Dear Graeme
Thank you for your email dated 24 March 2004 regarding peak oil and
alternative transport fuels.
Putting a date on when oil production will peak is a real headache. It
requires data we don't have and assumptions we can't test. Indeed, about
the only thing that commentators on this issue agree on is that world oil
production will peak and decline some time this century. However I would
like to note that your sources of information represent some of the most
pessimistic views of world oil supplies. The International Energy Agency
(IEA) is considered to be one of the leading authorities on world energy
projections and energy supply issues. In their 2004 World Energy Outlook,
the IEA predicts that global production of conventional oil will not peak
before 2030 if the necessary investments are made.
My officials carefully consider a wide range of evidence and information
but it should be recognised that mainstream opinion is that oil is not
likely to peak this decade. Keep in mind that after the 1970's oil shocks,
predictions were for oil to run out by the year 2000.
It is also important when considering the oil market situation, to account
for the short term and long term nature of the causes of oil-price rises.
The increase in oil prices since 2003 has been attributed to various
factors including international political unrest, hurricane damage to
refining capacity, demand growth in Asia, and a lack of investment in new
capacity. Higher oil prices do not necessarily imply that global oil
supplies are running out.
In your letter you call on the Government to establish targets for clean,
renewable energy and to establish measures and policies to encourage the
efficient use of energy. Promotion and development of renewable energy
sources and uptake of energy efficiency measures are priorities for the
government. The National Energy Efficiency and Conservation Strategy
(NEECS) sets out two targets, one for energy efficiency and the other for
the uptake of renewables. The target for renewable energy includes a
sub-target for the uptake of renewable transport fuels. The Energy
Efficiency and Conservation Authority (EECA) has responsibility for
implementing the government's objectives relating to energy efficiency and
renewables. Transport sustainability, including the promotion of renewable
transport fuels, is a key element of EECA's work programme. If you would
like further information on EECA's initiatives and programmes see
http://www.eeca.govt.nz.
As part of its climate change policy package, the government has developed
the Projects to Reduce Emissions mechanism, which is intended to promote
growth in the renewable energy sector and encourage business practices that
are less greenhouse gas intensive. The initiative provides incentives for
firms to undertake emissions reductions prior to and during the first Kyoto
commitment period (2008-2012). The Government has also decided to introduce
a carbon tax (on fossil fuels and industrial process emissions, ie. carbon
dioxide and fossil methane) from 2007 to create an incentive to reduce
emissions. Further information on the projects mechanism and carbon charge
can be found at http://www.climatechange.govt.nz.
The New Zealand Transport Strategy sets out a direction for New Zealand's
transport system. Sustainability is an underlying principle of the
strategy. You may be particularly interested in chapter 6, which outlines
our objectives for environmental sustainability including reducing fuel
consumption and increasing the use of low energy transport options. For
more information, or to view the strategy, go to http://www.beehive.govt.nz/nzts/.
The Government's recently released sustainable energy framework, a
cross-government project led by the Ministry of Economic Development, is
the best forum to look at overall government energy planning. A copy of
the framework can be found at:
http://www.med.govt.nz/ers/environment/ ... ble-energy.
You asked specifically about the Government's programme for alternative
transport fuels. Encouraging the use of transport biofuels contributes to a
number of sustainable development and climate change policy objectives. For
example, the NEECS, described above, includes a target for renewable
transport fuels of 2 Petajoules a year by 2012. The sustainable energy
discussion document recognises the importance of transport biofuels in
promoting reliable and affordable energy and taking better care of the
environment. In the context of these objectives, the primary transport
biofuels currently being considered in Government policy are biodiesel and
bioethanol. The Government is also examining further options to support the
uptake of transport biofuels such as mandatory biofuels targets, developing
appropriate quality standards and subsidies and other forms of financial
incentives.
Yours sincerely
Trevor Mallard
Minister of Energy





