Submission to Climate Change Commission’s Draft Advice on Aotearoa New Zealand’s Fourth Emissions Budget
- silvereyecomms
- Apr 9, 2024
- 8 min read
Updated: 1 day ago
“GOVERNMENT AND ENERGY UTILITIES SHOULD FUND MULTI-MILLION TONNE ENERGY EFFICIENCY OPPORTUNITY”
Submission to Climate Change Commission’s Draft Advice on Aotearoa New Zealand’s Fourth Emissions Budget
1. SUMMARY – MULTI-MILLION TONNE ENERGY EFFICIENCY OPPORTUNITY
The Climate Change Commission is seeking feedback for its draft advice on Aotearoa New Zealand’s fourth emissions budget. Interested parties were invited to submit their feedback by 31 May 2024.
It is with pleasure that Ecobulb Limited provides its feedback on this draft advice.
We would relish an opportunity to discuss this feedback further in person. Our contact details are:
Dr Chris Mardon, Managing Director, Ecobulb Limited
Email: chris.mardon@energymad.com
Mobile: 021 041 2981.
Ecobulb has delivered 107 Ecobulb and energy efficiency projects with government, energy trusts, lines companies and electricity retailers in New Zealand, Australia, the United States and Germany since 2004.
With approximately 25 million “Ecobulb” energy saving light bulbs installed in an estimated 3.4 million New Zealand, Australian and United States homes, and having completed energy assessments in 42,200 New Zealand homes, Ecobulb is 64% of the way to achieving our goal. Our Ecobulbs are saving an estimated $6 billion of electricity and 19 million tonnes of carbon dioxide emission reductions.
The Commission’s Draft Advice noted the large potential to improve energy efficiency of buildings through improved insulation or more efficient forms of heating.
However, it seems to be missing the larger energy efficiency and carbon dioxide emission
reduction potential from the widespread rollout of efficient lighting, hot water heating and electric motors in homes and buildings.
This has the potential to deliver 5,981 GWh of annual electricity savings at a price significantly lower than the cheapest currently available renewable generation technologies.
While this equates to about 15% of the electricity generated in New Zealand, it equates to a larger proportional share of the emissions generated by electricity because much of these savings would come at peak electricity generation times.
While the Government wants the Emissions Trading Scheme to do the heavy lifting in encouraging business to stop burning fossil fuels, the Scheme does not provide any incentive for residential and commercial lighting and other energy efficiency upgrades for homes and the vast majority of businesses in New Zealand.
The early and rapid large-scale delivery of New Zealand’s wider low-hanging energy efficiency opportunity therefore has the potential to deliver millions of tonnes of emission reductions and significantly reduce New Zealand’s post-2030 multi-billion-dollar carbon offset bill.
We therefore recommend that the Government:
1. Recommence and scale up its co-investment for all energy efficiency programmes that
deliver electricity savings at a lower cost than new electricity generation.
2. Obligate and incentivise lines companies and electricity retailers to improve energy
efficiency.
We also agree with the Commission’s six Recommendations listed in its Proposed Draft Advice, and in particular “Proposed Recommendation 5 – Revisions to the set emissions budgets.”
2. LARGE CARBON REDUCTION ELECTRICITY EFFICIENCY OPPORTUNITY
We commend the Climate Change Commission on its comprehensive and well thought draft advice on Aotearoa New Zealand’s fourth emissions budget. We note that the Commission’s Draft Advice includes the statement that there is “large potential to improve the energy efficiency of buildings”. It goes on to explain that:
“For existing buildings, renovations offer an opportunity to replace fossil fuel heating systems and make large improvements in energy efficiency through improved insulation or more efficient forms of heating (such as heat pumps). In the EB4 demonstration path, we have assumed that the energy efficiency of buildings would improve over time, reducing the demand for heating by 19% for residential buildings and 43% in commercial buildings by 2050, relative to 2019 levels.”
However, the Commission’s Draft Advice seems to be missing the larger energy efficiency and carbon dioxide emission reduction potential from the widespread rollout of efficient lighting, hot water heating and electric motors in New Zealand homes and buildings.
This section therefore outlines the large potential for carbon emission reductions – delivered
faster and at lower cost than building expensive renewable generation – through electricity
efficiency upgrades in New Zealand homes and buildings.
