My attention was caught by a press release this week from the NZ Wind Energy Association (NZWEA) announcing the results of an Infometrics report they had commissioned on the likely economic effect for New Zealand of an increase in wind power by 2030 to the point that it supplied 20 per cent of the country’s electricity. The NZWEA considers this a realistic target. The report came up with some interesting figures. Compared with the more modest expectations of the Ministry of Economic Development that wind might supply 8 per cent of the electricity in 2030 there was clear economic benefit for the country in the 20 per cent figure.
The comparison was made under four different scenarios:
- Carbon is priced at $50 per tonne (the figure planned under the current Emissions Trading Scheme). The benefit emerges as $60 per person per year.
- Carbon is traded at $100 per tonne. The benefit increases to $90 per person.
- Carbon is at $50 per tonne but the natural gas price increases to $17/GJ (currently over $9/GJ). The benefit rises to $390 per person annually.
- 800,000 electric vehicles are added to the transport mix with carbon remaining at $50 per tonne. The benefit is $170 per person per year.
To provide a perspective for these projected benefits the report points to the current average electricity cost per person of about $400 per year.
Weak though our Emissions Trading scheme is it’s apparently good for this much:
The introduction of New Zealand’s Emissions Trading Scheme (ETS) has tipped the cost structure of electricity generation against thermal generation. While gas is placed in a more favourable position than coal, the main effect of the carbon price is to enhance the competitive position of renewables-based generation, particularly those types that were already competitive at the margin, such as geothermal and wind.
The report explains in broad outline the modelling methods used to obtain the results and delineates the scenarios in much more detail than the summary statements above. It’s an accessible read for the non-economist.
The shift to renewables cannot be subordinated to economic considerations: it is imperative that we stop burning fossil fuels. But the economic objections are in any case clearly overstated, springing as they do from the alarm of vested interests. This report is yet another demonstration that the change which must be made for environmental reasons is far from spelling economic ruin. It is also another exposure of the foolishness of the government’s policy of “balancing” environmental and economic interests, as if environmental responsibility is some kind of threat to economic welfare and needs to be held in check. If the low price assigned to carbon emissions by the current ETS in New Zealand is enough to make wind power competitive with fossil fuel power there is clearly no threat to the economy from the abandonment of coal and gas-powered electricity in future.
The price currently put on carbon does not, of course, come anywhere near representing the real costs greenhouse gas emissions lay on human societies in the present and the future. The price would by now have been considerably higher if we were honest, and the transfer to renewables would be in full swing. The NZWEA would be so busy coping with the expansion of the industry that there’d be no need to seek reports on its benefits to the economy. Or any reports that were done would be in comparison with other forms of renewable energy, not with an energy mix that includes “cheap” natural gas or coal. And the government would have firmly turned its back on the further exploitation of fossil fuel resources, recognising the wealth they appear to offer as a betrayal of humanity.
There would be nothing wrong with a policy of balancing environmental and economic interests, if it were actually done. All to often when this is used as a defence of economic interests in an artificial adversarial contest with our environment, it is a petulant call to subordinate all else to the immediate short-term goal of this financial year.
Any corporation buckling to such anti investment short-term interests from shareholders would just spiral into decline.
The big surprise on onshore wind is, given how good it is, how little we have built so far.
Lots of fun over here with Prince Phillip and his Daily Mail / Telegraph opinions on wind power. I would defer to him on several things including commanding a destroyer and shooting tigers. But the little papers trumpeting of an elderly buffoons ‘bloke down the pub says’ knowledge of wind power and grid management just demonstrates their own ignorance and enthusiasm to pander to NIMBYs.
Rant over, I feel a little better now.
The 20% is certainly a more reasonable target. While congress in the US has been arguing over what to do the energy industry has invested in renewable more this year than in the area of new coal and gas plants. This reminds me of the 1980’s when the federal govt laughed at the idea of energy conservation, but the industry did it anyway because it was a money saver for them. BLOOMBERG NEWS
Also, as a long member of the NZ Wind Assoc and going to their conferences it is obvious how lucrative the long term investment into NZ wind power is for serious financial analysts: A significant interest in NZ wind power investment comes from US pension funds! Now if it is a good investment for them, then it should surely be a great investment for our own super fund. In fact, instead of gambling away our pensions at the international stock market or buying Shell’s superfluous petrol retail chain… Z….. we should invest into our own energy future.
BTW: It is my thinking that Shell and other petrol companies want out of NZ because in the long term NZ with its three destroyer Navy won’t command much convincing to tankers following bigger navy’s ‘suggestions’ to offload at THEIR refineries… and who needs a petrol retail chain if their ain’t much product coming…. 🙁
And the report has caused much harrumphing from Bryan Leyland: the latest NZCSC press release includes this wonderful nonsense:
The power of wishful thinking is strong in that one, Luke…
What a pity we can’t hook B Leyland up to a turbine and let him blow.
Yep – I just checked outside and it was 1956!…
The Adam Smith Institute wanted to write an objective paper on the economicsofwind power production, and they were so keen to get it right they went all the way round to the other side of the world to get a pompous old climate change denier called Bryan Leyland to write it!
http://www.adamsmith.org/blog/energy-environment/renewable-energy-vision-or-mirage
Even by the standards of these swivel eyed anti wind farm concoctions, this is pretty poor stuff. But never mind, it was just what the little papers wanted to print so job done.
I’m confident, given the antics of his latter day ‘adherents’, that Smith is now spinning so fast in his grave we should be using him as a turbine! Now, there’s a clean, renewable power source…
Well, through infectious nonsense the condition of terminal irrelevance spreads. Bryan Leyland’s has outed himself for a long time now as deadweight bump in the road towards a world in which our grand children have a decent chance of survival. The Adam Smith institute, a hotbed of queer minds acting out ritualistic floggings of our prospects to achieve sustainability (read: survive as a species) are of cause most happy to give Leyland a platform. Well all these dead weight obstructionists laying in the middle of the road to our survival will hopefully see the headlights of the train of change coming their way or they become a nameless roadkill the way of the possum……..