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Energy Efficiency and Conservation


[Energy efficiency is] the cheapest, cleanest, [and] fastest energy source


United States President Barack Obama1

I Introduction


In New Zealand, reducing greenhouse gas emissions through energy efficiency and conservation falls within the ambit of the Energy Efficiency and Conservation Authority (EECA). Among its objectives is reducing dependence on fossil fuels for energy in order to cut greenhouse gas emissions in a cost-effective and environmentally favourable manner. The EECA uses education and financial incentives to promoteenergy efficiency and conservation tobreak down market barriers which have been created by disaggregated rights. Real change is occurring with advancements in industry, business, transmission and distribution. This is complemented in the home with energy efficient smart meters, appliances and light bulbs. Warmer, healthier, more energy efficient homes have resulted from strengthening of the Building Code requirements. This holds true for existing buildings where there has been the addition of insulation, efficient heating and efficient hot water systems. The use of solar energy in building design, likewise, for hot water or electricity from photovoltaics is being embraced across New Zealand even though overseas feed-in tariff legislation has proved widespread. For transportation, fuel economy labelling rather than emissions standards is guiding change in New Zealand and there is a rise in the use of efficient public transportation. However, there are real limitations to the function that financial incentives and education can have in reducing energy consumption. Without evaluative targets, the process becomes haphazard. This chapter submits that the supplementation of market incentives amid tightening regulation is a partnership worth exploring to facilitate consumer choice.2

II Energy Efficiency and Conservation in New Zealand

As the phrase suggests, energy efficiency and conservation reduces greenhouse gas emissions by using less electricity. In this context, energy efficiency means using less energy to produce a given output and energy conservation means an overall reduction in energy use.3The aim is that there is an economically efficient use of that energy. Related benefits include less environmental impacts required for electricity generation, better health from improved heating and energy security protecting access to energy resources. The market should in theory provide for the most efficient outcome but there are several reasons for suboptimal energy efficiency. Consumers are given inadequate information as to the running costs of a product as opposed to the upfront purchase price.4This coupled with bounded rationality and decision heuristics means customers are more influenced by social background, time of the year, and personal mood in making product decisions than energy efficiency.5This inadequate information is perpetuated by the way in which electricity is paid for with customers paying a monthly averaged bill that does not reflect variation in costs between peak, shoulder, and off-peak periods.6There is also the principal/agent problem which is best exemplified by the example of a landlord making investments in a house and the tenant paying for the use of that house.7The landlord does not invest in energy efficient heating for heat the landlord will never enjoy. For low income households, there can be a lack of access to capital to fund energy efficient initiatives.8Another factor is the payback barrier where those who invest in energy efficient products expect to be paid back in the first few years for the investment which is an expectation well above most other investments.9Such consumers are unreasonably risk adverse and can be deterred by hidden costs such as building consents.10Lastly, the transition from external environmental costs to internalising such costs for energy production means there was an artificially low price for electricity in the past.11It is unsurprising, therefore, that in 2000 New Zealand was ranked 17th out of 22 OCED countries in terms of the efficient use of its energy.12

The principal / agent problem is a useful example of the tragedy of the anti-commons where disaggregated rights lead to a suboptimal outcome in the market.13Hardin’s well known tragedy of the commons is where a lack of property rights in a common resource  means that everyone pursues his or her own best interest to the detriment of all.14By contrast, Heller’s tragedy of anti-commons occurs where too many disaggregated property rights in a single resource leads every property rights holder to exclude another so that the resource is underused. To purloin an old adage “too many cooks spoil the broth.”15For Heller, “[p]rivate ownership usually increases wealth, but too much ownership has the opposite effect: it wrecks markets, stops innovation, and costs lives.”16The anticommons tragedy calls for an amalgamation of rights. Property rights, therefore, needs to negotiate the continuum of ending up as a tragedy of the commons (common ownership) or a tragedy of the anti-commons at the other (too much private ownership). It has been seen that the no ownership model of fugacious resources requires a focus on sustainability. Herein this chapter on energy efficiency and later on carbon sequestration, manmade electricity or bioenergy can clearly be owned. When too many people control the use of the resource or for that matter not enough people control the use of the resource, inefficiencies can be “brutal and slow” to overcome.17Another useful example of the tragedy of the anti-commons is where a “patchwork of electric utility fiefdoms” obstruct efficient electricity transmission across boundaries.18Energy efficiency is plagued with these barriers that inhibitmarket solutions.

The extent of benefits to be derived from remedying the anticommons of energy efficiency is not undisputed. The rebound effect is where an improvement in energy efficiency is negated by increased demand.19A simple example of this effect is if an energy efficient car is bought, more driving is done.20Alternatively customers will trade in a small inefficient fridge for a large energy efficient fridge effectively offsetting any energy savings.21Obviously, the market will favour energy efficient products eventually and it must be acknowledged that overall energy use is increasing with population in spite of advances in energy efficiency.22Thus, although energy efficiency “may be the best way to address energy and environmental problems”, there are obviously “some uncomfortable questions about consumption.”23Energy efficiency is also disputed to the extent that customer choice is restricted.24A ban on incandescent light bulbs for energy efficient fluorescent bulbs is seen as controlling.25Letting the market decide means New Zealand homes are up to 5oC colder than the healthy temperature recommended by the World Health Organisation26because as Treasury stated in 1995, it was unclear that there needed to be regulation of “private energy-efficiency investment decisions [as there] does not appear to be an externality.”27

In order to address New Zealand’s poor record, the EECA was established by a Cabinet minute in 1992 and later was given a statutory basis under the Energy Efficiency and Conservation Act 2000 (EECA 2000).28Despite international concern and economic justifications, the New Zealand Business Roundtable submitted that “there is no sound justification for the [EECA] and for legislation and regulations relating to energy efficiency standards.”29Nevertheless, with a statutory basis the EECA has continued to sustainably30“encourage, promote, and support energy efficiency, energy conservation, and the use of renewable sources of energy.”31It assists the relevant Minister in preparing and administering a strategy; promotes public awareness, practices and technologies; conducts relevant research; monitors and reviews the current state of such activities.32The EECA may make grants, awards, or loans and can enter into agreements for the administration of grants.33There have been three Energy Efficiency and Conservation Strategies promulgated under this Act. The first in 2001 set a target of 20 per cent in economy-wide energy efficiency by 2012 and an increase in renewable energy of 25-55 petajoules (PJ).34The second in 2007 proposed minimum energy performance standards for more products and existing buildings as well as Energy Star labels for other products.35It identified the energy savings in petajoules that each proposal was to deliver without specifying a national target.36The third in 2011 created a New Zealand energy efficiency target “to achieve a rate of energy intensity improvement of 1.3 percent per annum.37As Eusterfeldhaus and Barton note “the targets in the three [strategies] are different in character and are sometimes obscurely stated.”38The strategies are intentionally vague with “a lack of firm commitment to action.”39Any data is “inconsistent, unsubstantiated, discontinuous, and uninformative” with no clear evidence of “monitoring and evaluation.”40

