We have a lot of work to do to achieve carbon neutrality in just over three decades. Attention needs to focus on the likes of cars, trees, batteries and farms, writes energy analyst Briony Bennett.
New Zealand must map out a path to carbon neutrality by 2050. Small-emitting nations are responsible for up to 30% of total global greenhouse gas emissions. What we do here matters greatly and our challenges are harbingers for the rest of the world.
We already have a 85% renewable power mix, but we must figure out how to close this gap. Transport is responsible for most of New Zealand’s carbon dioxide emissions and 20% of total emissions, as is the case globally. Agricultural emissions make up more than half of our emissions profile. Dairy, meat, crops and horticultural products are exported, so international dietary preferences must figure in our national debate on climate change. We must also determine how many trees to plant each year.
Before Christmas, the new climate change minister and Green Party co-leader James Shaw announced the government’s intention to pass a Zero Carbon Act, whereby the New Zealand economy would achieve carbon neutrality by 2050. Industry, think-tanks and public sector officials have produced huge volumes of data and analyses since then. In the last few weeks, the members of the Interim Climate Change Commission were announced and the Productivity Commission published a 500-page draft report on the transition to a low-emissions economy.
We all want to know what it will take to reach net zero.
Around 85% of New Zealand’s annual electricity supply is generated from renewable sources. Gas or coal-fired generation is used to meet winter demand peaks and back up supply in low rainfall years. Hydroelectricity constitutes more than half of the national power mix. In a high hydrology scenario, with good seasonal rainfall and snow melt, hydro-power can meet up to 65% of our annual power needs, but dry years present a great challenge and a barrier to reaching 100% renewables.
Norway is often held up as an example, given its comparable population size and reliance on hydro-power. However, the tiny Nordic nation has almost six times the amount of lake storage available in New Zealand. That’s just geography and topography. We can’t build another lake. Or we could, but the major legacy hydro-power schemes in New Zealand already disturb our ecosystems and divert major waterways so as to generate power. Under current resource management laws, it is highly unlikely that a new large-scale hydro-power scheme would get built in New Zealand. We could feasibly expand lake storage in current schemes, but not double it, which is what would be required. Further, this would do little to address the main barrier to reaching a 100% renewable power supply, which is our dry-year risk.
At an emissions price of $75 or greater it will be economic to build enough wind farms to reach about 95% renewables in New Zealand, according to Concept Consulting. Wind farms will be important to ousting baseload gas and coal power plants over the next decade. This means that fossil fuels will never need be burnt to meet electricity demand when wind is available. Wind power only comprises around 6% of current supply, so resource consent and project permitting should be fast-tracked to encourage new build.
Today, a significant number of wind projects have actually been consented, over 2.5GW according to the NZ Wind Energy Association, but project developers are waiting for prices to rise before starting construction. However, wind power cannot ensure our power supply is 100% renewable in a dry year since it is not guaranteed to be available during winter peaks when demand is at its highest. Grid-scale or rooftop solar exacerbates the seasonal storage challenge as it only generates during periods of low demand and has a much higher output during the summer. We need power sources that are as flexible as coal and gas-fired power plants to meet seasonal demand.
Another important issue is that wind is highly correlated throughout New Zealand. To simplify, if it is a windy day in Auckland it is likely to be a windy day in Wellington. When south-westerlies or westerlies, or any given weather system, move across New Zealand we get high volumes of generation at all or most wind farms, but when the weather is mild then wind generation is generally low throughout the country. More geographically diverse locations can be selected for future wind farms to reduce the effect of this correlation. Nevertheless, New Zealand is an island nation lacking any electricity interconnectors to other countries, so we cannot import electricity from a neighbour as happens in the European Union or the United States when wind power cuts out. We are on our own.
Grid-scale battery storage projects have been making headlines around the world. Tesla installed a massive battery in South Australia after Elon Musk made a promise to do it in 100 days or for free on Twitter. Bloomberg New Energy Finance’s (BNEF) lithium-ion battery price index shows a fall from US$1,000 per kWh in 2010 to US$209 per kWh in 2017. This fantastic cost decline is a cause for celebration. It will bring more storage into our homes and bring more flexible services to our power grids. It has already brought us mass-market electric vehicles. Nevertheless, this technology cannot economically provide seasonal or dry-year power storage of the scale required at present. They just do not pack as much punch as hydro storage.
Let’s make some optimistic assumptions. Suppose, Tesla can manufacture a 10kW battery next year. The buffer that we might need in a dry year is 4000 GWh in New Zealand – this is the extra energy we can store in hydro lakes during wet years. We have around 1.5 million households. This suggests we need 400 million batteries, or over 250 Tesla Powerwalls per household. Even at a discounted price of just US$2000 this would require an investment of over US$500,000 per household or US$800 trillion in total. More than four times our current GDP. We could spend that money more wisely to reduce our greenhouse gas emissions.
