More energy please, but keep it clean

NZPA

As the 21st century moves toward the tail end of its first decade, the quest for energy has firmly cemented itself among the most urgent challenges facing the world.

Rich countries are trying to work out how to meet growing demand while producing less carbon dioxide, which many fear is contributing to a dangerous warming of the planet.

Making the goods that use energy more efficiently has so far failed to provide a solution, as greater efficiency often leads to greater demand for the goods, or a desire for larger or more complex models.

The spread of computers into offices, homes, schools, briefcases and pockets provides a classic example.

In this country a major study published this year by Statistics New Zealand (SNZ) found energy consumption per person had risen 13 per cent between 1997 and 2005.

The increase was primarily driven by increased use of vehicles, SNZ said.

At the same time in fast growing economies such as China and India huge numbers of people are staking claims to the lifestyle only intensive energy use makes possible.

Their demand for oil is hard to satiate, helping push US crude futures last month to within a whisker of $US100 ($NZ134) for the first time.

Coal use by India and China is also growing rapidly, not only adding greatly to the amount of carbon in the atmosphere but producing more immediate problems from dangerous brews of soot and toxic chemicals that cross borders and oceans.

In this country, latest figures show coal use to produce electricity is falling, largely being replaced by power from a new gas-fired turbine at Huntly.

But the Government has far greater ambitions to prove New Zealand's green credentials.

This month it tabled legislation aimed at pushing the country towards a target of generating 90 per cent of its electricity from renewable sources by 2025. That compares to 65 per cent in the quarter to September.

To achieve that a 10-year moratorium would be placed on the building of new baseload thermal electricity generation, except where needed to ensure the security of electricity supply.

A greenhouse gas emissions trading scheme would also be introduced covering all sectors and all gases.

The proposals have not been universally applauded, with debate about their wisdom and impact, and even a few sceptics querying the how much of a threat anthropogenic global warming is, or even whether it is happening at all.

It has been suggested the 10-year ban on new fossil fuel power stations could cause electricity prices to jump 30 to 40 per cent in a few years.

There are also fears it could lead to power shortages and restrict growth.

Certainly, coal seems to be an increasingly dirty word, at least if applied to use in this country.

In March, Mighty River Power (MRP) abandoned plans to recommission the controversial coal-fired Marsden B power station near Whangarei.

The decision was hailed as a victory by Greenpeace and the Green Party, but MRP chief executive Doug Heffernan said the decision was simply down to changes in the market, with gas supply looking good in the next decade.

Most of the plans for new electricity generation now are for either wind or geothermal, with a sprinkling of hydro proposals, but this year gas made a splash.

In March, MRP commissioned a new gas turbine generator at Southdown in Auckland, adding 45 megawatts (MW), the equivalent to the peak demand of up to 50,000 homes.

Then in the middle of the year, Genesis Energy started generating from the so-called e3p 385MW $520 million combined cycle gas turbine at Huntly, which has had such a role so far in reducing coal generation.

Work is also now well under way on MRP's $300m 90MW geothermal power station at Kawerau, due to be finished by the end of 2008.

The plant is expected to meet about a third of the residential and industrial demand in the eastern Bay of Plenty.

Meridian Energy has also started work on its $420m wind farm known as Project West Wind on windswept hills at Makara west of Wellington.

The two-year project will have 62 111-metre high turbines, generating 140MW, with Meridian saying its productivity will be the envy of the world's wind industry.

Makara residents fought the proposals for two years, highlighting the problem that even if electricity is carbon free, New Zealanders still do not want its generation to impinge on their lifestyle in any way.

Among those opposing another Meridian wind farm proposal were All Black rugby hooker Anton Oliver and poet Brian Turner.

The project, for 176 turbines on the Lammermoor Range, gained consent from a majority of commissioners appointed by the Central Otago District Council in October.

About the same time Contact Energy announced its plans for a 218 turbine project at Port Waikato.

Contact estimated the cost of the project at $1.5 billion to $2b, and said it could produce up to 650MW of power, enough for quarter of a million homes.

The company also plans to build a $140m 100MW gas-fired station at Stratford, Taranaki, to support increasing levels of wind generation during demand peaks and periods of low wind or hydro generation.

Earlier, in July, Contact filed resource consent applications for its proposed 225MW Te Mihi geothermal plant, to the north of Taupo.

The plant is planned to replace the 50-year-old Wairakei power station, generating 40 per cent more electricity without needing any more geothermal fluid, while reducing the discharge of heat and trace elements to the Waikato River.

Another large project on the drawing board is TrustPower's planned $440m 240MW wind farm near Gore, for which consent was sought in November.

Generation of electricity is only one step in the chain. The power also has to be delivered to where it is needed, which is where national grid operator Transpower's vexed plan for a 190km transmission line across the Waikato into Auckland comes in.

Farmers close to the power line route opposed it bitterly, but Transpower said the work was necessary for electricity reliability and security.

In July the Electricity Commission approved plans for a 220kV line, later to be boosted to 400kV, then the next month Cabinet Minister Pete Hodgson announced he would "call in" the proposal.

That means an independent board of inquiry will decide on the proposal, cutting out council hearings and the Environment Court process.

Beyond the Waikato line, Transpower has also announced plans to spend $521m upgrading transmission through Auckland, to ensure a reliable supply for users in the north Auckland and Northland areas.

It would appear, then, that the country is dealing with its electricity issues.

Progress is not happening without rancour and some concerns that power prices will rise more than they need to, but plenty is happening.

Hopes have also been raised that activity will step up in the other major energy segment -- oil and gas -- but that, of course, is much more at the mercy of a geological roll of the dice.

The country is already getting some hint of what could happen if a big discovery is ever made, with the start of production from the small offshore Tui oil field in the middle of the year.

Probable and proven reserves in the field are put at 41.7m barrels, and production has topped 50,000 barrels a day, making a positive impact on the country's accounts with the rest of the world.

But that will be small beer if big hopes for the stormy seas of the Great South Basin bear fruit, or preferably oil.

In July, the Government announced permits had been awarded to two major groups of investors to explore in the basin - one led by ExxonMobil of the USA and the other by OMV of Austria.

The amount the consortiums were to spend on the search could be as much as $1.2b, suggesting they take seriously indications the basin could contain as much as 10b barrels of oil equivalent.

New Zealand-owned Greymouth Petroleum also committed to a $23m work programme in a permit area covering a near-shore and onshore area of Southland.

While the deep south received most of the attention, claims of great possibilities were also being made for the area now at the centre of the country's hydrocarbon industry.

Colorado-based Global Resource Holdings said several structures within the deepwater Taranaki Basin, for which it has an exploration permit, were each capable of containing reserves of more than a billion barrels of oil.

But should New Zealand continue to promise more oil and gas than it delivers, then at least biofuels will be making a small contribution to supply diversity, as well as having the benefit of reducing this country's carbon dioxide liability under the Kyoto Protocol.

Next year, biofuel sales are to be at 0.53 per cent of petrol and diesel sales, rising to 3.4 per cent by 2012.

In another approach to the problem, state-owned coalminer Solid Energy said it was looking to carry out a pre-feasibility study into turning Southland lignite into liquid fuels - a project that could cost $8b.

The Green Party and a group called the Coal Action Network were unimpressed and called for the Government to put a stop to the idea.

It is yet another example of the difficulties in finding enough of the types of energy people want, from acceptable sources at the right price.