A          Industry and Business

Energy efficiency in business while reducing greenhouse gases has the benefit of increased competiveness and productivity.41The EECA supplies various detailed informational brochures, videos, energy use software, webinars and training about how to use energy more efficiently. Thus, EECA supplements rather than supplants the market for engaging in energy efficiency. For industry, EECA offers funding for “base-level” or “investment-level” energy audits.42Electric motors involved may include pumps, fans, compressed air, heat and refrigeration systems.43Moreover, extra funding for feasibility studies is available.44Following the energy audit, the EECA may make a project grant.45For commercial buildings, grants can be awarded for commercial projects, energy management, and commercial building design.46In a similar way, grants are given to small and medium sized businesses for energy audits and projects.47Crown loans are, additionally, available for government departments, district health boards, crown owned entities, territorial authorities, regional councils, universities, polytechnics and public schools.48These can be important for HVAC (heating, ventilation and air conditioning) systems and lighting. Significant barriers exist in the public sector (particularly for hospitals and schools) because funds are always reallocated as energy efficiency is repeatedly dismissed as a low priority. More effective use of energy can be achieved with renewable energy projects such as the conversion of inefficient diesel or natural gas boilers to efficient wood pellet or used oil boilers. It must be warned, however, that funding is held explicitly to break down market barriers.49

B          Transmission and Distribution

As cited before, the Electricity Authority reports that in 2011 transmission and distribution accounted for 8 per cent and 29 per cent respectively of residential electricity costs.50Ensuring efficiency in transmission (big high voltage power lines) and distribution (small low voltage power lines) is paramount. An answer to this problem, known as the Smart Grid, integrates computer software and communication technologies with electricity infrastructure.51Lyster acclaims that “the Smart Grid is poised to make a considerable contribution to the mitigation of climate change.”52The Smart Grid electrioncially monitors and reroutes electricity efficiently to locations where demand is critical in a finely tuned and responsive way.53The Smart Grid knows precisely when an overload will occur54and the number of houses affected.55It allows for the introduction of intermittent distributed generation such as small scale wind or photovoltaic solar panels at almost any point on the transmission grid which reduces transmission and distribution losses.56Of course, renewable energy must be generated at the site of the renewable resource and any electricity transmitted to demand whereas fossil fuels can be cheaply transported to demand for electricity generation.57Smart Grids are also poised to integrate electricity storage and peak-saving technologies such as electric vehicles and thermal storage air conditioning.58Smart meters, discussed below, are integral to the system. Given the size of the European Union, United States, and Australia, the Smart Grid guarantees interoperability. Fragmentation acts as a barrier to energy efficiency and has the potential to create a tragedy of the anticommons.

In New Zealand, efficiency of the electricity market is achieved with the Electricity Authority under the Electricity Industry Act 2010 and the activities of industry participants are governed by the lengthy Electricity Industry Participation Code 2010. The objective of the Electricity Authority is “to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.”59This objective fits well with the need to upgrade infrastructure to meet future demand in a Smart Grid as New Zealand’s electricity infrastructure was built in the 1950s and 1960s.60Transpower,61the owner and operator of New Zealand’s National Grid, is currently engaged in the North Island Grid Upgrade Project62and the upgrading of the Inter-Island HVDC link63which loses significant electricity in transmission.64Part 12 of the Electricity Industry Participation Code 2010 (EIPC 2010) deals with transmission through transmission agreements, benchmark agreements, the connection code, outage protocol, grid reliability standards, investment contracts, interconnection rules, and the transmission pricing methodology. Part 6 of the EIPC 2010 provides for the connection of distributed generation. This involves an application and approval process between a generator and distributer.65The process is different for electricity generation that is less than or equal to 10kW and generation that is greater than 10kW.66

There are default terms as to connection, dispute resolution processes and pricing principles although on occasion these can be contracted out by mutual agreement. Although New Zealand does not have feed in tariffs, the process of connection of distributed generation to the network is recognition of the growing integration of small scale distributed generation.


C         Smart Meters

Smart meters are electricity meters that record half-hour electricity consumption and communicate such readings back to the electricity provider.67They achieve energy efficiency and conservation through information disclosure. Smart meters act in real time to fill the consumer information gap where an unenlightening monthly bill is sent after electricity consumption. As smart meters track electricity consumption, this information is available to customers on the internet or via text messaging.68Smart meters can have in home display (IHD) which is a digital appliance that shows electricity use based on the level of electricity consumption which should reduce peak consumption.69Smart meters can be used along with a home area network (HAN) to mean that appliances are responsive to peak demand given the higher price of electricity at such times.70A fridge, dishwasher or heater as part of a home area network could automatically reschedule electricity use to off-peak times.71This load shifting is agile to the needs of renewable energy.72The PCE is critical of the unregulated roll out of smart meters in New Zealand as retailers, rather than the government, are taking charge due to the benefits of remote meter reading.73Retailers have a disincentive to have any more accessories than necessary as they may earn less revenue if customers reduce electricity consumption.74Thus, IHD and HAN have been left out of installed smart meters to be retrofitted afterwards. In this respect, the Commissioner refers to such smart meters as dumb75and the equivalent of Wellington and Auckland having different electrical sockets.76This is augmented by lines and appliance companies who both call for consistency.77The Electricity Authority has unfalteringly favoured the unregulated voluntary methodology of retailers.78