In July 2019 the Energy Efficiency and Conservation Authority (EECA) published its overview report “Energy Efficiency First, The Electricity Story*”. Its key findings included:
1. New Zealand energy consumers have a greater opportunity to improve the efficiency of energy use than those in many other countries because New Zealanders do not use energy very efficiently now**.
2. A focus in its modelling on three technologies: LED lights; heat pumps for water and space heating; and more efficient electric motors. All these energy-efficient technologies provide the same or better functionality as the less-efficient technologies they replace, meaning the energy needs of users can be filled using less electricity.
3. Implementation times for switching to LEDs, heat-pumps or more efficient motors are short relative to building renewable generation, which means that electricity efficiency measures could be deployed quickly, allowing emissions reductions to be achieved earlier. New Zealand’s emissions target under the Paris Agreement is a reduction of total emissions between 2021 and 2030, so rapidly deployable interventions are especially valuable in meeting that target.
4. Figure 1 below illustrates the cumulative 5,981 GWh*** annual electricity saving potential from LED lighting****, hot water heating, space heating and electric motors in New Zealand homes and businesses – and the levelised cost per MWh of electricity saved for each of these opportunities.
5. Figure 2 below illustrates that the average generation equivalent cost of implementing these electricity efficiency measures is significantly lower than the cheapest currently available renewable generation technologies, with electricity efficiency measures costing $15–50/MWh compared to new generation at $60–75/MWh.
* “Energy Efficiency First, The Electricity Story”, Overview Report, EECA, July 2019.
** It is Ecobulb’s opinion that this statement holds true in 2024.
*** For context, 5,981GWh is about 15 percent of New Zealand electricity generation (after line losses) of 39.4 TWh a year.
**** Ecobulb’s methods for delivering mass market residential LED rollouts result in residential LED lighting upgrades providing the largest and lowest cost per GWh and carbon abatement potential of the energy efficiency options. More detail about this potential is provided later in this section.
6. Efficient technologies are being adopted, but at a slower rate than one would expect based on the cost versus benefit analysis. As an example, Figure 3 below shows an estimate******* of the uptake for residential efficient lighting under current policies out to 2030. While the percentage share of LEDs is expected to grow, 35% of the lighting stock is still expected to be inefficient incandescent and halogen light bulbs by 2030.
A 2019 study for EECA by Concept Consulting******** found that residential lighting and space heating are largely responsible for the winter peak in electricity demand (see Figure 4) and much fossil fuel generation. Capturing the full technical potential of peak-related electricity efficiency could reduce electricity emissions by about 1.7 million tonnes per year, Concept said.
*******Forecast of Business-as-Usual New Zealand Residential Lighting Stock, Beletich, 2019.
******** “What is the case for electricity efficiency initiatives?”, Concept Consulting, March 2018 report for EECA.
Ecobulb has proposed a Government-funded programme in which 70% of households each receive 10 energy efficient LEDs that use up to 90% less electricity than the inefficient light bulbs they replace. The programme is estimated to cost $50 million. Ecobulb commissioned Concept Consulting to independently evaluate the proposal and the benefits to New Zealand Inc of Government funding the programme.
Concept’s evaluation********* found that the project, which would distribute 12.6 million Ecobulb LEDs over and above the expected business as usual increase in residential LEDs, would deliver the following
benefits**********:
1. 1.569 million tonnes of avoided carbon dioxide emissions through to 2040.
2. 173MW electricity network peak winter load reduction.
3. $848 million Net Present Value to New Zealand Inc. (excluding consumer electricity savings) at an 18 :1 Benefit : Cost ratio as shown below in Figure 5.
********* “Evaluation of the economic and environmental benefits of a programme of significant LED uptake proposed by Ecobulb”, Concept Consulting, February 2023 update.
********** This business-as-usual transition to LEDs is likely to have slowed because of the cost of LEDs having increased significantly due to inflation, and because the cost-of-living crisis is pushing more people towards the cheapest light bulb solution.
This Concept Consulting evaluation also found that replacing all 29 million inefficient (ie. non-LED) light bulbs in New Zealand homes with Ecobulb LEDs would deliver:
1. 3.931 million tonnes of avoided (greater than business as usual) carbon dioxide emissions
through to 2040, as illustrated below in Figure 6.
