Collaboration is key to addressing climate change

Vince Hawksworth, Chief Executive, Mercury

As humans we have created the world we live in today, we can also create the future we want.  With more than 30 years in the energy industry I believe the sector can make a difference.  We can harness renewable energy to decarbonise New Zealand, we can improve the health of our water-ways through collective action, we can regenerate our natural environment.

To do this we have to engage all members of society, change cannot be an add-on for the privileged few, it must be tangible for all.

It’s a well-known truth that you can never make everyone happy.  Last month’s release of the Government’s Emissions Reduction Plan was proof of this.

Some spoke of a sense of disappointment that the Plan didn’t go further, as the need to decarbonise becomes more urgent by the day.

Others expressed frustration that it incentivised the wrong areas.

But cutting through the noise, the Plan is an important step towards decarbonising our economy.

It sends important signals for where our collective efforts will need to be invested, and what actions the government will take to encourage and coordinate that activity.

Whatever our view, getting bipartisan support for the targets themselves is significant, providing certainty on our overall direction of travel.  This in turn helps build confidence in New Zealand’s plan to transition to a low carbon economy.  The challenges remain very significant to achieve net zero emissions, but they are not insurmountable. 

I was pleased to see the acknowledgement that collective effort will be required to meet this challenge. It will involve all sectors, Government and Kiwis to manage a transition that genuinely achieves the emissions reductions whilst ensuring that it is fair and equitable. 

Of course, this focus on collective action is nothing new for us partners of the Aotearoa Circle. It’s the fundamental premise that sits behind how we work together - enabling the coming together of the private and public sector. Everyone in this group has signed up to the same underlying principle: we know we need to work together to achieve a reverse in the decline of our natural resources.

One of the important things that we saw out of the Emissions Reduction Plan is the acknowledgement that New Zealand’s largely renewable electricity system will be fundamental to the wider decarbonisation of our economy.

We have a significant advantage over many other countries when it comes to decarbonisation: an electricity system that is among the best in the world. Our electricity is already low emissions and our renewability growing.

While other countries are struggling with the challenge of decarbonising their electricity, the benefit of our existing low emissions electricity system is that we can use it to help decarbonise other sectors like transport and process heat. This is a real advantage.

Our total electricity supply is expected to be over 90% renewable in the next 3-5 years with $2 billion currently committed by the sector and an outstanding renewable generation pipeline to meet anticipated growth in demand. This includes Mercury’s $465 million Turitea wind farm in the Manawatū which will be New Zealand’s largest wind farm. When fully commissioned next year it will bring on 840GWh of new renewable electricity a year, enough to power 375,000 electric vehicles (EVs). 

But we know there is still much to do. Like many sectors, the electricity sector is already working hard on stepping up to play our part. We know that, looking back in history, what we are facing now in terms of renewable infrastructure change is no more than was done between the 1960s and the 1990s. We do appreciate that the situation today is different, making this one of the most transformative changes in the sector’s history; much can be learned from the success we’ve had, replacing fossil fuels with new renewable generation.

We were pleased to see a renewable energy target set in the Emissions Reduction Plan. If we can shift our focus away from a renewable electricity target towards the goal of 50% of total final energy consumption from renewable sources by 2035, we are able to unlock even more action across the energy sector.  With the right signals from policy like the Emissions Reduction Plan and the learnings the sector can bring to the change we need to make – the energy sector is well-placed to support other sectors to decarbonise.

Coordination will enable the collective action we need. A National Energy Strategy, which the Government is targeting completion of by 2024, will be critical in pulling all of this together.  It must focus on enabling action and removing barriers; we already understand the goal and its urgency.

The Aotearoa Circle has significant insights and expertise that is highly relevant to this important piece of work.  The Low Carbon Energy Roadmap is a useful start to incorporate the overarching sector-wide view. We anticipate that early discussions on prioritisation and sequencing will be very important – particularly for issues that are already live as we move through the transition to a low carbon economy. Some issues are so pressing, for example clarity on the gas transition, and it is heartening to see that progress on them will not be slowed down by the National Energy Strategy process.

All of this speaks to the importance of system level change. Decarbonisation is a complex and multifaceted goal and the best way to tackle this is to recognise the interconnected nature of the systems at play. To design and implement policy across multiple sectors is an immense task, but achievable if we can work together. Every possible lever, public and private, will need to be pulled. There's no silver bullet to decarbonise the whole economy; it will require multiple answers, working in tandem.

The public sector can encourage private sector innovation in the right directions, including targeted funding where the commercial incentives aren't there for private investment.

The private sector can help effect change in this area by offering expertise, innovation, efficiency of capital allocation for new generation and new technologies that can achieve mainstream adoption of low carbon energy.

At Mercury, we talk about our mission of Energy Freedom.  To do this we believe kaitiakitanga is key – we must take an ultra-long view of our management of both physical and natural assets.

We must strive every day to take action that will shape a better tomorrow.