D         Appliances

Energy efficiency of appliances is achieved under s 36 of the EECA 2000. Regulations may be made under that provision to prescribe minimum energy performance standards for energy-using products and services, prescribe requirements for labelling, compel evidence of compliance including testing and verifying, require prescribed information, and the creation of associated offences for contravention of the regulations.79Regulation 4 of the Energy Efficiency (Energy Using Products) Regulations 2002 specifies that no person may sell any new item or the assembly to any person unless “the energy performance characteristics of that item comply with the standards for that item’s product class” and that an administrative procedure is complied with.80Such specified products include certain ballasts for fluorescent lamps, chillers, air conditioners, distribution transformers, external power supplies, gas water heaters, household refrigerating appliances, electric water heaters, refrigerated display cabinets, set-top boxes, air-to-air heat pumps, induction motors and tabular fluorescent lamps.81Regulation 6 provides that any person may not sell any new item unless “a label that complies with the standards for that item’s product class… is attached.”82Such products include clothes washing machines, dishwashers, household refrigerating appliances, rotary clothes dryers, and specified air conditioners and heat pumps.83In short, the EECA prohibits the sale of certain products using minimum energy performance standards and labelling to inform consumers is required for others. New Zealand seems to be abreast of international developments and aware of provisions in the Trans-Tasman Mutual Recognition Act 1997.84There is room for improvement, nonetheless, especially with regards to standby or phantom power of inefficient appliances.85The favouring of labelling rather than prohibition is consistent with the New Zealand adoption of the international voluntary programme “Energy Star” which is awarded to the top 25 per cent of the most energy-efficient appliances.86

E          Lightbulbs

New Zealand has not prohibited incandescent light bulbs preferring to entrench freedom of customer choice.87The metal filament of incandescent light bulbs is inefficient as electricity is used to produce heat and the light is a mere by-product.88The alternative compact florescent light bulbs are more efficient and should last longer but small amounts of mercury contained inside create a disposal problem.89The words of Energy Star on florescent light bulbs is instructive because if every United States home used one high-use fluorescent light bulb, the reduction in greenhouse gases would be equal to taking 800,000 cars off the road.90In Australia, there is a phase out of inefficient incandescent bulbs which has been established through import restrictions for incandescent light bulbs.91In New Zealand, the establishment of the Efficient Lighting Group92produced the now obsolete New Zealand Efficient Lighting Strategy.93The EECA is currently working with bulb manufacturers and distributors to offer a range of subsidised efficient lighting products94and are working towards road lighting efficiency.95Furthermore, EECA promotes a website called RightLight which has interactive tools to evaluate the potential savings from energy efficient lighting.96

F          Building Standards

Energy efficiency of buildings in New Zealand is regulated by the Building Act 2004 (BA 2004) which includes among its purposes that “buildings are designed, constructed and able to be used in ways that promote sustainable development.”97This recognises “the need to facilitate the efficient use of energy and energy conservation and the use of renewable sources of energy in buildings.”98There is a “need to facilitate the efficient and sustainable use in building of” materials and material conservation.99Warnock adds that the purpose to promote rather than to achieve sustainable development reflects a pragmatic approach to outcomes. These outcomes could be delivered under the RMA 1991100and the extent to which the RMA 1991 has power to override the BA 2004 is subject to a fine distinction between the requirements for the physical building structure and the use of that building.101This view holds that the RMA 1991 is about activities while the BA 2004 is about the buildings themselves. It is an uneasy distinction because activities rely on buildings and buildings rely on activities. The BA 2004 has set performance criteria102and it would lead to an absurd situation if a building could be built but never used because RMA 1991 requires greater levels of building energy efficiency. The detailed energy efficient requirements in the BA 2004 would sit uncomfortably with the ethereal RMA 1991 attempts to regulate building energy efficiency.103Perhaps the true test is that the more stringent prescription authorised by the two Acts should prevail and that territorial authorities do not have the power “carte blanche to supplement or depart from” the BA 2004.104Likewise, development contributions under the Local Government Act 2002 to ensure sustainable construction as assessed under the Green Home Scheme risks rewriting the BA 2004 altogether.105

The BA 2004’s energy efficiency provisions are expanded upon in the building code which have the effect of regulations.106Clause H 1 of the Building Code details energy efficiency objectives.107These state that “[b]uildings must be constructed to achieve an adequate degree of energy efficiency when that energy is used for (a) modifying temperature, modifying humidity, providing ventilation [or] (b) providing hot water to and from sanitary fixtures or sanitary appliances [or] (c) providing artificial lighting.”108The building envelope must be constructed to provide adequate thermal resistance and limit uncontrollable airflow.109Buildings must be constructed to ensure that their building performance index does not exceed 1.55110which is calculated using a specified computer programme.111Account must be taken of physical conditions affecting energy performance such as the thermal mass of the building elements, the building orientation and shape, the airtightness of the building envelope, the heat gains from services, processes and occupants, the local climate and the heat gains from solar radiation.112Systems for the heating, storage, or distribution of hot water to and from sanitary fixtures or sanitary appliances must consider the energy source to limit energy lost during heating.113Artificial lighting fixtures must be located and sized to limit energy use, consistent with the intended space use and be fitted with a means to enable light intensities to be reduced, consistent with reduced activity in the space.114Lastly, HVAC systems must be located, constructed, and installed to (a) limit energy use, consistent with the intended space use and (b) enable them to be maintained to ensure their use of energy remains limited.115Several limits on the application of those provisions apply such as applicability to either commercial or residential buildings only.116Despite these provisions, Tal suggests that the “[e]xisting… building codes could be far more rigorous about energy efficiency [such] as lowering ceiling heights.”117

The energy efficiency objectives of the Building Code are supported by the detail of New Zealand Standards. New Zealand Standards prescribe energy efficiency requirements for the building thermal envelope118and lighting119of large buildings as well as energy efficiency requirements for housing and small buildings120and the installation of insulation in residential buildings.121There is also a standard for hot water systems.122Generally these standards specify the thermal requirements for glazing and the degree of insulation necessary. There are three climate zones to which the standards apply.123The Franklin District, Auckland, Coromandel, and Northland form the first zone. The second zone is the rest of the North Island excluding the Central North Island given its height above sea level. The third zone is the Central North Island and the South Island. This would seem to satisfy Warnock’s concern that the Building Code applies unilaterally to all of New Zealand and does not have regional variation like the RMA 1991.124

