53rd APEC EWG meeting – New Zealand update Bertrand Ngai Senior Policy Advisor Energy Markets Policy Ministry of Business, Innovation and Employment (NZ)

New Zealand Energy Efficiency and Conservation Strategy The NZEECS is a strategy that outlines the Government’s policies, objectives and targets on energy efficiency and renewable energy in NZ in the next five years. The draft NZEEECS for 2017-22 was released for public consultation between December 2016 and February 2017. Process heat, transport and electricity sectors are identified as priority areas for improving energy productivity in the draft NZEECS. Final NZEECS is expected to be released in the middle of this year. The key theme of the recent policy developments is that the NZ Government is reviewing its strategies and regulations to ensure that new technologies, which cut across the whole energy system, can be incorporated into the system effectively.

NZ Electric Vehicle Programme The Government introduced the Electric Vehicles (EVs) Programme in May 2016 with the goal of 2% penetration by 2021 First round of the $30m Low Emission Vehicles Contestable Fund has been completed—15 projects have been conditionally approved, and includes: the use of electric grocery delivery vans an EV car share scheme an EV taxi fleet trial two electric bus trials seven rapid public charging infrastructure projects the establishment of a heavy vehicles conversion facility- converting trucks to electric engines. The Electric Vehicles Programme includes: A target of doubling the number of electric vehicles in New Zealand every year to reach approximately 64,000 by 2021 Extending the Road User Charges exemption on light electric vehicles until they make up two percent of the light vehicle fleet A new Road User Charges exemption for heavy electric vehicles until they make up two percent of the heavy vehicle fleet Work across Government and the private sector to investigate the bulk purchase of electric vehicles Government agencies coordinating activities to support the development and roll-out of public charging infrastructure including providing information and guidance $1 million annually for a nation-wide electric vehicle information and promotion campaign over five years A contestable fund of up to $6 million per year to encourage and support innovative low emission vehicle projects Enabling road controlling authorities to allow electric vehicles access to special vehicle lanes Review of tax depreciation rates and the method for calculating fringe benefit tax for electric vehicles to ensure electric vehicles are not being unfairly disadvantaged Review ACC levies for plug-in hybrid electric vehicles Establishing an electric vehicles leadership group across business, local and central government The package aims to address barriers to the uptake of electric vehicles, including the limited supply of models in New Zealand, lack of awareness and misconceptions about electric vehicles, and a lack of widespread public charging infrastructure. Ten projects e now have signed agreements, with negotiations nearing completion for the remaining five.

Energy Innovation Bill Implements parts of the Government’s Electric Vehicles Programme: Changes levy funding sources for the Energy Efficiency and Conservation Authority (EECA), giving it more flexibility to undertake a wider range of initiatives beyond electricity efficiency Clarifies how electricity industry legislation applies to secondary networks. The broad policy of this bill is to encourage energy innovation, such as emerging energy technologies and increased variation in energy-related business models, so that New Zealand has the ability to respond to its environmental and energy objectives. This Bill amends the Electricity Industry Act 2010, the Energy (Fuels, Levies, and References) Act 1989, the Land Transport Act 1998, and the Road User Charges Act 2012. The broad policy of this bill is to encourage energy innovation, such as emerging energy technologies and increased variation in energy-related business models. Under EECA’s current funding model, its entire levy funding (almost half of its total funding) is recovered from the electricity efficiency levy which can only be spent on electricity efficiency activities. The Bill enables the cost of the EECA’s activities to be spread across the levies for transport fuels and gas, as well as electricity. The Bill also creates a new road user charge exemption for heavy electric vehicles until they make up two per cent of the fleet and amends the law so that Road Controlling Authorities can allow electric vehicles in special vehicle lanes. The Bill clarifies how electricity industry legislation applies to secondary networks. Secondary networks are smaller electricity networks that indirectly connect to the national grid, typically through a local distribution network. The Bill will ensure that consumers on secondary networks have the same access to dispute resolution as consumers on local electricity networks. This will help the adoption of new energy technologies, such as combining solar photovoltaics and battery storage on a residential subdivision, and for supplying those to consumers.

IEA In-Depth Energy Policy Review Some of the IEA recommendations included: continue to foster well-functioning electricity markets and security of supply by fine-tuning market rules in favour of even more flexibility, demand response, smart and effective electricity retail and distribution facilitate technology opportunities for renewable energy and energy efficiency, in buildings, industrial heat, transport and agriculture Drive decarbonisation of the economy through a suite of integrated actions, including a low carbon strategy and carbon budgets, an enhanced NZ Emissions Trading Scheme and sectoral energy action plans, with focus on transport and industry sectors For more information see the IEA webiste

Updating Engine Fuel Specifications Reducing the sulphur level allowed in petrol from 50 to 10 parts per million. Introducing a total oxygen limit, which potentially allows a wider range of fuel blends. Raising the biodiesel blend limit in diesel from five to seven per cent. Amendments were announced in December 2016. The objective of reducing the sulphur limit is to lock in an existing reduction in harmful emissions, while the other significant specification changes aim to improve fuel supply choice and enable market-led innovation in the fuel mix. Fourteen minor and technical amendments to provide technical clarification, update test methods to match improvements in technology and align them with international best practice, and/or to consequentially amend the four significant changes.