Power sector in 2030
New Zealand benefits from a power mix with a relatively high share of renewables of 82% in 2019. The country has set the target of 90% renewable electricity generation by 2025 and 100% renewable electricity by 2035.12,15 A Paris Agreement compatible pathway requires New Zealand to be near 100% renewable power by 2030 and phasing out coal in the current decade and natural gas by 2032 to 2035 latest.
New Zealand would need to diversify its renewable energy mix in the power sector amid concerns about relying on hydro power as hydro generation declines during El Niño events.
Coal and gas were used to meet the recent shortfalls of hydro generation in 2019 and 2021.10 Geothermal, wind, solar and storage technologies along with energy efficiency measures should be scaled up to meet hydro power shortfalls and replace fossil fuels. Current plans focus on wind, geothermal and gas-fired peaking plants.8 New Zealand is also investigating a pumped hydro storage project to manage dry years when lake levels are low, to replace the current backup for energy production largely coming from coal power plants.24
Towards a fully decarbonised power sector
To align with a 1.5°C compatible pathway, New Zealand would need to reduce its power emissions intensity by around 94% from 2019 levels by 2030 reaching 10 gCO₂/kWh by 2030 and 0 or below by 2040 in line with a 1.5°C pathway.
While negative emissions technologies such as BECCS require upfront investments, a later phase out of fossil fuel will result in a higher reliance on negative emissions technology.
Several scenarios show the phase out of unabated fossil fuels, displaced by renewable energy without the need for BECCS or fossil fuels with CCS. Considering New Zealand’s current high levels of renewable energy in the power sector, renewables with storage offers a more likely alternative path to decarbonise the power sector.
1 CAT. New Zealand, CAT Climate Target Update Tracker. Climate Action Tracker. (2021).
2 Ministry for the Environment. Te hau mārohi ki anamata Transitioning to a low-emissions and climate-resilient future Have your say and shape the emissions reduction plan. (2021).
3 CAT. New Zealand – September Update. Climate Action Tracker. (2021).
4 Daalder, M. New Paris Target Might Actually Reduce Emissions, A Bit . Newsroom, (2021).
5 Gütschow, J., Jeffery, L., Gieseke, R. & Günther, A. The PRIMAP-hist national historical emissions time series (1850-2017). V.2.1. GFZ Data Serv. (2019).
6 United Nations Climate Change Secretariat. Summary Of GHG Emissions For New Zealand. 0–3 (2021).
7 Ministry for the Environment. New Zealand’s Greenhouse Gas Inventory 1990-2018. New Zealand Government. (2020).
8 Ministry for the Environment. New Zealand’s Fourth Biennial Report Under the United Nations Framework Convention on Climate Change. (2019).
9 Woods, M., Parker, D. & Shaw, J. Government delivers next phase of climate action . Beehive. (2021).
10 Ministry of Business Innovation & Employment. Energy in New Zealand 20. (2020).
11 Climate Bonds Initiative. AUS & NZ Green Infrastructure list. Climate Bonds Initiative. (2018).
12 Ministry of Business Innovation & Employment. Energy strategies for New Zealand. New Zealand Government. (2021).
13 EECA. Clean and Clever Energy Progress Report. (2020).
14 He Waka Eke Noa Steering Group. He Waka Eke Noa Discussion Document, Steering Group Discussion Document to support Partnership Targeted Engagement Nov/Dec 2021. (2021).
15 Government of New Zealand. New Zealand’s Action on Climate Change. (2016).
16 New Zealand Government. Reducing government fleet emissions. New Zealand Government Procurement and Property. (2021).
17 New Zealand Government. Public sector to be carbon neutral by 2025. Beehive. (2020).
18 Ministry for Primary Industries. One Billion Trees Programme.
19 Beehive. New Zealand to phase down use of HFCs from 2020. Beehive. (2018).
20 Ministry of Business Innovation & Employment. Unlocking our energy productivity and renewable potential : New Zealand energy efficiency and conservation strategy 2017-2022. (2017).
21 Woods, M., Parker, D. & Shaw, J. Government delivers next phase of climate action. Beehive. (2021).
22 Climate Change Commission. _Ināia tonu nei : a low emissions future for Aotearoa. (2021).
23 Climate Action Tracker. New Zealand. Climate Action Tracker. (2020).
24 Woods, M. Major contract awarded to power NZ Battery investigation . Beehive. (2021).
25 New Zealand Government. A vision for hydrogen in New Zealand, Green Paper. (2019).
26 New Zealand Government. Building for climate change. Building Performance. (2021).
27 Waka Kotahi NZ Transport Agency. Clean Car Discount overview. Waka Kotahi NZ Transport Agency. (2021).
28 Ministry of Transport. Climate change — emissions work programme | Ministry of Transport. (2021).
29 New Zealand Parliament. Land Transport (Clean Vehicles) Amendment Bill 2021: Bills Digest 2654 . New Zealand Parliament. (2021).
