THE PRESS TUESDAY, SEPT. 13, 1983. Looking forward with energy

Press, 13 September 1983, Page 16

THE PRESS TUESDAY, SEPT. 13, 1983. Looking forward with energy

The Government’s 1983 Energy Plan, presented to Parliament last week, is the fourth such plan to be produced. The plans consider the energy needs and resources of the country as a whole. In the 1983 Energy Plan’s own description, the formal purpose is to advise the Minister on policies for effective and efficient development of the energy sector. One less formal purpose is to act as a focus for the Minister of Energy’s long-term planning. Another is to provide concise and comprehensive information to energy suppliers, consumers, and the interested public. The Energy Plan looks forward for 15 years. When the first, the 1980 Energy Plan, was formulated, it was just after the second oil price increase in 1979. Most of the major energy and development projects were still to be begun. Now some have been completed and others are in the process of being built. One, the Aramoana aluminium smelter, has for the purposes of the 1983 Energy Plan, been assumed to be postponed indefinitely. The Energy Plan acknowledges that this has removed most major uncertainties from last year’s electricity plan.

The principle of having such a plan is excellent. It compels, or should compel, the Ministry of Energy to make frequent evaluations of the directions it is taking. This year’s plan tends to be more concerned with methodology and the factors in pricing policy, and less weighted with strategic aims and guiding philosophy. The result is a more technically and economically involved plan which, to some extent, is less readily accessible to general readers. The non-specialist reader might have been better served had more attention been given to the principles used to choose among options, and had a less technical exposition been given of the points being made.

In presenting the Energy Plan, the Minister of Energy, Mr Birch, said that New Zealand would be more than half self-sufficient in transport fuels within three years from now. This was the whole aim of the energy development in New Zealand and Mr Birch was repeating what has been said many times before. Yet the Energy Plan, for all its detailed coverage of energy development in New Zealand, fails by omission to answer some of the important questions about development. One of the more important questions about energy policies is whether they are yielding a net benefit to the country. The aim of becoming less dependent on imported liquid fuels is sound because of the huge costs of importing oil. When the country has its own fuel resources it seems only sensible to use them and become less dependent on imported fuels. However, it is not possible to evaluate, from the information given in the Energy Plan, whether the development of gas fields and the. associated processing plants has meant that New Zealand will be paying less in debt servicing, or earning more in overseas funds from exports, than it would have done by continuing to import oil. The need for commercial secrecy should not overwhelm the need that the country has to be assured that the basic strategy of energy development is on the right lines. Security of

supply counts for much; the net economic effect is still critical, though forecasting the result depends on the trend of overseas prices and exchange rates — both beyond certain determination.

The once seemingly abundant supplies of gas in the Kapuni and Maui fields gave New Zealand reason to be optimistic about its energy resources. The discussion, in last year’s and in this year’s Energy Plan, about a gas depletion policy is an indication that thought is being given to the time when the gas supplies will be exhausted and the country will have to find substitutes for gas (or find more gas). The future discussions are likely to be about the rate at which gas will be taken from the fields and the possibility of the extraction of gas liquids. The extraction of the gas liquids would make compressed natural gas less compressible, and affect the range of vehicles fuelled with C.N.G. The rate of conversions of vehicles to use C.N.G. has slowed somewhat and any suggestion that the range of vehicles would be made more limited might become a disincentive for conversions. This would be unfortunate, because C.N.G. is the best and cheapest indigenous fuel for motor vehicles. An increased extraction of gas appears to be related to an increased use of the gas for electricity generation. This is certainly one of the least efficient uses of natural gas. Because the gas is cheap at the moment should not be decisive in deciding whether to use more gas for the generation of electricity. The general surplus of electricity, which was talked about some years ago, is no longer assured. Concern is being expressed that the development of North Island coalfields to fuel thermal plants may be on a tight schedule. The more densely populated North Island will continue to need electricity from the South Island in increasing quantities, and probably some coal as well. Lignite coal from Southland may well be used in the plant of New Zealand Steel. Reference is made in the Energy Plan to the possibility of extracting liquid fuels from wood and from coal. Investigations are being conducted. While it is only sensible to explore all possibilities for energy, enough is already known about the production of liquid fuels from coal for the subject to be treated with caution. It is one of the most expensive ways of producing liquid fuels. West German experience has demonstrated this amply. Producing an alcohol fuel from wood is also likely to be expensive.

The production of synthetic petrol from gas is likely to be about one-third more expensive than the present cost of having imported oil refined to petrol. It may be necessary to cope with New Zealand’s transport fuel needs that way, but it would seem unwise to get the country in a position in which it has to produce liquid fuels from coal at frightening costs. The prudent use of C.N.G. for transport in the North Island still seems the soundest option. The Government has given assurances that C.N.G. will remain attractive financially. It would do well to make sure that no. other moves are made to make the extensive use of C.N.G. unattractive.