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Topic 6: Energy

Sufficient supplies of energy are essential for meeting needs, supporting the economy, and maintaining people’s standard of living. New Zealand has access to a variety of energy sources, including fossil fuels, hydroelectricity, geothermal power, and wind power. Energy in this topic includes oil used for transport (see topic 7).

Although energy is essential in our day-to-day lives, producing and using it can have harmful effects on the environment. CO2, released by burning fossil fuels, contributes to increased greenhouse gas emissions. Air pollution from diesel use and domestic wood fires reduces air quality and can lead to health problems such as respiratory diseases (see also topic 3).

A challenge for sustainable development is meeting the energy needs of society and the economy, while limiting the impact on the environment.

Main results

Total primary energy supply per person has increased over the 20 years to 2007, but the intensity of energy demand in relation to GDP has decreased. In contrast to the target trends, the proportion of electricity generated from renewable sources has decreased and greenhouse gas emissions from the energy sector have increased. Households are spending a greater proportion of their income on energy in the home. As a nation, New Zealand is more dependent on imported energy in 2007 than it was in 1990.

Table 6.1
Energy indicators – key results

 Energy indicators - key results.

What the indicators tell us

Total primary energy supply per person (indicator 6.1)

Total primary energy supply (TPES) is the total amount of energy provided in New Zealand for energy transformation (the conversion of energy from one form to another) and use by consumers. TPES includes energy used for transport, households, and industry. TPES per person compares changes in energy supply over time with changes in the size of the population. This provides an indication of how efficiently we are using energy. Indicator 6.2 is also a measure of efficiency.

Between 1987 and 2007, New Zealand’s TPES increased by 35.5 percent. Over the same period the population grew by 27.9 percent. Accordingly, TPES per person increased overall by 5.9 percent between 1987 and 2007, though it has been decreasing since the peak in 2001 (see figure 6a).

 Total primary energy supply per person, 1987–2007.

Energy intensity of the economy (indicator 6.2)

This indicator compares production in the economy (as measured by real GDP) with total energy demand (as measured by total consumer energy). This measures whether reliance on energy to generate economic growth is increasing or decreasing.

Figure 6b shows that, since 1995, GDP has increased at a greater rate than total consumer energy. As a result the energy intensity of the economy has decreased overall by 14 percent. This means that less energy has been required for each unit of value added to the economy.

Energy intensity is influenced by three main factors: changes in consumer behaviour, structural factors (such as the composition of the economy), and technical factors (such as new machinery that uses less energy). One structural factor that has contributed to the reduction in energy intensity in New Zealand is the growth of service industries, which are less energy-intensive than industries such as manufacturing. More than three-quarters of economic growth over the period 1995 to 2007 was generated by service industries. (See also indicator 3.4, which shows that the greenhouse gas intensity of the economy has been decreasing.)

 Energy intensity of the economy, 1995–2007.

Percentage of electricity generation from renewable resources (indicator 6.3)

The majority of energy sourced in New Zealand is used to generate electricity. All non-renewable energy sources used in New Zealand are fossil fuels – coal, gas, and oil. Fossil fuels are finite and burning them emits CO2 and other polluting substances. Substituting fossil fuels with renewable energy therefore reduces dependency on finite resources, and reduces greenhouse gas and other pollutant emissions.

This indicator measures the percentage of electricity generated in New Zealand from renewable sources: hydro, geothermal, biogas, wood, and wind.

Between 1987 and 2007, the total amount of electricity generated from renewable resources increased. However, over the same period, the proportion from renewable resources decreased from 80.5 percent to 66.6 percent (see figure 6c). This is because the increase in electricity demand over this period has been increasingly met from non-renewable sources rather than renewable ones. New Zealand’s current renewable proportion is still relatively high compared with other countries (International Energy Agency, 2008).

The largest source of renewable energy in New Zealand is hydro power. In 2007, hydro made up 54.9 percent of total electricity generation, compared with 7.7 percent for geothermal and 2.2 percent for wind generation. Generation of electricity from hydro resources fluctuates annually depending on rainfall patterns. Wind generation is becoming an increasingly significant source of renewable energy, increasing by 51 percent between 2006 and 2007.

 Proportion of electricity generated from renewable resources, 1987–2007.

Household expenditure on energy used in the home, by income group (indicator 6.4)

Access to affordable energy to heat and light houses is an important element of meeting people’s needs. House temperatures affect people’s health and well-being. In New Zealand, houses tend to be damp and have lower indoor temperatures than the World Health Organization recommends (Ministry of Economic Development, 2007).

