Peter Neilson: Long-term energy plan overdue

When I was appointed to the Business Council last year, I canvassed council members about the key issues facing New Zealand.

Overwhelmingly these 50 chief executives concurred that identifying a sustainable energy future for this country should be at the top of our agenda. This is not surprising because nine out of 10 New Zealanders do not believe that we have a long-term strategy to keep the lights on.

Why is this? Unfortunately, energy planning does not easily sit within the three-year planning process which preoccupies Government because it requires consideration of uncertain futures and long investment lead times. While in the past New Zealand has benefited from plentiful and affordable energy, with supplies running out, it was clear to us that we could no longer put off making the often difficult trade-offs between affordability, security of supply and environmental protection.

The council felt it could make a positive contribution to an issue that is important to business and society by initiating discussion.

This has not been an easy process because we deliberately cast a wide net to include energy suppliers, transport providers and electricity networks alongside research and business associations. That so many competitive companies were willing to jointly fund a research project speaks volumes about the perceived policy vacuum.

The report highlights that when we have energy decisions by crisis, security of supply becomes the priority with questions of affordability a close second. With the lights about to go out, the environment is the last thing on anyone's mind. That is why we need to plan now for a balanced long-term outcome.

By 2050, even taking into account significant energy savings, all but one of the scenarios forecast in the report involves using the equivalent energy from a Maui size gas reserve in around 2.5 to 5 years. That's a lot of energy and it's not sustainable given present planning. Over the next 50 years, new technology - some of which we cannot imagine today - will be developed and we must be able to adapt fast to such changes.

At the outset, we assumed key aspirations for New Zealand: to remain a good global citizen, take care of our environment and have a world-class quality of life with better than average incomes among developed countries. The good news is that all of this is possible. We're already one of the lowest global emitters of carbon dioxide in electricity generation because of our high use of renewables.

However, we cannot rely on just wind, hydro, solar and geothermal generation, even with significant increases, to fuel our growth. Nuclear is not considered to be a viable option so we will continue to be reliant on fossil fuels. This means we need to be investing now in clean coal technology and other innovations and more fuel-efficient and low-emission vehicles which will best let us balance energy production and environmental protection.

We started this work with open minds and a blank canvas and we have tried to envisage what our country and, indeed, the world will look like in 2050. We know that the reality will be different, but if we don't start planning now, we will find ourselves without options later.

* Peter Neilson is chief executive, New Zealand Business Council for Sustainable Development.