New Zealand could achieve sustainablity in its energy sector more easily than any other IEA country. It has a temperate climate, high sunshine, rainfall and wind regimes. Trees and crops grow very quickly. Its population is small and educated. It is far from energy exporting countries. Energy suppliers that were owned and run by the state are now companies, which are more accountable at least in theory. Sustainability is an overall objective of several laws and regulations.

The factors above are favourable. But New Zealand's so-called "free-market" culture is working against sustainability. Privatisation and deregulation have been implemented passionately by both Government and business interests aligned with global markets. This allows energy companies to wield great market power. New Zealand has an unusually "lumpy" mix of supply facilities and demand centres, usually connected by long transmission facilities. This allows market power to be greatly increased. Many energy companies that were once publicly owned have been wholly or partly sold to foreign companies. When these companies abuse their market power, the excessive profits go overseas, adding to New Zealand's burden of debt.

This report follows the brief of HELIO International, by using eight indicators to monitor New Zealand's progress in relation to sustainable development. We compare the values of these in 2000 to the values in 1990. Because statistics are available for each year, and there are great variations in each year, we draw a trendline wherever possible (we use the third power "polynomial trendline" available in Excel, the simplest fit available that allows significant variations in either direction over the ten-year period of interest).
 

• For the global environment, we find that New Zealand's average per capita CO2 emissions from fossil fuel combustion are 8% higher than those in 1990, and 80% higher than global emissions in 1990.

• For the local enivronment, emissions of particulate matter is the most significant indicator. These come mostly from domestic solid fuel burning in winter. The city of Christchurch has long monitored these emissions; they were 25% higher in 2000 than in 1990.

• For social sustainability, the indicator for access to electricity is simple: New Zealand households had 100% access in both 1990 and 2000. It is not access, but high prices for small consumers, rural consumers, and low-income households, that deprive some people of benefits of electricity. 

• A second social indicator is the trend towards "clean energy", defined as small-scale renewable energy and energy efficiency investment. This indicator is very subjective, because we must define what counts as "small-scale". Our best estimates are that investment in small-scale renewable energy almost doubled between 1990 and 2000. Unfortunately the two significant wind farms that contributed to this have postponed their plans to expand.

• Economic indicators begin with "resilience", essentially the amount of self-sufficiency in fossil fuels. This is declining - we imported 29% more fossil fuels in 2000 than in 1990. 

• The "burden of investment" indicator works differently in New Zealand's highly commercialised environment than in most countries. We define "burden" as the flow of profits overseas as New Zealand energy supply businesses are privatised. We cannot quantify the flow of wealth overseas from capital gains and payments to related companies and to top managers and directors.

• For technological sustainability, we look at the amount of primary energy needed to produce a unit of gross domestic product. This indicator has declined (become more favourable) by 13% in the decade from 1990 to 2000.

• The final technological indicator is the percentage of energy supply coming from all renewable resources. This was 18% higher in 2000 than the 1990 figure. Plans for more thermal generation may reverse this trend.

The unregulated energy market allowed large companies to gain wealth at the expense of small consumers, rural consumers and small-scale energy businesses. New Zealand's energy efficiency and economic efficiency have both lagged behind gains made by other OECD countries. For years, governments have responded by making "sustainable development" a broad goal of energy law and policy. But they still allow the big energy companies to abuse their market power. Increasing foreign ownership is allowing profits to flow overseas, adding to New Zealand's burden of debt.

The restructuring of the 1980s and 1990s amounted to a cultural revolution, and the energy sector led those reforms. It would take a counter-revolution to bring social goals back into the energy free-market. Energy companies are constrained only by threat of regulation. Until real regulation is imposed on energy companies, we have little hope for sustainable energy development in New Zealand.