This emphasis on new buildings ignores the need for energy efficiency in existing buildings. Garry explains that of the 1.6 million homes in New Zealand, over 1 million were constructed before insulation was mandatory.125The EECA estimate that today 750,000 homes in New Zealand have inadequate under floor or ceiling insulation.126The EECA provides finding for homeowners to overcome the market barriers to installation of insulation and clean heating sources. Known as the Warm Up New Zealand: Heat Smart programme, the EECA uses approved service providers to properly complete the work in accordance with strict auditing procedures.127If a homeowner holds a community services card (CSC) or there are CSC tenants, greater funding is available.128Funding may be higher where third party funding from charities, lines companies or councils is provided.129Funding for under floor moisture barriers, draught proofing of doors, hot water cylinder wrap and hot water pipe lagging is available.130If a home is insulated, heating funding is obtainable for specified heat pumps, wood burners, pellet burners and flued gas heaters.131Extra funding is also available towards the decommissioning of inefficient open fires or wood burners if that form of heating is in an area which exceeds the limits of the National Environmental Standard for Air Quality.132Those regulations create a thermal efficiency standard for wood burners which ensures the ratio of useable heat energy output to energy input is not less than 65 per cent.133

The biggest advance in energy efficiency in buildings comes from the private sector. The billion dollar HouseHold Fund to reduce greenhouse gas emissions from the residential building sector as part of the emissions trading scheme was scuttled in 2008.134Nevertheless, private sector groups such as BRANZ (Building Research Association of New Zealand) and NZGBC (New Zealand Green Building Council) in association with the government departments have created Homestar for residential properties.135Homestar is an online assessment tool which allows owners to assess their home’s energy efficiency, comfort and health performance.136Homestar certification involves an assessment followed by a certificate which can be used when advertising for selling or renting.137Homestar has 10 stars with 1 star representing underperformance and 10 being world leading.138A new home built to the current building code will receive about 4 stars.139 An associated tool is New Zealand Green Building Council’s Greenstar for commercial buildings such as offices, industrial and education facilities.140This has six stars.141Greenstar assesses the environmental impact of green buildings at each of the design, built and performance phases.142These star systems are analogous to international voluntary approaches such as the Energy Star’s venture from appliances into energy efficient built design143and the LEED (Leadership in Energy and Environmental Design) rating system for certification which has Certified, Silver, Gold or Platinum based on sustainability achieved in construction.144

With regard to energy efficiency in existing buildings, New Zealand’s use of financial incentives is prone to political interference. A superior approach is found in Australia where the Building Energy Efficiency Disclosure Act 2010 (Cth) requires a Building Energy Efficiency Certificate to be carried out by an accredited assessor for mandatory disclosure of the energy efficiency performance of large commercial buildings.145)This disclosure obligation applies to the offer, invitation of offers, sale, lease and sublease of such premises. Thus any advertising about the sale of lease to prospective buyers and tenants must include disclosure. Although these obligations only apply to specified commercial premises, in Australian Capital Territory (ACT) and Queensland, compulsory disclosure of the energy efficiency of residential buildings is mandated. In ACT, all advertisements for the sale of residential premises must contain a statement of the energy efficiency rating and the vendor is required to supply the prospective buyer with a copy of the rating statement before entering into legal relations and the buyer is required to certify that a rating statement has been received.146In Queensland, a vendor must complete a sustainability declaration to identify the property’s sustainability features which can be significant for energy, water, safety and access.147To take a different example, in the European Union the Directive on the Energy Performance of Buildings148requires a common system for the energy performance of all buildings including existing buildings. This requires minimum building energy performance. When a specified floor area undergoes a major renovation, all of the building must be upgraded to the minimum energy performance requirements.149Importantly, when any existing building is sold or rented, an energy performance certificate is required to inform consumers and advise the consumer of cost-effective improvements for increasing energy performance.150This Directive has been implemented in the United Kingdom.151

Barton and Eusterfeldhaus deride the incoherency of New Zealand’s targets for energy efficiency. One solution to this difficulty lies in the Victorian Energy Efficiency Target, South Australian Residential Energy Efficiency Scheme and the New South Wales Energy Savings Scheme.152An unambiguous target is at the centre of these schemes. The Victorian scheme creates a form of baseline and credit emissions trading with energy efficiency certificates for energy retailers. Such certificates are created by accredited persons who register activities such as changes in water heating, space heating, space conditioning, lighting, refrigerators or freezers.153The certificates are then surrendered for compliance. In South Australia, energy providers are obliged to meet individually set energy reduction targets including the delivery of energy audits to households on low-incomes.154In the New South Wales scheme, each certificate has the value of one tonne of carbon dioxide equivalent.155Again, the scheme is imposed on electricity retailers with a specified energy savings target.156The advantage of these market based schemes is that a clear target is set and that the private rather than the public sector is made to deliver the outcomes. The disadvantage is that such a system is awfully similar to emissions trading.157This duplication means that meticulous institutional design is required to ensure the market does not conflict with other goals.158

Market-based energy efficiency is unlikely to work for New Zealand but New Zealand would do well to learn from the precision of the targets set by such schemes.


G         Solar Energy

Another method related to energy efficiency is solar energy use for hot water heating or for electricity via photovoltaic panels. Hot water heating uses the sun’s rays to heat water which is subsequently stored in a tank. Photovoltaic cells use semiconductors to convert the sun’s rays into electrical current. Currently in New Zealand, 1.6 per cent of homeowners have a solar water heating system.159Under the Building Code, Acceptable Solution G12/AS1 and AS2 deal with solar water heating to ensure that any solar water heater placed on a building is structurally stable and durable, resists external moisture entering the building, prevents injury from that hot water system and that such a system is positioned in an energy efficient roof location.160It is unfortunate that a large portion of any EECA funding granted is recanted with the council building consent fees despite council attempts to encourage solar water heating.161Nonetheless, the solar energy project of Maxim Projects, SolarCity and Meridian Energy to build New Zealand’s largest solar energy subdivision of 2,200 homes in Highfield after the Christchurch Earthquake is encouraging.162Each solar installation is designed to provide approximately a quarter of a typical home’s energy needs.163This shows that the situation has improved immeasurably since Al Gore’s famous experience where he was prohibited from installing solar panels on his home in Tennessee.164

