Balance needed in energy policies
By Richard Harman (author)
While Government MPs yesterday were defending the offshore petroleum exploration ban during a debate in Parliament, one of the world’s top energy experts was at a conference in the capital warning of the need to maintain balance in energy policies.
Dr Christopher Frei is the Secretary-General of the British-based World Energy Council and has been in Wellington for the Asia Pacific Energy Leaders’ Summit.
The BusinessNZ Energy Council is hosting the summit which involves over 200 delegates with the World Energy Council.
Frei told POLITIK that the world energy industry currently accounted for 50% of global investment capital and he argues that moving an industry that large from a petrochemical base to electricity is a massive task.
Frei calls electricity “the new oil”.and he says the world consumes about 100 mega (million) barrels of oil a day.
But if that were to be replaced entirely by electricity that would be two to three times the full global electricity system that we have in place today.
“So even if you double electricity volume-wise, we are not even talking about growth, there still remains a lot to be done on the liquid side.
Because of the size of this challenge Frei and the World Energy Council have developed what they call a “trilemma” which has been designed as a tool to help Governments develop energy policy.
It is based on three core dimensions – energy security, energy equity, and environmental sustainability.
These three goals constitute a ‘trilemma’, entailing complex interwoven links between public and private actors, governments and regulators, economic and social factors, national resources, environmental concerns, and individual behaviours.
In the New Zealand context it is possible to model the offshore exploration ban as being a positive for environmental sustainability but a potential negative for energy security and energy equity or affordability.
But overall, New Zealand, gets a high rating from the Council for its energy policies.
The World Energy Council's 2017 Energy Trilemma Index ranks countries on how well they achieve the energy 'trilemma' balance of security, equity and sustainability.
With an overall balanced rating of AAB, New Zealand remains 9th out of 125 comparable countries and is still the best-performing country in the Asia-Pacific region, and the only non-European country in the top ten.
Frei believes that the key to a successful, balanced energy policy is clarity.
“Be careful,” is his advice to New Zealand.
“From international observations what we generally see is fewer signals, clear signals, are more powerful than a cacophony.
“The more that cacophony includes more micro-market interventions, the more you may have unintended side-effects.
“You need to focus on the big signals and be 100 per cent clear what those are and really make sure that they stick.”
The world energy debate is a complex and difficult one; for example, nuclear energy is an issue that has to be dealt with.
“You have a technology that has massive promise on climate change but has doubts and risk on another side.
“So how do you deal with that?”
He believes that some countries will agree to go nuclear for their energy supplies.
“There will be countries that decide that nuclear energy has to be a part of their energy supply.
"For us, that is a democratic decision to be made by that specific country.
“We are not going to get involved.
“What we are saying is that we need every country to find the solutions that best help the country to support the three goals of the trilemma and with that support competitiveness and an industrial strategy.
"So that is the way we try to elevate the discussion; it takes away the very short-term issues like pricing or immediate pollution --- let's go ten years forward and ask where we want to be. What is the aspiration?”
Frei concedes that all this is likely to go over the heads of ordinary people.
“We are very bad at doing that; at talking to the man or woman ion the street.
“The first ambition must be that we create a common direction.
“As long as there is fragmentation and fights within countries that is not a good situation.”
And with that, he makes a veiled swipe at Australia.
“There is a country not so far from here that is probably one of the best examples of that fragmentation, and it is really unhelpful.
“the first thing you need to do to get out that is not talk about individual technologies.
“What elevates this is things like the big signals and even then also to industrial or competitiveness strategy.
“We have to elevate the discussion to security, equity and the environment.”
That is is his key message; that just as a series of economic indicators can measure the strength of the economy, it is now time to apply a similar sort of template to energy policy.
And that template will focus policymakers' minds on the need for balance.