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Why the time has come for a standalone Ministry of Energy

OPINION: With several high profile government objectives in the spotlight, a single ministry could drive better outcomes across them all. Robyn Holdaway, senior policy advisor at Vector, makes the case for a Ministry for Energy.

When the Ministry for Business, Innovation and Employment was created in 2012 it replaced not one but four full ministry-level offices – the Department of Building and Housing, the Department of Labour, the Ministry of Economic Development and the Ministry of Science and Innovation.

MBIE is currently charged with “growing New Zealand for all” and that’s a big task. Big enough that its remit includes such headline-grabbing issues as power prices, immigration, tourism, the New Zealand Space Agency (yes, we have one!), employment conditions and, until recently, solving the housing crisis. 

That’s a lot for one ministry to look after. 

When Vector thinks about the future of energy and the systems and technology necessary to meet the coming mix of energy challenges, a dedicated energy ministry makes sense to us to enable decision-making that will give us and the rest of the industry certainty to continue to make investments that align with the country’s decarbonisation goals. This includes investments to give people more choice and better energy efficiency, including the smart integration of technology and innovation.

Vector has already completed several projects with Auckland communities where solar panels and batteries give consumers more control over their power bills and save them money sustainably. 

To shift the dial on this future we need dynamic and forward-looking policy and an industry response which puts consumers first. We should avoid perpetuating an industry structure which doesn’t put customers at the centre. 

In its report, Accelerated Electrification, the Interim Climate Change Commission identifies ten different industry and government parties which make up our energy system’s regulatory and institutional framework.

A new Ministry for Energy would be well placed to coordinate the country’s response to complex and overlapping issues which impact energy consumers, and to monitor both industry and regulatory performance to support better customer outcomes.

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Transport and energy are converging as the country electrifies

There is no denying that the threat of climate change has turned the world of energy on its head. As the Zero Carbon Bill progresses towards law, New Zealand businesses, like others across the world, are setting ambitious carbon targets to step up and help deliver.

New Zealand’s mostly clean energy supply puts our swift transition to an electric-vehicle nation in focus as an option to reduce New Zealand’s emissions from the transport sector. Recently announced incentives for low-emissions cars will drive further consumer appetite for EVs. This is good news for the environment and the air we breathe, but the rapid rise of EVs is going to drive up demand for electricity and bring new challenges to how we manage that. 

Electricity generation– both centralised generation and on-premise and customer-owned, like rooftop solar – has a role to play in meeting growing electricity demand. Much of this could be from a greater mix of wind farms, solar generation, and possibly more hydro storage.

But we can’t lose sight of the critical role new customer-owned solutions will play by increasing energy efficiency as we rely more on electricity. That means things like software management systems to help reduce the impact residential EV chargers have on peak demand, and Vehicle to Grid (V2G) and Vehicle to Home (V2H) chargers to bring added value to the electricity stored in an EV battery. 

Left unaddressed, rapid EV uptake could have large cost implications if the local electricity network needs to be reinforced. That’s why we need a coordinated, collaborative approach across transport and energy to ensure we’re successful in meeting our decarbonisation goals. 

Energy use is linked to housing quality

Draughty, uninsulated homes use more electricity to heat, which costs more in power bills. Improving energy efficiency through steps like LED lightbulbs helps, but so does improving housing stock.

This overlap is recognised by the Healthy Homes Initiative and the Energymate project. Both are good examples of collaboration across government and industry to strengthen energy efficiency. It doesn’t have to be just incremental gains: well-designed houses can be so efficient that no winter heating is needed at all.

That’s not to say passive houses are practical for everyone, but there is clearly a scale of energy efficiency potential, and interventions are possible to make a material difference to both quality of life and energy efficiency. The new Healthy Homes Standards are a good example. Could a ministry solely focused on how to achieve better outcomes through coordinated energy policy produce more of these initiatives? 

‘It’s the economy, stupid’

As noted recently by Interim Climate Change Commission chair David Prentice, “accelerated electrification will not happen if electricity is too expensive”. If electrification is needed to reduce emissions (it is), then it will only proceed at the required pace if the price is right. We think the work of the Interim (and in future, Independent) Climate Change Commission is therefore strongly linked with the work of the Electricity Pricing Review. The last thing we want are recommendations from those workstreams with diverging trajectories in terms of pricing and carbon emissions reduction. 

Add the imperative to enable emerging technologies and innovation to limit price rises, and the work of the existing regulators (the Electricity Authority and Commerce Commission), and it’s clear there are lots of separate workstreams that could be coordinated by a single ministry.

We believe that the establishment of a new Ministry for Energy could bring together parts of the Ministry for the Environment, Ministry of Civil Defence and Emergency Management, Ministry of Transport, and MBIE. And this could be just the thing to provide a more coordinated, all-of-government approach to enable a just transition to a zero-carbon economy. 

This content was created in paid partnership with Vector. Learn more about our partnerships here


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