For solar photovoltaics, New Zealand has not followed the feed-in tariffs of other countries despite calls for feed-in tariffs here.165The basic design of feed-in tariff is to allow distributed renewable generators and utility operators to share electricity, for the utility operator to receive electricity in priority to non-renewable generation and a guaranteed tariff to be paid to the generator.166However, there are a variety of different types of feed-in-tariffs available and feed-in tariffs are not limited to solar photovoltaics. New Zealand has not taken up feed-in tariffs because “New Zealand lacks natural conditions for optimal solar electrical generation” and solar photovolatics will “produce a trivial percentage of national electricity.”167New Zealand does, nonetheless, connect distribution generation to the electricity network. Internationally, Germany and Spain have been the leaders.168The United Kingdom has a feed-in tariff under the Energy Act 2008169and Ontario in Canada has a feed-intariff with the passing of the Green Energy and Green Economy Act 2009.170In 2009, more than 18 States in the United States were engaged in comprehensive discussions as to legislative or regulatory feed-in tariffs.171In Australia, ACT has the Electricity Feed-In (Renewable Energy Premium) Act 2008 and South Australia has the Electricity (Feed-In Scheme – Solar Systems) Amendment Act 2008.172Other states and territories have a type of feed-in tariff in place.173A key difference between the Australian programmes is the payment of the tariff based on net metering or gross metering.174Net metering is where electricity produced is used to supply the energy requirements of the renewable energy generator with any unused excess generation exported to the electricity network. Gross metering is where all electricity generated is exported and any consumption by the renewable energy generator has to be paid separately. In the United Kingdom, the differences and difficulties in the returns of tariffs has already been subject to judicial review.175


H         Transport

Transport is the fastest growing sector of greenhouse gas emissions in New Zealand.176Any efficiency gain in transportation’s internal combustion engine is critical.177In New Zealand, the Energy Efficiency (Vehicle Fuel Economy Labelling) Regulations 2007 means that all new cars and cars imported for sale in New Zealand must display information about the vehicle’s fuel economy. This “fuelsaver information” details the vehicle make, model, as well as information on the vehicle’s fuel economy displayed as cost per year, a rating out of six stars, and litres per 100 kilometres.178There is also a requirement for reference details.179A “fuel economy label” includes the “fuelsaver information” with the information printed in an authorised label.180This label is to be displayed on the vehicle or near the vehicle.181Land Transport Rule: Fuel Consumption Information 2008 provides for the process by which fuel consumption data is collected into a database.182Under Rule 2.1, for a vehicle to be certified for entry into service, fuel consumption information must be provided. With this information of vehicle purchasers, EECA and the New Zealand Transport Agency have created a website called Fuelsaver.183This helps current drivers to work out how much is currently spent on fuel and advises how to cut down fuel consumption.184Specified vehicles are also subject to Land Transport Rule: Vehicle Exhaust Emissions 2007 which aims to improve air quality by reducing the level of harmful emissions from those vehicles. The Rule is designed to improve progressively emissions standards of vehicles in New Zealand by requiring imported vehicles to meet progressively tightening emissions standards. Existing vehicles are required to pass Warrant of Fitness and Certificate of Fitness inspections that aim to identify visibly excessive emissions from vehicles.185The International Energy Agency notes that the global light-duty vehicle fuel economy is led by countries such as India, Italy, France, Japan, Spain, Indonesia, Turkey, and Brazil with poor fuel economy in countries such as Australia, United States and Canada. Hence, although European cars have fuel economy far superior to Australian and American cars, the Trans-Tasman Mutual Recognition Act 1997 seems to restrict higher standards in New Zealand.186Tal’s submission that “there is no reason why the increasingly efficient European performance levels cannot be imposed as import standards” can be answered with the retort that such a proposal will lead to a standoff with New Zealand’s trading partners.187New Zealand needs to increase its standards in line with countries such as Japan without alienating Australian car manufacturers. The result is that “New Zealand’s present legal framework regarding vehicle efficiency… is patently thin and weak”188

and vehicle fuel economy labelling in New Zealand assumes greater importance in influencing consumer choice.


Demand side response to transport efficiency in New Zealand has a role to play. For transport there are transit lanes, congestion charges, carpool facilitation, bicycle lanes, limits on urban parking, and the use of buses and rail. New Zealand’s road transport is regulated by the Land Transport Management Act 2003 that aims to achieve an integrated, safe, responsive, and sustainable land transport system.189Transit lanes are lanes for vehicles that generally require more than one person in that vehicle. These are created by the Land Transport (Road User) Rule 2004 as a “special vehicle lane” and are authorized by bylaws.190Under Rule 2.3, in order to drive in such a lane the driver must meet the sign’s requirements for occupancy or otherwise will commit an offence.191These provisions are identical for bus lanes.192Provisions in the Rules also relate to cycle lanes and cycle paths.193Congestion charges are a possibility as a road toll to decrease vehicle use.194Congestion charges will only be politically palatable where money is spent efficiently to improve the current transport arrangements.195It should be noted here that electric vehicles are exempted from road user charges.196Limits on urban parking could be imposed using the RMA 1991. For public transport such as buses and rail the Public Transport Management Act 2008 is the principal legislation.197This Act amalgamates regional council, territorial authority, and New Zealand Transport Agency functions with strategies to address public transport. Controls can be placed on commercial operators of public transportation to require common signage, integrated technology and integrated ticket systems.198 The Act empowers the setting of fares based on time, zone, travel mode, frequency and concessions.199Furthermore, the Act requires information gathering and allows extensive monitoring.200

III Conclusion

New Zealand has “a strong statutory and institutional base”201for energy efficiency and conservation “encouraged and promoted by the use of education and financial incentives.”202This liberal approach attempts to break down the market barriers with the EECA but beyond its empowering statute the implementation of targets is confused. Improvements in energy efficiency and conservation are prioritised yet any evaluation of whether goals are achieved is absent. Nonetheless, these advancements in industry, business, transmission, distribution are to be welcomed. The introduction of energy efficient smart meters, appliances and light bulbs is a smart answer to curbing energy climbing consumption. Changes in the Building Code have produced warmer, healthier, more energy efficient homes with insulation, clean heating and efficient hot water systems. The energy efficiency of existing buildings is improving through financial incentives. Such incentives could be tightened with private enterprises or individuals rather than government departments fostering change like in Australia. Solar energy is progressively being adopted even though a fortified feed-in tariff law has been overlooked by the legislature. Fuel economy labelling for vehicles has a greater presence in New Zealand than emissions standards and a movement to further efficiency in transportation seems expected. Yet, financial incentives for energy efficiency and conservation alone may not be enough to reduce energy consumption from fossil fuels to combat climate change.

