Introduction

Energy keeps Aotearoa New Zealand running. We use energy for transport, heating, manufacturing, food preparation and in countless other ways.

While our energy system has served us very well, our energy use is also a major source of emissions. In 2021*, emissions from energy made up 40% of New Zealand’s total gross emissions. Cutting emissions from energy is essential to meeting our international climate commitments and reducing the impacts of climate change.

The Government has committed to reaching net zero for long-lived gases by 2050, has set a target that 50% of total energy consumption will come from renewable sources by 2035, and has set an aspirational target to reach 100% renewable electricity by 2030.

To reach the domestic targets, and to contribute to limiting global warming to 1.5°C, we need to look across energy policy settings to ensure they facilitate the transition to a low energy system, while maintaining reliability, affordability, and supporting productivity.

The Government has a wide range of actions already underway to reduce emissions, and to encourage more renewable energy generation. This paper forms one part of a package of documents consulting on the next phase of Aotearoa New Zealand’s energy transition. Each document addresses a critical aspect of the energy transition – the emerging roles for hydrogen, measures to enhance the electricity system, and proposals for regulating a future offshore renewable energy industry.

This paper presents an overview of these energy system discussion documents, identifies cross-cutting issues, and shows how this consultation supports work towards developing an overarching Aotearoa Energy Strategy. The Energy Strategy will chart a path for the energy sector to 2050, promoting our objectives for a highly renewable, reliable, and affordable energy system that supports economic growth and productivity.

* New Zealand's Greenhouse Gas Inventory 1990–2021 snapshot(external link) — Ministry for the Environment

Gas Transition Plan issues paper

Developed by the Ministry of Business Innovation and Employment (MBIE) in conjunction with the Gas Industry Company, the Gas Transition Plan Issues Paper seeks feedback on the strategic direction for the gas sector. The gas sector faces opportunities and obstacles in transitioning. These include ensuring that consumers have access to secure and affordable energy, not locking in older and poorly performing assets, and supporting the Government’s vision for the energy and industry sector. It is almost certain New Zealand will need a level of reliable gas supply for years to come. This Gas Transition Plan Issues Paper seeks feedback on the key issues and opportunities facing the gas sector. The Issues Paper also considers the role of other opportunities for lowering emissions, like carbon capture utilisation and storage, and renewable gases like biomethane and hydrogen.

Measures for transition to an expanded and highly renewable electricity system

This paper looks at how we can ensure electricity is affordable, reliable and resilient while we transition to an expanded and more highly renewable electricity system. The Government has set an aspirational target of 100% renewable electricity by 2030. A key issue for the energy transition is how to manage the phase out of fossil fuels in the electricity system, while responding to substantially increased electricity demand that is occurring through the electrification of other sectors (such as industry and transport). The paper sets out work already underway by government and regulators, and seeks feedback on what else might need to be considered.

The market measures issues paper is accompanied by a separate paper – 'Implementing a ban on new fossil-fuel baseload electricity generation'. This paper provides an opportunity for final feedback on the design and implementation of the emissions reduction plan action to ban new fossil-fuel baseload electricity generation.

Interim Hydrogen Roadmap

The 'Interim Hydrogen Roadmap' (the Interim Roadmap) sets out an emerging view on the potential role of hydrogen in New Zealand’s energy transition, to inform where the Government should best place its effort. Providing a roadmap for hydrogen in New Zealand will also help foster certainty for investors and project developers. Feedback is sought on whether stakeholders agree with the strategic context and direction of focus in the roadmap, or whether there are other circumstances Government should consider. The Interim Roadmap suggests that hydrogen has the most potential to play a role in decarbonising New Zealand’s hard-to-abate applications such as chemicals, fertiliser and parts of heavy transport (including aviation and marine), and that an industry in New Zealand could generate substantial economic activity. There is also significant international interest in New Zealand’s potential for providing hydrogen to export markets.

Developing a regulatory framework for offshore renewable energy

Offshore renewable energy refers to the energy sources and technology used to generate electricity from such sources as offshore wind. New Zealand has world-leading offshore wind generation potential within its Territorial Sea and Exclusive Economic Zone (EEZ), which could contribute to our target of net-zero carbon emissions by 2050. The Government is consulting on a regulatory framework for offshore renewable energy in 3 phases. Following an initial discussion document on regulating feasibility activities, 'Developing a Regulatory Framework for Offshore Renewable Energy' makes regulatory proposals for the construction, operation, and decommissioning stages. A regulatory framework is needed to incentivise developers to invest, and to manage development of the industry.

We will be consulting on the discussion documents for 12 weeks. During this time, MBIE intends to engage with iwi, and to meet with stakeholders across communities and the energy sector.

The findings from the consultation will inform near-term policy and contribute to the Energy Strategy. The Government intends to produce an Energy Strategy issues paper for consultation around the end of the year.

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