This indicator measures the affordability of energy in the home across different income groups in New Zealand. Needing to spend a high proportion of household income on energy, especially for low income households, can be a financial barrier to heating houses adequately. While energy conservation can be encouraged by managing demand through pricing structures, higher energy prices mean higher financial barriers for low income homes.

The percentage of household income spent on energy in the home has increased across all income groups (deciles) between 1988 and 2007. The biggest increase was for the lowest income group (decile 1) up from 4.2 percent in 1988 to 6.8 percent in 2007. In contrast, the highest income group (decile 10) spent 2.5 percent of household income on energy in the home in 2007 (see figure 6d).

 Proportion of household expenditure on domestic energy, by income decile.

Energy dependency (indicator 6.5)

A secure and stable supply of energy is critical to the economic development of New Zealand and to meeting individuals’ needs. Energy dependency shows the extent to which a country relies on imports to meet its energy needs.

New Zealand’s net energy import dependency was 17.2 percent in 2007. This has increased from 14.2 percent in 1990 (see figure 6e).

Although overall net energy dependency is relatively low, New Zealand’s dependence on imported oil is high. Dependency on oil imports increased from 47 percent in 1990 to 66 percent in 2007, having decreased from a high of 83 percent in 2006. The decrease in 2007 was driven by an increase in oil exports, as domestic production from a new oil field came online, and production from an existing field increased.

 Net energy import dependency, net energy imports to total primary energy supply.

Energy-related greenhouse gas emissions (indicator 6.6)

Emissions from the energy sector made up 43 percent of total greenhouse gas emissions in 2007. Energy emissions have increased 39 percent since 1990, the biggest increase of any sector (see also indicator 3.2). This includes emissions from transport, energy generation, petroleum refining, gas processing, and solid fuel manufacturing (see figure 6f).

 Energy-related greenhouse gas emissions, 1990–2007.

About the indicators

Total primary energy supply per person (indicator 6.1)

TPES is the total amount of energy produced in, and imported to, New Zealand for energy transformation and use by consumers. Primary energy is energy as first obtained from natural sources, such as coal, hydro, and wind. TPES includes energy used for non-energy purposes, such as natural gas used for the production of methanol. It excludes fuels used for international transport and exports.

TPES data is from the Ministry of Economic Development (2008) for December years and is measured in gigajoules (GJ).

Energy intensity of the economy (indicator 6.2)

This indicator is total consumer energy demand divided by real GDP. Total consumer energy is the amount of energy consumed by final users, excluding energy used or lost in the process of transforming energy into other forms and bringing energy to final consumers. Real GDP is a volume series, expressed in 1995/96 dollars, therefore removing the effect of price changes.

Total consumer energy demand is for years ended December and is matched with the subsequent March year GDP data. For example, total consumer energy demand for the year ended December 1987 is matched with GDP for the year ended March 1988.

Data is from the Ministry of Economic Development’s Energy Data File, June 2008.

Percentage of electricity generation from renewable resources (indicator 6.3)

This indicator measures the percentage of energy generated from renewable resources (hydro, wind, wood, geothermal, and others). Non-renewable sources of energy used in New Zealand are fossil fuels (coal, oil, and gas). This indicator includes generation from cogeneration plants. This is where two or more forms of useful energy are produced from a single primary energy source, for example, when heat or steam that would otherwise be wasted is used for industrial heating.

Generation of electricity from hydro resources fluctuates annually. As hydro storage is limited, the amount of energy available over the year is strongly affected by rainfall patterns and whether the year is ‘wet’ or ‘dry’.

The data is for December years and is from the Ministry of Economic Development (2008).

Household expenditure on energy used in the home, by income group (indicator 6.4)

Expenditure on energy in the home includes expenditure on electricity, gas (mains), coal, and firewood. It does not include expenditure on fuel for vehicles. The indicator does not take into account potential affordability gains from the use of insulation or use of efficient heaters, which can decrease the amount spent on energy.

Deciles are formed by dividing households into 10 groups, ranked by income. Decile 1 is the lowest 10 percent of the population in terms of income, while decile 10 is the highest 10 percent of the population.

Data is from the Household Economic Survey for 1988, 1998, and 2007.

Energy dependency (indicator 6.5)

Net energy import dependency is calculated as net imports of energy divided by total primary energy supply, measured in total petajoules (PJs). Net imports equals imports less:

  • exports
  • change in stocks held
  • international transport costs.

Total primary energy supply is as defined for indicator 6.1.

The data is for December years and is from the Ministry of Economic Development (2008).

Energy-related greenhouse gas emissions (indicator 6.6)

The information is from the Ministry for the Environment (2008).

Table 6.2
Energy indicators – defining principles

 Energy indicators - defining principles.

See part C for the complete list of defining principles for all indicators.

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