Direct Use of Gas
Overview
Introduction
The 2008 Gas Government Policy Statement states that ‘The Minister requests Gas Industry Co to provide advice on the extent to which policies to enhance the direct use of gas in industrial, commercial and residential applications would mitigate greenhouse gas emissions and the likely costs of implementing those policies’. The key focus of this project is to establish, at an economy-wide level, whether direct use of gas will be of net benefit to New Zealand, taking into account (but not limited to) greenhouse gas emissions, and the full supply-chain costs of gas and its alternatives. A key output will be an appraisal of whether current market and policy settings are delivering an optimal fuel mix for end-use applications, particularly with respect to the levels of direct use of gas.
Summary of Status
Gas Industry Co's project to give advice to the Minister has now been completed.
Contact Details
Christine Southey
Tel: 04 494 2464
christine [dot] southey
gasindustry [dot] co [dot] nz
Recommendation
At its 18 December 2009 meeting, the Board approved the making of a recommendation to the Associate Minister on the Direct Use of Gas.
Follow up letter to the Minister (April 2010)
Concept Study
Gas Industry Co commissioned Concept Consulting Group Limited to undertake a comprehensive study on the direct use of gas using up-to-date information. The outcome of which was a report “Cost: Benefit Analysis for increasing the direct use of gas in New Zealand” Our recommendations on the direct use of gas to the Associate Minister was influenced by this work.
The Concept study analysed the three energy end-uses that collectively provide the best opportunities for gas to substitute for other fuels. These were space heating, water heating, and industrial process heating. The study examined whether it would be beneficial from a private and a national perspective for further direct use of gas in these areas. The analysis in the study suggested:
• That electric heat pumps and log burners are generally the preferred means for space heating from both a private and a public perspective, and the arguments in favour of promoting the direct use of gas for space heating are not strong;
• That instant gas is generally the preferred means for water heating in new-build situations from both a private and a public perspective, and there may be a case for a low level of policy intervention in support of instant gas water heating, particularly if it is possible to extend an existing scheme. However, there does not appear to be a compelling case to promote consumers switching away from an existing workable water heating appliance such as an electric water cylinder; and
• There may be a short-term private incentive to convert industrial boilers from gas-firing to coal-firing and this may not be in the national interest. However, given that the cap on CO2 prices under the New Zealand ETS is due to be lifted post-2012, it is not believed that this will result in material levels of fuel switching.
Industry Workshop
Gas Industry Co held a workshop on Wednesday 10 February 2010 for all interested stakeholders to discuss the Concept report.
Both at the workshop, and in follow up submissions, stakeholders suggested a number of issues and supplied additional information, which they considered should be taken into account in the Concept report.
Accordingly, we invited Concept to review all the various comments, submissions, and additional information supplied, and to consider whether its report should be amended. Concept has completed its review and has amended its report in some areas and has concluded that the changes, collectively, do not have a material impact on the conclusions in the original report.
All relevant material can be viewed below:
Direct Use of Gas
The Associate Minister invited Gas Industry Co to liaise with EECA regarding our recommendations on the Direct Use of Gas.
Gas Industry Co wrote to EECA to discuss its recommendations. That letter can be viewed here
EECA’s response to Gas Industry Co can be viewed here
We will continue to work with EECA on these issues as it becomes apparent what funding is likely to be available, and the extent to which it may be appropriate to direct this towards instant gas water heating.