  1. Michael Grunwald “America’s Untapped Energy Resource: Boosting Efficiency” (31 December 2008) Time Magazine <> as cited by Neil Peretz “Growing the Energy Efficiency Market though Third-Party Financing” (2009) 30 Energy LJ 377 at 378. []
  2. Amanda Reilly “Regulation of Energy Efficiency: A Discussion of Policy, Ethical and Legal Issues Relevant to Achieving Efficient Use of Energy in New Zealand” (LLM Thesis, University of Auckland, 1998) at 42 []
  3. Marcel Eusterfeldhaus “The Law of End-Use Energy Efficiency” (LLM Thesis, University of Waikato, 2010) at 3. []
  4. At 6. []
  5. At 18-20. []
  6. Parliamentary Commissioner for the Environment Getting More From Less: A Review of Progress on Energy Efficiency and Renewable Energy Initiatives in New Zealand (Wellington, 2000) at 49; Edan Rotenberg “Energy Efficiency in Regulated and Deregulated Markets” (2006) 24 JEL 259 at 271-272. []
  7. Peretz, above n 1, at 386; Rotenberg, above n 6, at 281. []
  8. PCE Getting More From Less, above n 6, at 48. []
  9. Peretz, above n 1, at 385; Rotenberg, above n 6, at 283. []
  10. Barry Barton “The Law of Energy Efficiency” in Donald Zillman and others (ed) Beyond the Carbon Economy: Energy Law in Transition (Oxford, Oxford University Press, 2008) 61 at 65. []
  11. Eusterfeldhaus, above n 3, at 8; Rotenberg, above n 6, at 273. []
  12. David Grinlinton “New Zealand’s National Energy Efficiency and Conservation Strategy” (2002) 20 AMPLJ 326 at 326. []
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  16. At 2. []
  17. Heller “The Tragedy of the Anti-Commons”, above n 13, at 625. []
  18. Heller The Gridlock Economy, above n 15,at 20. []
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  20. Barton, above n 10, at 69. []
  21. Marcel Eusterfeldhaus and Barry Barton “Energy Efficiency: A Comparative Analysis of the New Zealand Legal Framework” (2011) 29(4) J Energy Nat Resources and Envtl L 431 at 436. []
  22. Barton, above n 10, at 69. []
  23. At 73. []
  24. Reilly, above n 2, at 33. []
  25. Eusterfeldhaus and Barton, above n 21, at 436. []
  26. Eusterfeldhaus, above n 3, at 5. []
  27. PCE Getting More From Less, above n 6, at 62. []
  28. At 25; EECA 2000, s 20. []
  29. PCE Getting More From Less, above n 6, at 112. []
  30. EECA 2000, s 6. []
  31. EECA 2000, s 21. []
  32. EECA 2000, s 21. []
  33. EECA 2000, s 22. []
  34. Energy Efficiency and Conservation Authority “National Energy Efficiency and Conservation Strategy: Towards a Sustainable Energy Future 2001” (September 2001) <> at 6. []
  35. Energy Efficiency and Conservation Authority “New Zealand Energy Efficiency and Conservation Strategy – Making It Happen – Action Plan to Maximise Energy Efficiency and Renewable Energy 2007” (October 2007) <> at 12. []
  36. Eusterfeldhaus and Barton, above n 21, at 444. []
  37. Energy Efficiency and Conservation Authority “Developing Our Energy Potential: The New Zealand Energy Strategy 2011-2021 and the New Zealand Energy Efficiency and Conservation Strategy 2011-2016” (August 2011) Ministry of Economic Development <> at 17. []
  38. Eusterfeldhaus and Barton, above n 21, at 448. []
  39. International Energy Agency Energy Policies of IEA Countries – New Zealand 2010 Review (International Energy Agency, Paris, 2010) at 10. []
  40. Eusterfeldhaus and Barton, above n 21, at 448. []
  41. Reilly, above n 2, at 15. []
  42. EECA Business “Industrial Energy Audit Grants” (2012) <>. []
  43. EECA Business “Industrial Energy Audit Grants”, above n 42. []
  44. EECA Business “Feasibility Study Grants” (2012) <>. []
  45. EECA Business “Industrial Energy Programme: Project Grants” (2012) <>. []
  46. EECA Business “Commercial Buildings Programme” (2012) <>. []
  47. EECA Business “Energising Business” (2012) <>. []
  48. EECA Business “Crown Loans” (2012) <>. []
  49. EECA Business “Commercial Project Grants” (2012) <>. []
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  52. Rosemary Lyster “Smart Grids: Opportunities for Climate Change Mitigation and Adaptation” (2010) 36 Monash U L Rev 173 at 173. []
  53. At 175; Jan Wright “Submission to the Finance and Expenditure Committee on the Electricity Industry Bill: 26 February 2010” (2010) Parliamentary Commissioner for the Environment <> at 3. []
  54. Jan Wright “Submission on the Electricity Industry Bill”, above n 53, at 3. []
  55. Jan Wright “Presentation to the Commerce Select Committee on Smart Meters and Smart Grid: 11 August 2011” (2011) Parliamentary Commissioner for the Environment <> at 8. []
  56. Lyster, above n 52, at 176. []
  57. Timothy Duane “Greening the Grid: Implementing Climate Change Policy Through Energy Efficiency, Renewable Portfolio Standards, and Strategic Transmission System Investments” (2010) 34 Vt L Rev 711 at 766. []
  58. Lyster, above n 52, at 180. []
  59. Electricity Industry Act 2010, s 15. []
  60. Nirmal-Kumar Nair and Lixi Zhang “SmartGrid: Future Networks for New Zealand Power Systems Incorporating Distributed Generation” (2009) 37 Energy Policy 3418 at 3419. []
  61. Electricity Industry Act 2010, s 8. []
  62. Transpower “North Island Grid Upgrade” (2012) Grid New Zealand <>; Report and Decision of the Board of Inquiry into the Upper North Island Grid Upgrade Project (18 September 2009). []
  63. Transpower “HVDC Inter-Island Link Project” (2012) Grid New Zealand <>. []
  64. Genesis Power Limited v Franklin District Council [2005] NZRMA 541 (EnvC) at [64](vi)(d). []
