The challenge ahead for our team of 5 million
James Carberry | Head of Sustainable Opportunities, Simply Energy | April 2021
There’s no shortage of thought-provoking reads out there on the challenge of climate change. None perhaps more critical to our future prosperity than the 10,000 + submissions the Climate Change Commission (CCC) received on their Draft Advice, which they hope to finalise in May. The high level of interest and engagement in the topic from our ‘team of 5 million’ demonstrates we’re passionate and eager to support the net-zero transition.
If you’re interested in taking a read of our submission head on over here. We share what we believe is needed to support commercial and industrials make the transition to a net-zero economy. You’ll find Contact’s broader submission here.
Making sense of the data
Reading about climate change can be pretty overwhelming at times, with some big concepts and numbers to get your head around. Two numbers that recently came to light were 51 billion and zero and making sense of these is really important.
In Bill Gates’ latest book release – How to Avoid a Climate Disaster – he tells us that in a normal year 51 billion tonnes of greenhouse gases are released into the atmosphere globally. It’s a number so large it’s hard to picture so to provide some perspective, it’s equivalent to 5 million Eiffel Towers, which if lined up side by side would circumnavigate the globe over 12 times. In short, that’s a lot of carbon.
Now back to zero – the annual net emissions we need to reach by 2050 to avoid a ‘climate disaster’ known as ‘net zero’. A number much easier to comprehend, but according to Gates getting from 51 billion to net-zero, might be the most difficult challenge humankind has ever attempted.
We can do it
The good news is, that it is possible. For the most part, it will require monumental collaboration, and other important actions, no doubt covered in the 10,000+ submissions on the CCC Draft Report. For example, strengthening environmental policy drivers, heightening corporate responsibility and accelerating technological innovation.
Whilst we may have only contributed 0.1% to global emissions in 2019, amongst OECD countries, New Zealand’s emissions per capita are the 5th highest with only Luxembourg, Canada, the USA and Australia above us. In addition, our emissions rose by 64% between 1990 and 2015.
We may be small but, according to Dr Carr (Chair of the Climate Commission) who spoke at a public discussion on the Draft Report at Auckland City Council “being little doesn’t get you out of jail free” and “being little and taking action reassures others that they too can take meaningful action”.
Back to the data
Numbers are also really important in helping us understand where our emissions are coming from and deciding where to focus our efforts.
First, let’s take a look at global carbon emissions which can be split into 5 simple categories and where electricity generation is the second highest contributor to emissions behind manufacturing.
- How we make things (manufacturing) = 31%
- How we power things (electricity) = 27%
- How we grow things (food) = 19%
- How we move things (transport) = 16%
- how we heat things (heating/cooling/refrigeration) = 7%
Now let’s have a look at New Zealand’s emissions. Unlike the global profile, New Zealand is incredibly fortunate to have a highly renewable electricity grid (82.4% in 2019). After agriculture emissions, it’s transport and industry/manufacturing processes (notably process heat) that contribute most to emissions, around 35%.
So, what does this mean for New Zealand?
In Aotearoa, the government has committed to reaching net-zero emissions of long-lived gases by 2050 and to reducing biogenic methane emissions (from biological processes in the waste and agriculture sectors produced by living organisms) by between 24-47%. These are targets that ensure we stay on track to reach our ultimate target of limiting global warming to 1.5 degrees C.
What is clear is that we need to pick up the pace and accelerate our collective actions to reduce emissions; especially in the areas of transport and industry.
Getting smarter together
Using our largely renewable electricity supply to electrify New Zealand’s transport and manufacturing sectors will significantly reduce emissions. So why not just go for it?
Here lies a key paradox to the net-zero transition – many low carbon solutions currently command a higher cost, or, as Gates terms it, a ‘green premium’.
What we’ve found is that we can support our customers best by working with them on balancing what’s good for the environment, with what makes economic sense.
Take electric vehicles (EVs) for example. The total cost of ownership (TCO) for most light EVs is expected to reach parity with internal combustion equivalents by 2023. We’ve established EV charging partnerships to promote EV uptake and are on course for our own light vehicle fleet to be fully electric by the end of next year. With increasing sales and technological advancements, EV costs will continue to drop, accelerating this uptake as a result of both the environmental and financial incentive to switch.
Another example is process heat. Using electricity for process heat is currently more expensive than coal at today’s prices. However, for customers willing to enter into long-term agreements, the certainty of demand means we’ve been able to structure lower-cost supply deals that are competitive vs coal when also accounting for an increasing carbon tax and total lifecycle costs.
Being smarter with when we consume electricity is also a key area to focus on. We’re finding our customers are loving solutions like demand flexibility where we offer financial incentives for flexible energy use. For example, powering down equipment at times of high demand. Shifting production outside of peak periods or introducing thermal storage for process heat can also result in electricity being consumed when the grid is greener and the supply price is lower.
There’s certainly no silver bullet for solving the net-zero transition. It is going to require hard work and a healthy combination of collaboration, policy drivers and technological and commercial innovation. As our team of 5 million demonstrated in the response to the COVID pandemic, with strong leadership, a clear plan and collective action we can succeed in the face of adversity. Importantly, a successful net-zero transition should not only allow the environment to thrive but also each and every New Zealander.