The world faces a highly uncertain energy future. Internationally, businesses, governments and individuals are grappling with issues such as accelerating deeper and affordable decarbonisation, rethinking energy security as dynamic resilience in an era of broadening geopolitics, cyber insecurity and global environmental risks.
The need to balance our energy systems across the dimensions of affordability, sustainability and reliability is becoming more obvious and urgent, yet the responses are increasingly complex.
It is important that, in addressing the realities of climate change, countries need to support public acceptance at home and foster international cooperation. New Zealand and Germany can take a leading role in addressing the realities of climate change by working in partnership.
The two countries enjoy a supportive relationship based on common interests and values, making us like-minded partners in international affairs, trade, commerce, science and cultural exchange.
Germany has long been one of New Zealand’s most important partners in the area of science and innovation, with 2017 marking the 40th anniversary of the Scientific and Technological Cooperation Agreement.
Prime Minister Jacinda Ardern visited Berlin in April 2018, meeting with Federal Chancellor Dr Angela Merkel where they discussed a ‘truly excellent relationship’.
In terms of energy, Germany has already expressed interest in collaborating with New Zealand on green hydrogen. In September, Chancellor Merkel agreed to support a €54 billion package of climate policies aimed at getting Germany back on track to meet its goal of reducing greenhouse gas emissions by 2030.
Over the next 40 years, hundreds of billions of dollars will be expended on capital, operating and fuel costs across the energy sector. Governments need to strike a balance between making long-term policy and investment decisions, and decisions that are resilient and adaptive to the rapidly moving energy system. Governments should not work in silos when making these decisions.
New Zealand is also looking to Germany and see what it can learn from the German energy transition ‘Energiewende’ (Germany’s transition to non-nuclear, sustainable power sources).
The ‘Energiewende’ policy includes greenhouse gas reductions of 40% by 2020 and 80-95% by 2050 relative to 1990. As part of the ‘Energiewende’, the Ministry of Education and Research announced an investment of €300 million in research on green hydrogen by 2023 (€180 million has already been allocated for the coming years).
In a recent meeting, facilitated by the BusinessNZ Energy Council and the Konrad Adenauer Foundation, Director General of the Federation of German Industry (BDI) Dr Joachim Lang asked how Germany and New Zealand could work together in developing hydrogen.
He said that Germany would have a strong interest in importing green hydrogen from New Zealand, showing a willingness to pay the additional cost of producing green, instead of brown or grey, hydrogen. This is another great opportunity for New Zealand and Germany to identify potential areas of collaboration and the BEC would be pleased to facilitate its further development.
Similar to Germany, New Zealand faces rapidly changing patterns of energy use, emerging disruptive technologies and the challenge of living affordably and sustainably.
Our recent BEC2060 project paints a picture of New Zealand’s plausible energy future and the range of trade-offs we might need to make.
Importantly, the research highlights the importance of cooperation between organisations and countries.
As a member of the World Energy Council (WEC), BEC members are a cross-section of leading energy-sector business, government and research organisations. Together with its members the BEC is shaping the energy agenda for New Zealand.
The WEC offers extraordinary opportunities at the global, regional and national levels. Access to this high-level network stimulates useful dialogue, promotes the exchange of ideas, aids development of new business partners and investment opportunities and provides valuable collaboration and information sharing across the energy sector. This is a strong, win-win relationship.
Our internationally renowned, New Zealand-specific modelling envisages our potential and plausible energy system futures. Using an explorative analysis, we were able to give a more accurate, open-ended insight into how New Zealand’s future energy mix might look, should things we are uncertain about coalesce in different ways, and the range of trade-offs and choices these different pathways imply.
It became clear from the results that the biggest opportunity to decarbonise is to leverage New Zealand’s amazing renewable electricity resources and convert much of the transport fleet and industrial heat to electricity.
But we cannot do it alone. More forward-thinking solutions are needed, and we need to look to the likes of Germany for ideas.
Global and domestic innovation and R&D will be a critical part of finding commercial solutions for decarbonisation. We also note aviation and marine solutions to decarbonisation are neither obvious nor easy.
A technology race is underway, and the race is finely balanced. We must be wary of “betting the house” on a given technology. Robust trialling, piloting, and clear policy frameworks will level the playing field for technology development. The NZ-Germany Scientific and Technological Cooperation Agreement could play an important role in this.
If we fail to ask the ‘what-if’ questions and fail to look to our international partners, we will become blinded to the possibility that the future we are aiming for will not eventuate.