  65. Electricity Authority “Electricity Industry Participation Code 2010” (2012) <>, pt 6. []
  66. Electricity Authority “Electricity Industry Participation Code 2010”, above n 65, pt 6. []
  67. Parliamentary Commissioner for the Environment Smart Electricity Meters: How Households and the Environment can Benefit (Wellington, 2009) at 8; See generally Electricity Authority “Electricity Industry Participation Code 2010”, above n 65, pt 10. []
  68. At 17. []
  69. At 44. []
  70. At 28. []
  71. At 27. []
  72. At 14. []
  73. At 9. []
  74. At 9; Sandra Levine and Katie Kendall “Energy Efficiency and Conservation: Opportunities, Obstacles, and Experiences” (2006) 8 Vt J Envtl L 101 at 103. []
  75. At 30. []
  76. Jan Wright “Submission on the Electricity Industry Bill”, above n 53, at 5. []
  77. At 6. []
  78. Electricity Commission “Advanced Metering Policy: May 2008” (2008) Electricity Authority <> at 10. []
  79. EECA 2000, s 36(1). []
  80. Energy Efficiency (Energy Using Products) Regulations 2002, reg 4. []
  81. Energy Efficiency (Energy Using Products) Regulations 2002, sch 1. []
  82. Energy Efficiency (Energy Using Products) Regulations 2002, reg 6. []
  83. [1]Energy Efficiency (Energy Using Products) Regulations 2002, sch 2. []
  84. Energy Efficiency (Energy Using Products) Amendment Regulations 2011; Trans-Tasman Mutual Recognition Act 1997, s 10; Eusterfeldhaus and Barton, above n 21, at 451 []
  85. Alon Tal “Tried and True: Reducing Greenhouse Gas Emissions in New Zealand Thorough Conventional Environmental Legislative Modalities” (2009) 12(1) Otago L Rev 149 at 172-175. []
  86. Eusterfeldhaus, above n 3, at 33. []
  87. Eusterfeldhaus and Barton, above n 21, at 451-452. []
  88. Alon Tal (ed) Legal Strategies for Controlling Greenhouse Gas Emissions in New Zealand (Dunedin, University of Otago Law Faculty, 2008) at 70. []
  89. At 70. []
  90. Energy Star “Light Bulbs for Consumers” (2012) <>. []
  91. Department of Climate Change and Energy Efficiency “Lighting” (2012) <>. []
  92. Energy Efficiency and Conservation Authority “Efficiency Lighting Programmes” (2012) <>. []
  93. Efficient Lighting Group “New Zealand Efficient Lighting Strategy 2008 to 2010” (2008) Energy Efficiency and Conservation Authority <>. []
  94. Energy Efficiency and Conservation Authority “Other Lighting Programmes” (2012) <>. []
  95. Energy Efficiency and Conservation Authority “Efficient Road Lighting” (2012) <>. []
  96. Energy Efficiency and Conservation Authority “RightLight” (2012) <>. []
  97. Building Act 2004, s 3. []
  98. Building Act 2004, s 4(2)(m). []
  99. Building Act 2004, s 4(2)(n). []
  100. Ailsa Ceri Warnock “Sustainable Construction in New Zealand” (2005) 9 NZJEL 337 at 367. []
  101. Christchurch International Airport Ltd v Christchurch City Council [1997] 1 NZLR 573 (HC []
  102. Building Act 2004, s 18. []
  103. Warnock, above n 100, at 366. []
  104. Christchurch International Airport Ltd v Christchurch City Council [1997] 1 NZLR 573 (HC) at 580. []
  105. Local Government Act 2002, ss 197-211; Warnock, above n 100, at 372 – 376. []
  106. Building Act 2004, s 400. []
  107. Building Regulations 1992, sch 1, cl H1. []
  108. Building Regulations 1992, sch 1, cl H1.2. []
  109. Building Regulations 1992, sch 1, cl H1.3.1. []
  110. Building Regulations 1992, sch 1, cl H1.3.2E. []
  111. Department of Building and Housing “New H1 Requirement for Houses – Q and A” (2012) <>. []
  112. Building Regulations 1992, sch 1, cl H1.3.3. []
  113. Building Regulations 1992, sch 1, cl H1.3.4. []
  114. Building Regulations 1992, sch 1, cl H1.3.5. []
  115. Building Regulations 1992, sch 1, cl H1.3.6. []
  116. Building Regulations 1992, sch 1, cl H1. []
  117. Tal “Tried and True”, above n 85, at 177. []
  118. Standards New Zealand NZS 4243:2007 Energy Efficiency – Large Buildings Part 1: Building Thermal Envelope (Wellington, 2007). []
  119. Standards New Zealand NZS 4243:2007 Energy Efficiency – Large Buildings Part 2: Lighting (Wellington, 2007). []
  120. Standards New Zealand NZS 4218: 2009 Thermal Insulation: Housing and Small Buildings (Wellington, 2009). []
  121. Standards New Zealand NZS 4246:2006Energy Efficiency – Installing Insulation in Residential Buildings (Wellington, 2006). []
  122. Standards New Zealand NZS 4305:1996 Energy Efficiency Domestic Type Hot Water Systems (Wellington, 1996). []
  123. Standards New Zealand NZS 4218: 2009, above n 120, app B. []
  124. Warnock, above n 100, at 347. []
  125. Thomas Garry “Turning Buildings Green: Instruments for Improving the Energy Performance of Existing Buildings” (2008) 12 NZJEL 233 at 250. []
  126. EECA Energywise “Getting Insulation Installed under the Warm Up New Zealand: Heat Smart Programme” (2012) <>. []
  127. EECA Energywise “Information about Approved Service Providers” (2012) <>. []
  128. EECA Energywise “Getting Insulation”, above n 126. []
  129. EECA Energywise “Getting Insulation”, above n 126. []
  130. EECA Energywise “Getting Insulation”, above n 126. []
  131. EECA Energywise “Getting Clean Efficient Heating Installed under the Warm Up New Zealand: Heat Smart Programme” (2012) <>. []
  132. EECA Energywise “Clean Air Funding” (2012) <>. []
  133. Resource Management (National Environmental Standards for Air Quality) Regulations 2004, reg 24. []
  134. Garry, above n 125, at 236; Climate Change Response (Moderated Emissions Trading) Amendment Act 2009, s 82. []
  135. Homestar “Live Better with Homestar Now and For the Future” (2012) <>. []