2. 340MW electricity network peak winter load reduction. This is equivalent to a Hamilton city-worth of peak load reduction.
3. $2.02 billion Net Present Value to New Zealand Inc. (excluding consumer electricity savings).
3. RAMP UP GOVERNMENT AND UTILITY ENERGY EFFICIENCY FUNDING
As outlined earlier, New Zealand has an abundant “low hanging fruit” energy efficiency opportunity.
Unfortunately the current coalition Government’s first target for saving money involved axing the one billion dollar “GIDI” fund which incentivised the installation of efficient lighting, heating, and electric motors, and removal of coal-fired boilers.
The Energy Minister says he prefers market-based approaches to energy policy as the best means of achieving social, economic and environmental goals in the energy system. He wants to “mobilise private capital and leverage the energy efficiency regulatory regime11” to enable energy efficiency gains.
The Government also wants the Emissions Trading Scheme to do the heavy lifting in encouraging business to stop burning fossil fuels. Unfortunately the Emissions Trading Scheme does not provide any incentive for residential and commercial lighting and other energy efficiency upgrades for homes and the vast majority of businesses in New Zealand.
Further, most commercial lighting upgrades won’t happen without Government co-investment, because of split incentives between landlords who pay for the upgrades and tenants who pay the power bills.
The Climate Change Commission’s Chair said during a 9 April 2024 Radio New Zealand interview12 that New Zealand will in 2031 or 2032 need to purchase approximately 100 million tonnes of carbon emission offsets to cover its shortfall for the 2020 decade. The cost range for these purchases, based on the Ministry for the Environments projection for the country’s domestic emissions, is between $8.8 billion and $20.6 billion.
The early and rapid large-scale delivery of New Zealand’s low-hanging energy efficiency opportunity therefore has the potential to deliver millions of tonnes of emission reductions and reduce this looming carbon bill significantly.
We therefore recommend that the Government:
1. Recommence and scale up its co-investment for all energy efficiency programmes that
deliver electricity savings at a lower cost than new electricity generation.
2. Obligate and incentivise lines companies and electricity retailers to improve energy
efficiency.
Regarding point two, regulating energy utilities to improve energy efficiency sounds controversial but it is relatively common in overseas countries. The International Energy Association of 31 member nations is a strong supporter because utility-funded programmes have two unique advantages:
1. Energy utilities have access to finance, which puts them in a strong position to fund energy
efficiency projects. Due to their reach and resourcing, utilities can deploy energy efficiency actions quickly on a large scale.
2. In New Zealand, nearly every person and business is an energy utility customer and with the right regulatory incentives, utilities are well placed to promote energy efficiency through identifying and deploying energy-savings opportunities for their customers.
11 A quote from a 21 March 2024 letter from the Energy Minister to Ecobulb.
12 NZ could be more ambitious on emissions targets | RNZ
We also agree with the Commission’s six Recommendations listed in its Proposed Draft Advice, namely:
Proposed Recommendation 1 – Proposed budget level.
Proposed Recommendation 2 – Breakdown of the fourth emissions budget.
Proposed Recommendation 3 – Reductions by greenhouse gas to meet the emissions budget.
Proposed Recommendation 4 – Limit on offshore mitigation for the fourth emissions budget.
Proposed Recommendation 5 – Revisions to the set emissions budgets.
Proposed Recommendation 6 – Rules to measure progress
4. ABOUT ECOBULB LIMITED
Ecobulb Limited (formerly Energy Mad) is a 100% owned Christchurch company. Our goal is to save enough electricity to power New Zealand for one year.
We are experts in designing, developing and delivering New Zealand regional and nationwide residential energy assessment and lighting projects.
We have a highly successful history and proven track record from delivering 107 large Ecobulb and energy efficiency projects with Governments, Energy Trusts, Lines Companies and Electricity Retailers, in New Zealand, Australia, the United States and Germany since 2004.
With approximately 25 million “Ecobulb” energy saving light bulbs installed in an estimated 3.4 million New Zealand, Australian and United States homes, and having completed energy assessments in 42,200 New Zealand homes, Ecobulb is 64% of the way to achieving our goal. These Ecobulbs are saving an estimated $6.0 billion electricity and 19 million tonnes of carbon dioxide emission reductions.
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