New fossil fuel plants banned for 10 years

New coal and gas-fuelled power stations have effectively been banned for 10 years, leaving plans for a $500 million project near Auckland destined for the scrapheap.
View video

State-owned Genesis Energy's gas turbine plant at Rodney, which has been on the drawing board for two years, appears to be the main casualty of the Government's new long-term energy strategy.

Energy Minister David Parker said there was no need for new generation from coal, gas or diesel for at least 10 years - except as emergency backup.

"The Government expects all generators ... to take its views into account when considering new generation investments," he said.

State-owned enterprises would be advised they were expected to follow this guideline.

The Government announcement appears to have taken Genesis by surprise as this week it had briefed analysts on progress at the Rodney plant.

The plant would have generated 360 megawatts of power, enough for 360,000 households.

Regulations to extend the 10-year limit to private companies, such as Contact Energy, are being considered.

Finance Minister Michael Cullen said it was hard to see how the Rodney project could proceed.

"We do not need that amount of additional thermal capacity given what we are told is available in terms of wind, geothermal and hydro."

He ruled out compensation.

Genesis chief executive Murray Jackson said he welcomed the "greater certainty for the electricity sector", and was committed to greater energy efficiency.

The Government has set a target for 90 per cent of electricity from renewable sources by 2025, from less than 70 per cent now.

The energy strategy was otherwise little changed from a December draft. A national policy statement on renewable energy would be developed in 2008 that would make it easier to build wind farms.

The plan also confirmed curbs on gas-guzzling cars and moves to make homes warmer and drier.

Rules would ensure new and used imported cars were 25 per cent more fuel efficient by 2015 than those imported now.

The scheme would mean a big increase in the number of diesel vehicles and save motorists 4.8 billion litres of fuel by 2025.

There would also be better cycling and walking facilities, and more emphasis on public transport and ways to reduce car journeys, including a targeted 10 per cent cut in the number of single occupant journeys.

The Government spokeswoman on energy efficiency, Green MP Jeanette Fitzsimons, said the highlight was a plan to upgrade insulation and energy efficiency in 180,000 homes.

Moves to make appliances more efficient, costing $3 million, had already saved households $60 million on power bills.

Energy efficiency would deliver savings equivalent to the electricity used by 30 cities the size of Nelson.

National's energy spokesman Gerry Brownlee said there was a huge gap between the strategy's rhetoric and the Government's record.

"Under Labour, the amount of renewable energy ... has reached an all-time low of 6 per cent, while the amount of electricity generated from coal has climbed from 4 per cent to 12 per cent.'

Business New Zealand was also sceptical, saying the scheme would add costs to the economy with no extra benefit to the environment.

- © Fairfax NZ News