Trustpower supports intent of emissions target but calls for careful consideration of impacts

Trustpower supports intent of emissions target but calls for careful consideration of impacts. Photo: Lynn Grieveson

Trustpower supports the intent of the government’s net-zero emissions target by 2050 but says decisions such as the recent ban on offshore oil and gas exploration that deplete the capital needed for the task and don't achieve the objective "must be avoided".

In April, the government announced it would not issue new offshore oil and gas exploration permits, in a decision that was widely criticised for a lack of consultation.

Trustpower chair Paul Ridley-Smith told the company's annual general meeting at ASB Baypark Mount Maunganui that "the (zero emissions) targets are ambitious and require careful consideration of economic and social impacts," according to a presentation filed with the stock exchange.

He said the government's target is "achievable, but not necessarily the best economic outcome, nor the most productive means of getting the greatest emission reductions. The targets need further expert analysis."

However, he recognised that renewable electricity generation should significantly increase, both to meet greater demand as other sectors move from fossil fuels and in the proportion of electricity generated from renewable sources. Among other things, conversion of industrial heat boilers to electricity and the widespread uptake of electric vehicles could increase electricity consumption by 75 percent in 2050, he said.

According to Ridley-Smith, gas peaking for dry, calm overcast and peak demand periods will be needed and "retaining access to existing hydro resources underpin the ability to increase renewable generation."

He said the national policy statement for renewable energy generation - which sets out the objectives and policies for renewable energy generation - needs to strengthen if targets are to be realistic.

He also called on the government to "join up" policy, noting there are currently 10 Crown agencies with climate change functions and said that both the Climate Change Commission and the government's goals must have cross-party support to succeed.

New Zealand's government received 14,000 submissions on its plans for a new Zero Carbon Bill during a six-week consultation that closed last week.

Regarding the company's market view, chief executive Vince Hawksworth said the electricity industry is poised for growth. While Trustpower agrees the market is "approaching a supply/demand balance" he said there is considerable uncertainty around that balance in the long run.

As a result, "Trustpower is unlikely to invest in a significant new generation build in the near term. Small-scale builds/enhancements may be possible," he said.

Overall, "clear signals" are required from government to encourage capital deployment, said Hawksworth.

Trustpower shares recently traded up 0.3 percent at $5.87, having shed 2.2 percent so far this year.