Focus on decarbonisation progress and barriers at WEC

The New Zealand Business Energy Council (BEC) and others were represented at the recent World Energy Congress 2024 in Rotterdam - the first congress since Abu Dhabi in 2019. 

New Zealand energy research specialists, Enerlytica, provided BEC members with a summary of the key takeouts from the congress from a New Zealand perspective. 

Enerlytica says that hearing the stories of where other countries are at in their decarbonisation transitions highlighted just how fortunate New Zealand is with its energy mix. However, it also underlined the stress that the local energy sector is currently experiencing. 

Hydrogen continued to receive plenty of airtime, Enerlytica noted. However discussion had moved on from a tone of emergence to that of acceptance.  

“This maturation was however qualified, with discussion also reflecting a view to step back from positioning of ‘everything, everywhere all at once’ to one of ‘right place at the right time’.  

“We came away more convinced than ever of the non-competitiveness of NZ hydrogen-for-export concepts.” 

The extent of direct financial incentives for decarbonisation being offered across the developed world, was a surprise. Numerous speakers noted the importance of direct government support in getting marginal decarbonisation projects sanctioned.  

Enerlytica says with New Zealand’s new government having clearly signalled that the time of extensive financial support for decarb projects is now at an end, “we worry about being able to attract private sector capital to NZ projects when that capital is so rewarded elsewhere”.  

“With subsidies seemingly off the table, the focus of politicians and policymakers must shift towards what they can do to remove barriers so that private capital can flow unobstructed into the best of the unsubsidised opportunities that exist.” 

“The approach that politicians and policy agencies will therefore need to revert to is that of doing what it can to encourage private sector investment in decarbonisation initiatives by focussing on the rules of engagement and to the extent possible resolving institutional barriers that may stand in the way of the flow of private capital.” 

Another strong shared concern across numerous speakers was the risk that as the energy transition matures, it will be the wealthiest who stand the benefit the most and the poorest who may suffer the greatest cost.  

“[New Zealand] companies and policy makers need to be conscious of the full demographic extent of their constituents so as to minimise the risk that those that have the lowest ability to pay, and also possibly are the least sophisticated, do not carry more than their reasonable share of system costs.” 

“The benefits of advanced consumer services should not fall entirely to those that can afford those services.” 

The WEC is the body that coined the phrase ‘Energy Trilemma’ and the concept of the three pillars of security, affordability and sustainability.  

“Much of the discussion at the congress was framed to the interplay of these pillars.  

“We did however sense a bias in how the three were portrayed. Whereas affordability and sustainability were somewhat givens in discussion with the debate being over the question of extents, security was expressed more as a binary bottom line.  

“As one speaker put it ‘if there isn’t power flowing then customers won’t give a monkey’s if it was going to be either affordable or sustainable’.” 

Enerlytica notes that the new government has already expressed its position that security is a bottom line priority.  

“This expectation does increase pressure on industry to ensure that disruptions are kept to an absolute minimum.  

“We continue to hold concern towards the next few winters, very much including 2024. The risk is that of greater political involvement and/or intervention if security is compromised.” 

Enerlytica also noted that discussion towards CO2 had noticeably matured since the last WEC.  

“There was greater acknowledgement of the critical role that CO2 plays as a feedstock to enable the production of a vast array of goods and services, including e-fuel products.  

“There remains, however, political reluctance to recognise the enabling role of CO2 in the wider energy and economic systems.  

“This extends to a reluctance to accommodate the reuse and/or recycling of CO2 in policy settings in many countries.  

“New Zealand found out the standalone importance of CO2 the hard way when the country ran short of it last year.  

“The squeeze followed the decommissioning of the Marsden Point oil refinery and an extended outage of the Kapuni Gas Treatment Plant (KGTP), which were the two major suppliers of food grade CO2 into the domestic market. Now only KGTP remains.  

“Many users had no option but to seek feedstock CO2 from overseas at a cost reportedly multiples that of indigenous supply.  

“New Zealand politicians and policy makers should seek to fully understand the role that CO2 plays in the NZ economy, perhaps even as part of a NZ Energy Strategy workstream.  

“They should also prioritise development of a specific CCUS regime in NZ.”