KEY POINTS:
A recent important observation by Dr Don Elder, the chief executive of Solid Energy has not received the attention it deserves.
Dr Elder, respected in our national energy scene said: "National climate change objectives and strategies are not absolutes. They should not be given automatic priority over, or considered in isolation from, other national objectives and strategies."
The recently released draft New Zealand Energy Strategy (NZES) by the Ministry of Economic Development (MED) and the carbon emissions trading regime are examples of what Dr Elder was talking about. Both are dominated by the Government's conviction that climate change (more properly described as "man-made global warming") is real and dangerous and that reducing CO2 emissions will save New Zealand from climate driven disaster.
The Strategy is an expensive, misleading and futile political exercise. We need an energy strategy that will ensure that we have a reliable supply of energy at the lowest cost. The energy strategy concentrates on renewables and ignores large hydropower, our huge reserves of coal and nuclear power.
The NZ Energy Strategy fails to recognise that meeting our legitimate needs for energy is important, that minimising damage to our economy is important, and that it is important that we know exactly what it might cost us to satisfy the Government's obsession with man-made global warming. .
The key problem is that the Government has ignored the uncertainties in the evidence claimed to support the belief that man-made global warming is real and dangerous.
The new Energy Strategy includes a chart showing that wind power costs about 7c/kWh (kilowatt-hour) and a recurring theme is that wind power is the lowest-cost generation option. Yet a recent study for the Electricity Commission shows that the real cost is in excess of 11 c/kWh. This means that a carbon price of $45 per tonne would be needed to make it competitive with conventional generation. At $45/tonne, the cost of electricity to consumers would increase by something like $1.8 billion a year - $450 for every man, woman and child in the country!
Meridian Energy is able to sell carbon credits from its Te Apiti wind farm because it convinced an auditor that the farm was uneconomic compared to conventional power. This means that Meridian and its Government owner have known for several years that wind power was uneconomic.
So why does the Strategy tells us that renewables provide our lowest cost generation? There would be an uproar if the public were misled like this in a prospectus for a new share float. Is there one rule for private companies and another for the Ministry of Economic Development?
The Strategy predicts a huge increase in wind generation - 5000 MW (megawatts) by 2030. Laid out in a line, the wind turbines would stretch for 700 kilometres, almost from Auckland to Wellington. The strategy fails to mention that 4000 MW or more of thermal backup stations will be needed to provide power when the wind doesn't blow.
Lots of new transmission lines would also be needed. The consumers, not the developers of the wind farms, will pay the costs of this extra transmission and backup.
The Energy Strategy projects that only 1200 MW of new coal and gas fired stations will be needed and ignores the need to replace at least 2200 MW of ageing thermal stations.
If, as it predicts, the installed capacity of wind and wave power increases from 200 MW to 6000 MW, we will need at least 3000 MW of thermal power to backup this unpredictable supply. I have calculated that with the Energy Strategy, we will need to build 13,000 MW of new capacity by 2030. With a rational strategy, we would need only 7,000 MW.
Nuclear power has hit the headlines over last few days because, quite logically, many world leaders have concluded that if man-made global warming is a real problem, nuclear power is the only large scale technology that can significantly reduce carbon dioxide emissions at a low cost.
Of the world's electricity, 16 per cent is now generated by nuclear power stations.
In terms of deaths per unit of electricity generated, the mortality rate associated with nuclear power is well below that of coal or hydropower stations.
Much is made of the problems in disposing of nuclear waste while ignoring the far greater problems of disposal of huge quantities of ash and other pollutants from coal-fired power stations and the risk of dam failures at large hydropower stations.
The only significant failure of a nuclear power station has been at Chernobyl which was an obsolete design without secondary containment, operated with its safety devices switched off. Opposing nuclear power generation based on the Chernobyl experience is like banning modern cruise ships because the Titanic did not have radar.
A recent report for Australia showed that building several units using the latest technology would give a cost of electricity in the vicinity of 7 c/kWh. Well below the cost of wind. If the Australians move to nuclear power, we could work with them to build two or three identical units in New Zealand.
The argument that a 1000 MW nuclear unit is too large for the New Zealand power system is not supported by the evidence. Twice in the last year the system has lost more than 600 MW of generation and survived without a blackout. By the time a 1000 MW nuclear unit is in service we can be sure that the system will survive its loss.
The saddest thing about all this is that even if man-made carbon dioxide does cause dangerous global warming, all the effort, expenditure and economic damage that will be visited on New Zealand by the Energy Strategy and carbon emissions trading or "Cap and Trade" will make hardly any difference to our carbon dioxide emissions. As a senior civil servant once said to me, Kyoto is all about politics, not science.
* Bryan Leyland, a power engineer and consultant, is chairman of the economics panel of the New Zealand Climate Science Coalition.