  136. EECA “Developing Our Energy Potential”, above n 37 at 23. []
  137. Homestar “Certified Assessment” (2012) <>. []
  138. Homestar “Frequently Asked Questions” (2012) <>. []
  139. Homestar “Frequently Asked Questions”, above n 138. []
  140. New Zealand Green Building Council “Introduction to Green Star Rating Tools” (2012) <>. []
  141. New Zealand Green Building Council “About Green Star” (2012) <>. []
  142. New Zealand Green Building Council “Introduction”, above n 140. []
  143. Edna Sussman “Reshaping Municipal and County Law to Foster Green Building, Energy Efficiency, and Renewable Energy” (2008) 16 NYU Envtl L J 1 at 12. []
  144. At 10; Cullen Howe and Michael Gerrard (ed) The Law of Green Buildings: Regulatory and Legal Issues in Design, Construction, Operation and Financing (American Bar Association, Chicago, 2010); See generally:David Dell “Climate Change and Property Law” in Dennis Mahony (ed) The Law of Climate Change in Canada (Canada Law Book, Toronto, 2010) ch 17. []
  145. Building Energy Efficiency Disclosure Act 2010 (Cth []
  146. Civil Law (Sale of Residential Property) Act 2003 (ACT), pt 3; Nicola Durrant Legal Responses to Climate Change (Federation Press, Sydney, 2010) at 142. []
  147. At 142; Building Act 1975 (Qld), ch 8A. []
  148. Directive 2010/31/EU on the Energy Performance of Buildings (Recast) [2010] OJ L153/13. []
  149. Directive 2010/31/EU on the Energy Performance of Buildings (Recast) [2010] OJ L153/13, art 7. []
  150. Directive 2010/31/EU on the Energy Performance of Buildings (Recast) [2010] OJ L153/13, art 11. []
  151. Buildings (Certificates and Inspections) (England and Wales) Regulations 2007; Energy Performance of Buildings (Scotland) Regulations 2008; Energy Performance of Buildings (Certificates and Inspections) Regulations (Northern Ireland) 2008. []
  152. Victorian Energy Efficiency Target Act 2007 (Vic); Electricity (General) Regulations 1997 (SA), pt 2AA; Electricity Supply Act 1995 (NSW), pt 9. []
  153. Durrant, above 146, at 144. []
  154. At 144. []
  155. At 145. []
  156. Electricity Supply Act 1995 (NSW), ss 106-118. []
  157. Kearney, above n 19, at 130. []
  158. Garry, above n 125, at 270. []
  159. Energy Efficient and Conservation Authority “Solar Energy” (2012) <>. []
  160. Department of Building and Housing “Solar Water Heaters – Guidance for Suppliers, Installers and Building Consent Authorities” (2012) <>. []
  161. Tal “Tried and True”, above n 85, at 184. []
  162. Solar City “New Zealand’s Largest Solar Subdivision to be Built in Canterbury” (2012) <>. []
  163. Solar City, above n 162. []
  164. Sussman, above 143, at 29. []
  165. David Grinlinton “Achieving Emissions Reduction and Renewable Energy Targets: The Case for “Feed-In-Tariffs”” (2009) 8 BRMB 68 at 72. []
  166. At 71-72. []
  167. Tal “Tried and True”, above n 85, at 182-183. []
  168. Grinlinton “Feed-In-Tariffs”, above 165, at 72. []
  169. Energy Act 2008 (UK). []
  170. Green Energy and Green Economy Act SO 2009 c 12; See generally: Miguel Mendonca, David Jacobs and Benjamin Sovacool Powering the Green Economy: The Feed-In Tariff Handbook (Earthscan, London, 2009) at 87 and 91. []
  171. At 94. []
  172. At 97 and 99; Electricity Feed-In (Renewable Energy Premium) Act 2008 (ACT); Electricity (Feed-In Scheme – Solar Systems) Amendment Act 2008 (SA). []
  173. At 97-102. []
  174. New South Wales Government Trade and Investment “Small Scale Solar PV Generators: Fact Sheet” (2011) <>. []
  175. Secretary of State for Energy and Climate Change v Friends of the Earth [2012] EWCA Civ 28. []
  176. Tal “Tried and True”, above n 85, at 187. []
  177. At 187. []
  178. Energy Efficiency (Vehicle Fuel Economy Labelling) Regulations 2007, reg 4. []
  179. Energy Efficiency (Vehicle Fuel Economy Labelling) Regulations 2007, reg 4. []
  180. Energy Efficiency (Vehicle Fuel Economy Labelling) Regulations 2007, reg 6(6). []
  181. Energy Efficiency (Vehicle Fuel Economy Labelling) Regulations 2007, reg 6(5). []
  182. Land Transport Rule: Fuel Consumption Information 2008 []
  183. New Zealand Transport Agency “fuel$” (2012) <>. []
  184. New Zealand Transport Agency “Habits” (2012) <>. []
  185. Land Transport Rule: Vehicle Exhaust Emissions 2007, preamble. []
  186. Trans-Tasman Mutual Recognition Act 1997, s 10. []
  187. Tal “Tried and True”, above n 85, at 188. []
  188. Tal, Legal Strategies, above n 88, at 149. []
  189. At 118. []
  190. See: Auckland City Council Traffic Bylaw 2006. []
  191. Land Transport (Road User) Rule 2004, r 2.3. []
  192. Land Transport (Road User) Rule 2004, r 2.3. []
  193. Land Transport (Road User) Rule 2004, r 2.3 and r 11.1A. []
  194. Land Transport Management Act 2003, s 46; Land Transport Management (Road Tolling Scheme for ALPURT B2) Order 2005. []
  195. Tal “Tried and True”, above n 85, at 192. []
  196. Road User Charges Regulations 1978, reg 3(1)(d); Road User Charges Act 2012, s 37. []
  197. Public Transport Management Act 2008; See generally: Kenneth Palmer Local Authorities Law in New Zealand (Thomson Reuters, Wellington, 2012) at 715-721 []
  198. Public Transport Management Act 2008, s 10(2). []
  199. Public Transport Management Act 2008, s 13. []
  200. Public Transport Management Act 2008, ss 14 and 41. []
  201. Tal “Tried and True”, above n 85, at 174. []
  202. Ailsa Ceri Warnock “The Climate Change Regime: Efficacy, Compliance and Enforcement” (2004) 8 NZJEL 99 at 118. []