30 Ministry for the Environment. New Zealand’s projected greenhouse gas emissions to 2050. (2021).
31 Including the residual methane emissions left from the separate methane target for 2050.
32 According to national projections, LULUCF emissions could reach -26 to -31 MtCO₂e by 2040. See the Government 2020 for LULUCF projection estimates.30
33 While global cost-effective pathways assessed by the IPCC Special Report 1.5°C provide useful guidance for an upper-limit of emissions trajectories for developed countries, they underestimate the feasible space for such countries to reach net zero earlier. The current generation of models tend to depend strongly on land-use sinks outside of currently developed countries and include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches. The scientific teams which provide these global pathways constantly improve the technologies represented in their models – and novel CDR technologies are now being included in new studies focused on deep mitigation scenarios meeting the Paris Agreement. A wide assessment database of these new scenarios is not yet available; thus, we rely on available scenarios which focus particularly on BECCS as a net-negative emission technology. Accordingly, we do not yet consider land-sector emissions (LULUCF) and other CDR approaches which developed countries will need to implement in order to counterbalance their remaining emissions and reach net zero GHG are not considered here due to data availability.
34 See CAT for full explanation.
35 Methane from agriculture and waste sectors.
36 According to national projections, LULUCF emissions could reach -36 to -41 MtCO₂e by 2040. See the Climate Action Tracker assessment on New Zealand (July 2020 update) for assumptions on LULUCF projections.
New Zealandʼs power mix
terawatt-hour per year
- Nuclear and/or fossil with CCS
- Unabated fossil
- Negative emissions technologies via BECCS
- Renewables incl. biomass
New Zealandʼs power sector emissions and carbon intensity
MtCO₂/yr
- Historical emissions
- High energy demand - Low CDR reliance
- Low energy demand
- SSP1 High CDR reliance
- 100%RE
- SSP1 Low CDR reliance
1.5°C compatible power sector benchmarks
Carbon intensity, renewable generation share, and fossil fuel generation share from illustrative 1.5°C pathways for New Zealand
Indicator | 2019 | 2030 | 2040 | 2050 | Decarbonised power sector by |
|---|---|---|---|---|---|
Carbon intensity of power gCO₂/kWh | 120 | 10 | −30 to 0 | −20 to 0 | 2032 to 2033 |
Relative to reference year in % | −94% | −125 to −100% | −118 to −103% |
Indicator | 2019 | 2030 | 2040 | 2050 | Year of phase-out |
|---|---|---|---|---|---|
Share of unabated coal Percent | 5 | 0 | 0 | 0 | 2025 |
Share of unabated gas Percent | 13 | 1 to 2 | 0 | 0 | 2031 to 2034 |
Share of renewable energy Percent | 82 | 98 to 99 | 100 | 100 | |
Share of unabated fossil fuel Percent | 18 | 1 to 2 | 0 | 0 |
Investments
Demand shifting towards the power sector
Across the set of 1.5°C pathways that we have analysed, annual investments in renewable energy excluding BECCS increase in New Zealand to be on the order of USD 0.5 to 2.4 billion by 2030 and 0.8 to 3 billion by 2040 depending on the scenario considered. The ‘high energy demand, low CDR reliance’ pathway shows a particularly high increase in renewable capacity investments, which could be driven by an increase of electrification of end-use sectors and growing energy demand. Other modelled pathways have relatively lower investments in renewables and rely to varying degrees on other technologies and measures such as energy efficiency and negative emissions technologies, of which the latter can require high up-front investments.
New Zealandʼs renewable electricity investments
Billion USD / yr
Yearly investment requirements in renewable energy
The 1.5°C compatible pathways analysed here tend to show a strong increase in power generation and installed capacities across time. This is because end-use sectors (such as transport, buildings or industry) are increasingly electrified under 1.5°C compatible pathways, shifting energy demand to the power sector. Globally, the “high energy demand” pathway entails a particularly high degree of renewable energy-based electrification across the various sectors, and sees a considerable increase in renewable energy capacities over time. See the power section for capacities deployment under the various models.