、gen in the New Zealand economy.IEA.CC BY 4.0.3.ENERGY AND CLIMATE CHANGE 43 ENERGY SYSTEM TRANSFORMATION It was followed by modelling work released in 2022 that outlined a potential business-as-usual development path for hydrogen in New Zealand.This modelling work is intended as a precursor or base
325、case for the hydrogen road map that is currently being developed and due to be finalised by the end of 2024(MBIE,2022).A key issue to be resolved is how this hydrogen road map development will be integrated into work on a wider Energy Strategy and the transition of the electricity market,given the m
326、aterial effects large-scale electrolyser demand would have on the generation and transmission system if New Zealand adopts a large-scale hydrogen development pathway.A component of the hydrogen road map is ensuring regulations are fit-for-purpose.The consultancy firm PWC was engaged to undertake a r
327、eview of New Zealands regulations and standards as they affect hydrogen.This work aimed to prioritise a subsequent legislative programme to support hydrogen use in New Zealand.The PWC paper is still being finalised.The government has no specific hydrogen-supporting funds.However,several pilot hydrog
328、en projects have received government funding as part of funds focused on economic development,Covid recovery or decarbonisation.Several private sector initiatives are underway concerning hydrogen,and some have received government funding.Climate adaptation and resilience In August 2020,the governmen
329、t published New Zealands first National Climate Change Risk Assessment.The assessment painted a national picture of the risks New Zealand faces from climate change and helped identify where the government needs to prioritise action.It identified the most significant risks and opportunities from clim
330、ate change and highlighted gaps in the information and data needed to properly assess and manage them.The risk assessment identified 43 priority risks across five value domains(natural environment,human,economy,built environment and governance)and highlighted the 10 risks considered to be the most s
331、ignificant.The most significant risks in the built environment are the risk to potable water supplies due to changes in rainfall,temperature,drought,extreme weather events and ongoing sea-level rise,and the risk to buildings due to extreme weather events,drought,increased fire weather and ongoing se
332、a-level rise.Another of the 43 risks identified in the National Climate Change Risk Assessment is the risk to electricity infrastructure due to changes in temperature,rainfall,snow,extreme weather events,wind and increased fire weather.For this risk,the assessment notes that New Zealands heavy relia
333、nce on renewable electricity sources(particularly hydroelectricity and wind)exposes the country to climate variability.Climate change could also affect electricity demand due to higher cooling demand in summer and lower heating demand in winter.Transmission and distribution infrastructure is at increasing risk of disruption and damage from climate hazards,which could undermine energy security if i
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