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Renewable Energy Law in New Zealand

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New Zealand’s energy demand has been growing steadily and is forecast to continue to grow. New Zealand must confront two major energy challenges as it meets growing energy demand. The first is to respond to the risks of climate change by reducing greenhouse gas emissions caused by the production and use of energy. The second is to deliver clean, secure, affordable energy while treating the environment responsibly.

National Policy Statement for Renewable Electricity Generation1

I Introduction

Electricity as a source of energy derived from renewable resources seeks to displace greenhouse gases emitted from fossil fuels. To this end, the New Zealand Government has stated that it will adhere to a target of 90 percent of electricity generation to be from renewable resources (which currently sits at around 74 percent)2  by 2025 (in an average hydrological year) providing this does not affect security of supply. Historically, New Zealand has benefited from the use of renewable resources. Today, renewable resources are being encouraged because they will reduce greenhouse gas emissions, allow diversification, enable security of supply, and reduce transmission losses. Nonetheless, legal impediments exist to the development of such resources.The most important is the “first-in-first-served” system of resource allocation which traverses ownership and usufruct rights (the right to use). Of course although there is a “demonstrable public need for power”, “not all development of such renewable energy is appropriate.”3 It is conceded that the development of renewable resources for electricity all have adverse environmental effects of some kind.4 The legal analysis that follows shows that the

competition over the use of resources in New Zealand has to negotiate sustainability over the appearance of an untapped resource with its limits.

This chapter only evaluates the legal impediments to New Zealand’s development of hydro, geothermal, wind, and marine energy. This is despite the definition of renewable energy in the RMA 1991 as “energy produced from solar, wind, hydro, geothermal, biomass, tidal, wave, and ocean current sources.”5

For convenience, solar energy is analysed in the upcoming chapter on energy efficiency and biomass energy is analysed in the last chapter. Each part of this chapter follows a general pattern of exploring historical legal developments, ownership disputes, and then the adverse environmental effects of hydro, geothermal, wind and marine respectively. The final paragraph in each part is devoted to Maori concerns. This chapter has been confined entirely to New Zealand law owing to the already voluminous judgments and commentary.  Before examining the legal impediments to hydro, geothermal, wind and marine energy, a short foreword describes the benefits of renewable energy.

 

II The Benefits of Renewable Energy

The bundle of resource consents necessary for almost all renewable energy projects requires an assessment of environmental effects.6 Not all environmental effects are adverse.  Benefits are summarised in the National Policy Statement for Renewable Electricity Generation 2011 (NPSREG 2011), which aims to promote the efficient use of renewable energy in New Zealand. This recognises as a matter of national significance “the need to develop, operate, maintain and upgrade renewable electricity generation activities” and “the benefits of renewable electricity generation.”7 This includes avoiding, reducing or displacing greenhouse gas emissions. In addition, maintaining or increasing electricity generation capacity as well as security of supply through diversification is advantageous. It emphasises the benefits of using renewable national resources rather than finite resources; the reversibility of some renewable electricity generation technologies; and avoiding reliance on imported fuels. Decision makers are required to consider the maintenance of existing renewable electricity generation output; minor reductions in existing renewable electricity generation can have cumulative effects; and meeting the New Zealand Government’s national target for renewable electricity. The NPSREG 2011 elucidates that renewable electricity generation needs to be sited where the renewable resources are available; technical difficulties may arise; and associated infrastructure will usually be required. Decision makers should also design measures to allow for environmental mitigation (including offsetting measures or compensation) and encourage

adaptive management. Regional and district plans are required to identify and accommodate potential sites.

