The magazine for alumni and friends of Massey University.
Issue 14, April 2002

Feel the energy
Finding alternatives to our fossil fuel addiction

The days of cheap and abundant energy are over. New Zealand’s industries, and New Zealanders’ lifestyles, are highly dependent on energy. Demand for it is increasing by around 2 percent each year, but the security of future energy supplies is becoming a key issue. In America and Europe, with the war in Iraq and terrorist retaliations a possibility, energy security has been a topic of debate for many months. New Zealand has been relatively isolated from such concerns, but recently it has become headline news here too.

In recent decades New Zealand has been blessed with secure, relatively cheap and abundant sources of energy from hydro power plants, large natural gas fields, geothermal heat and domestic firewood, with crude oil imported to produce petrol and diesel at the Marsden Point oil refinery. There have been a few moments of concern, such as the oil shocks, fuel rationing and carless days of the late 1970s; the dry hydro years of 1991 and 2001; and the embarrassing failure of the cables taking power into central Auckland in 1999. But in general, when we flick a switch the lights always come on, and when the car runs low on petrol there is always the next service station.

Recently, however, several issues have pointed to our energy supplies being less reliable in the future. The hydro storage levels are once again low for this time of year (about 80 percent of normal at the time of writing) and the in-flows are well below average following the current dry spell of weather. In the competitive electricity market this has pushed up the average wholesale electricity price to over 5c/kWh, whereas it was closer to 3c/kWh this time last year. Whether or not it will remain high, and for how long, is anyone’s guess, but since the hydro system has relatively small reserves of water stored behind the dams compared with other countries, and since climate change could make precipitation events even less predictable and dry years more frequent, there is an increased risk of power supply constraints.

In the past the thermal power stations (mainly gas-fired) have largely saved the day when the lake levels were low. They have been run night and day and some of the power generated has been sent from the North Island, where the gas plants are located, to the South Island, where much of the hydro plant is, in order to conserve the water reserves. Normally it is the other way around. Now, however, the concern of several energy industry observers has finally been confirmed: the Maui gas field’s life is nearly over. The contractual agreements to use the gas are very complex, and several new but much smaller gas fields, such as Pohukura, are almost ready for commercial development to partly take Maui’s place. But until the various owners announce their intentions and agree to sign up on gas supply contracts, plans for several new, efficient, combined-cycle gas-fired power plants have been put on hold. These factors imply that the gas supply may become constrained in at least the short term. Regardless, the retail price of gas, and hence of electricity, will soon increase. To meet the declining gas reserves the high gas-consuming petrochemical plants such as Methanex will be the first to close, whereas reticulated natural gas to houses and factories will probably continue for at least 10 or 20 years. So if electricity consumers fail to heed the advice given in the National Energy Efficiency and Conservation Strategy to save both energy and dollars (see www.eeca.govt.nz for details), demand will continue to rise and there will be a shortage of installed power station capacity to meet it. The National Party apparently sees nuclear power as a possible solution, but given the track record of this industry elsewhere in the world, and with no new plants having been built for decades, this remains an unlikely prospect here.

There are good known reserves of coal in New Zealand but the problem in using more of it to meet the growing energy demand is not only that it is more expensive than gas in many regions, but that it produces more than double the carbon dioxide than natural gas to provide the same amount of heat or power. Since the Government has now signed the Kyoto Protocol, thereby agreeing to reduce our greenhouse gas emissions back to 1990 levels (a major challenge in itself), it is better from the long-term perspective to leave the coal locked up underground.

So is there a practical solution? Perhaps the only option in the short term is to increase the implementation of more renewable energy-producing projects such as wind farms, geothermal, small hydro, and bioenergy, mainly from forest residues. These can be in the form of ‘distributed energy’, and new small technologies are rapidly being commercially developed, ranging from solar water heaters (which every homeowner should consider installing – see NZ Consumer, Jan/Feb 2001) to hydrogen-powered fuel cells. The long-term future will be in the hydrogen from renewable sources such as solar-powered electrolysis of water, and forest biomass sources (see www.smallisprofitable.com). Meanwhile we will need all the help we can get from using existing small-scale technologies such as solar panels, small wind turbines and heat pumps, which do not require natural gas or coal.

Transport fuels are even more at risk. As we look to the events in the Middle East (which largely result from the US needing secure oil supplies to continue in their “business-as-usual” fashion) and note the increasing price of oil, it is increasingly evident how precariously dependent on fossil fuels we are. But in New Zealand we have other options, which were well researched in the 1970s when the crude oil price leapt upwards. We could, if we were so-minded, be running our cars, trucks and tractors on the fat of the land as every year New Zealand exports more than 100 million litres of tallow, the waste fat from New Zealand’s meatworks. The tallow is destined for soap and candles, but it could equally well be turned into biodiesel, which burns cleaner than the current New Zealand diesel fuel, the atmospheric emissions from which are said to result in 200 to 300 deaths each year. This would provide around 8 to 10 percent of the annual diesel demand, the remainder coming from growing vegetable oil crops such as oilseed rape, if need be. Bioethanol to blend in with petrol could also be produced from whey, a by-product from the dairy industry, and from sugar crops to meet any higher demand. Growing crops for energy is costly – but technically it is well understood.

New Zealand has ample renewable energy resources available to supply all its energy needs, and more besides. We are using only a small portion of them now because oil, coal and gas are cheaper options. In future these will increase in price due to dwindling reserves of gas, oil supply constraints from OPEC countries and a global cost being placed on emitting carbon dioxide. Regardless of whether the world goes into battle against terrorism (with the US leading the charge) or against the greater threat of climate change (with the US dragging along behind), we all need to use energy more wisely and to displace fossil fuels with green energy alternatives wherever possible. New Zealand is well placed to once again show America how to win and lead the way by being small and innovative rather than wealthy and powerful.