Power sector emissions have declined 13% since 1990 and make up less than 10% of total emissions. In the same period, transport emissions rose 70% and constitute 20% to New Zealand’s emissions. Car ownership reached its highest level ever last year, at 774 light vehicles for every 1,000 New Zealanders. This is almost the highest vehicle ownership per person worldwide (Ministry of Transport).
This is the beast we must tackle. Electrification is the key pathway with existing technology to cut the majority of transport emissions. To charge electric passenger vehicles and e-buses, electrify trains, and reduce fossil fuel usage for heating, a reliable and affordable electricity supply is crucial. Rising power prices or an uncertain supply could frustrate decarbonisation in these emissions-intensive sectors and lead to worse overall outcomes (Concept Consulting). That’s why it is vital to not prematurely force a 100% renewables goal in the power sector.
Nevertheless, with more wind, batteries and additional geothermal power plants, it is technically feasible to reach the 100% renewables target when we have average or high rainfall. This would be achieved at great expense and put significant upwards pressure on power prices. Other flexible technologies, such as demand response or renewable power-to-gas, hold great potential to help New Zealand reach 100% renewables. Biomass or tidal power generation could emerge as affordable means to generate electricity in New Zealand in the next few decades. Solar and wind offer a comparatively low-cost pathway to reduce emissions in most countries that currently have a high share of coal and gas-fired generation, but how we plug the gap between 95% and 100% in New Zealand isn’t obvious yet.
The New Zealand Emissions Trading Scheme (ETS) is our main tool for encouraging decarbonisation. The scheme requires emitters to pay for each tonne of carbon dioxide or other greenhouse gas produced – this is called an emissions unit. Farmers are currently exempt from participating in the ETS, which covers energy, waste and industry. To achieve net zero this will have to change since agriculture contributes over half of our emissions. To ensure a gradual transition for farmers, they should receive free emissions units upfront and have trading at the full emissions price phased in over time.
Carbon dioxide is not the culprit in the agricultural sector. In New Zealand, the main agricultural greenhouse gases are nitrous oxide and methane.
Nitrous oxide is a potent, long-lived greenhouse gas with over 200 times the global warming potential of carbon dioxide. Produced from livestock urine and dung, NO2 emissions rose 48.5% between 1990 and 2015, and make up 10% of our total emissions.
Methane is a short-lived gas in the atmosphere. In other countries it is mainly generated as a byproduct of oil and gas exploration. These are called ‘fugitive’ emissions. In New Zealand, methane is biological in origin stemming from cattle and sheep. It has a very powerful heating effect in the short-term and can serve to accelerate or delay peak temperature or tipping points in the climate system.
Changing land-use from dairy, sheep and cattle farming to new forests or low-emissions crops and horticulture (growing fruit, vegetables and flowers) is key to achieving carbon neutrality in New Zealand by 2050. This implies that fewer sheep and cattle will be farmed in the future. Reducing, though perhaps not eliminating, dairy and meat exports raises important questions about food production. The carbon footprint associated with a diet rich in animal protein is an issue that is likely to loom larger in public debate.
Planting forests, also known as afforestation, currently offsets about 30% of New Zealand’s greenhouse gas emissions annually. At the moment, foresters can voluntarily participate in the ETS and profit from offsetting emissions. However, the registration fees and complexities of trading discourage small foresters from joining the scheme. Facilitating forest-owners participation in the ETS will provide new sources of income to agricultural regions, as farmers switch from pastoral farming and dairying to horticulture, crops or forestry.
All pathways to net zero, require forestry to play a major role. Afforestation is like a credit card, buying us time to develop alternative technologies to replace current agricultural and industrial processes. A methane vaccine for animals or other biological inhibitors that can be mixed with their feed are being researched, but these technologies remain unproven. Selective breeding, though it can take decades, will also continue reduce the amount of methane produced per animal.
Beyond 2050, when all economically viable land for new forests has been used, emissions offsets or reductions will have to come from elsewhere, so research and development funding is important. Government funding for research into emissions mitigation technologies is about NZ$20m per year, with roughly NZ$16m going to agricultural programmes. Given the contribution of agriculture to GDP (6% in 2015), and its proportion of total emissions, this is a small sum. More than NZ$1.5 billion is spent funding innovation in other areas. One option is to use revenues from the auctioning of emissions units to fund new mitigation technologies and research.
There are few affordable means to cut emissions from pastoral and dairy farming without reducing herd populations at present. Forestry, cropping and horticulture will offer alternatives. If all sectors are covered by the Emissions Trading Scheme, businesses that reduce their emissions will be rewarded and pay for fewer emissions units. It is the main tool we have to encourage the changes and innovation required in all sectors to dramatically cut our emissions and reach net zero by 2050 in New Zealand.
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