As seen, s 7(j) of the RMA 1991 explicitly requires decision makers to have particular regard to “the benefits to be derived from the use and development of renewable energy.”8 This is complemented with s 104E.9 In this way, greenhouse gas “emissions targets and renewable energy uptake are closely interlinked.”10 Clearly, s 7 (j) prefers renewable energy. New Zealand has not chosen to achieve such a goal with renewable portfolio standards, tax incentives, or feed-in tariffs.11 Rather, New Zealand has focused on energy strategies, resource management planning, building codes, government procurement, various grants and the NZETS.12 The New Zealand Energy Strategy 2011 provides the supporting framework through which such objectives are to be achieved. This states “developers of these resources face challenges from immature markets, low consumer awareness, emergent technologies, uncertain environmental effects or lack of supporting infrastructure.”13 These initiatives have been supplemented with other National Policy Statements.14 Lastly, the nature of electricity in New Zealand needs explaining. Renewable generating capacity in order of capacity is hydro, geothermal, wind with marine, solar and biomass having an indistinguishably small contribution to the electricity grid.15 Residential electricity consumption only accounts for 35 per cent of that consumed.16 14 per cent of New Zealand’s electricity goes to Rio Tinto’s smelter at Bluff.17 The rest is consumed by commercial and industrial sectors. According to the Electricity Authority for the residential sector in 2009, only 36 per cent of the cost of electricity is actually derived from generation.18 Transmission accounts for 8 per cent, distribution accounts for 29 per cent, metering costs are 2 per cent, the retail margin is 14 per cent and GST is 11 per cent (which has since increased to 15 per cent).19 New Zealand has five principal retailers which in the order of market share are: Genesis Energy, Contact Energy, Mercury Energy (Mighty River Power), Meridian Energy and Trust Power.20 All of these companies are collectively regulated by the Electricity Authority.21 Electricity prices are determined by large generators competing in the electricity spot market for the right to generate electricity.22 Offers are submitted in the whole-sale information and trading system for each future half-hour period.23

  1. New Zealand Government “National Policy Statement for Renewable Electricity Generation 2011” (14 April 2011) Ministry for the Environment <http://www.mfe.govt.nz> [NPSREG 2011], preamble []
  2. 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 <www.med.govt.nz> at 6. []
  3. Upland Landscape Protection Society Incorporated v Clutha District Council EnvC Christchurch C 85/2008, 25 July 2008 at [239]-[240] []
  4. Debroah Lynne Johnson “Electricity and the Environment – Current Trends and Future Directions” (2008) 12 NZJEL 195 at 213-214. []
  5. RMA 1991, s 2, definition of “renewable energy” []
  6. RMA 1991, ss 88(2)(b), 104(1)(a) and sch 4 []
  7. NPSREG 2011, above n 1, at 4. []
  8. Resource Management Act 1991, s 7(j); See generally: Barry Barton “Renewable Energy in New Zealand” (2005) 23 J Energy and Nat Res L 141; Richard Hawke “Support for Renewable Energy: The Government’s Response” (2008) 7 BRMB 159; Johnson, above n 4; Jagdeep Singh-Ladhar “Support for Renewable Energy: Analysing Legal Issues for Wind Power Generators in New Zealand Law” (2008) 7 BRMB 142 []
  9. RMA 1991, s104E. []
  10. David Grinlinton “Achieving Emissions Reduction and Renewable Energy Targets: The Case for “Feed-In-Tariffs”” (2009) 8 BRMB 68 at 72 []
  11. At 72 []
  12. At 72. []
  13. NPSREG 2011, above n 1, at 6. []
  14. Department of Conservation “New Zealand Coastal Policy Statement 2010” (3 December 2010) <www.doc.org.nz>; New Zealand Government “National Policy Statement on Electricity Transmission 2008” (13 April 2008) Ministry for the Environment <http://www.mfe.govt.nz>; New Zealand Government “National Policy Statement for Freshwater Management 2011” (1 July 2011) Ministry for the Environment <http://www.mfe.govt.nz>. []
  15. Electricity Authority “Electricity in New Zealand 2011” (2011) <www.ea.govt.nz> at 18. []
  16. At 4. []
  17. At 2. []
  18. At 25. []
  19. At 25; GST Act 1985, s 8. []
  20. At 9 []
  21. Electricity Industry Act 2010, s 12. []
  22. Electricity Authority, above n 15, at 11. []
  23. At 11. []