VZCZCXRO8907
RR RUEHAP RUEHNZ RUEHPB
DE RUEHWL #0048/01 0460311
ZNR UUUUU ZZH
R 150311Z FEB 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5063
INFO RUEHNZ/AMCONSUL AUCKLAND 1617
RUEHDN/AMCONSUL SYDNEY 0637
RUEHAP/AMEMBASSY APIA 0444
RUEHBY/AMEMBASSY CANBERRA 5099
RUEHPB/AMEMBASSY PORT MORESBY 0723
RUEHSV/AMEMBASSY SUVA 0717
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 04 WELLINGTON 000048 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
DOE FOR A/S KARSNER 
STATE FOR EAP/ANP AND EAS 
 
E.O. 12985:  N/A 
TAGS: PGOV PREL TRGY KGHG AY NZ
SUBJECT:  DOE A/S KARSNER MEETS WITH NEW ZEALAND ENERGY LEADERS 
 
REF:  07 WELLINGTON 695 
 
¶1.  (SBU) Summary:  On January 14, US Department of Energy (DOE) 
Assistant Secretary Alexander Karsner met in Wellington with key NZ 
energy officials and experts in roundtable discussions hosted by the 
NZ Ministry of Research, Science and Technology (MoRST).  The 
productive dialogue covered many energy-related topics, during which 
Karsner encouraged continued collaboration between NZ and the US on 
energy issues and invited NZ representatives to visit DOE research 
facilities in the US.  End Summary. 
 
Roundtable Discussion with NZ Energy Officials 
--------------------------------------------- - 
 
¶2.  (SBU) On January 14, DOE A/S Karsner met in Wellington with key 
NZ energy officials in a roundtable discussion at the offices of 
MoRST.  Participants included Dr. Helen Anderson (Chief Executive, 
MoRST), David Smol (Deputy Secretary, Energy and Communications, 
Ministry of Economic Development), Tony Frost (Senior Advisor, 
Technology and Fuels, Ministry of Transport), Eric Pyle (Director of 
Environmental and Social Development, MoRST), David Crawford 
(General Manager, Land Transport Environment and Safety, Ministry of 
Transport), Ken Kirkpatrick (Department of the Prime Minister and 
Cabinet), Mike Underhill (Chief Executive, Energy Efficiency and 
Conservation Authority), and Martyn Pinckard (Senior Manager, 
Household Sustainability Program, Ministry of the Environment). 
Also accompanying A/S Karsner were an Embassy political specialist 
and Poloff. 
 
¶3.  (SBU) In his opening remarks, Karsner noted how NZ successfully 
meshes its environmental and energy policy debates, to include 
inter-agency communications and the allocation of resources, toward 
meeting the challenges presented in both areas.  He commented that 
in order to meet the world's environmental challenges, energy must 
be part of the solution and not "the culprit."  That is a global 
effort, according to Karsner, and one country alone cannot supply 
all of the answers.  In the last three years, continued the A/S, the 
US has made enormous strides in the development of renewable energy 
by changing focus from research and development to applied science 
and commercialization.  The US is also incorporating the 
technological "push" and the market-demand "pull" to good effect. 
Communication and the sharing of knowledge are vital as well, he 
stressed, if the development of renewable energy is to move 
forward. 
 
New Zealand Energy Strategy Explained 
------------------------------------- 
 
¶4.  (SBU) Ministry of Economic Development Deputy Secretary Smol 
stated that the GNZ has taken a bold approach by announcing its goal 
to make NZ a completely "sustainable" nation and that, over time, 
the GNZ will sharpen that goal into focused policy outcomes.  He 
explained that the NZ energy strategy has three tracks: 
 
- Leadership (including the use of "flagship projects" such as 
carbon neutral government agencies, waste management/minimization, 
sustainable government procurement to grow markets, and energy 
efficiency standards); 
 
- Modifying household and business behavior (i.e., modifying 
consumer and business purchasing decisions); and 
 
- Working with other partners (energy producers, private industry 
and NGOs) to establish "platforms" for the development of 
sustainable energy (as one example, to encourage the development of 
such energy, the GNZ has announced a 10-year moratorium on the 
construction of base-load energy generation that uses fossil 
fuels). 
 
This overall strategy is based on two underlying concepts: 
 
- The government's target of carbon neutrality; and 
 
- The implementation of the government's proposed comprehensive 
"Emissions Trading Scheme" (ETS). (reftel) 
 
According to Smol, it will be "a tricky balance between global and 
local challenges," i.e., to comply with the Kyoto Protocol and meet 
NZ's environmental goals "without disrupting the energy distribution 
system and prices." 
 
 
WELLINGTON 00000048  002 OF 004 
 
 
¶5.  (SBU) Karsner commented that NZ's implementation of ETS will be 
a useful measurement tool, but it is insufficient by itself and must 
be combined with other mechanisms and options in order to 
successfully bring about change.  The US, for example, has a broad 
range of options at the state and federal levels to address 
renewable energy, energy security, emissions control, and climate 
change mitigation.  The US has 53 "laboratories" (i.e., states and 
territories) for energy research and development, all relatively 
powerful when compared to the US federal government.  He added that 
NZ appeared to have more of a regulatory focus than the US, which is 
relying more on market forces as the instrument for developing 
renewable energy.  It is not government regulation, the A/S 
maintained, but the marketplace that is the real locomotive for 
change. 
 
¶6.  (SBU) Pyle noted that NZ has every conceivable natural resource 
to assist in providing a renewable energy supply, including wind, 
solar, geothermal and tidal. 
 
Biofuel Is Promising, But It's Role Depends on Economics 
--------------------------------------------- ----- 
 
¶7.  (SBU) Smol stated that the role of biofuel is largely dictated 
by economics.  Once the regulatory framework is established, the oil 
companies must then adjust their practices to deal with the new 
operating environment.  Moreover, NZ must be careful that the 
development of biofuel does not adversely impact the environment and 
that "we don't cut down forests to do it."  In order to achieve 
meaningful progress in this area, NZ must work with the USG. 
 
¶8.  (SBU) Karsner stated that in 2007 the US committed USD 1 billion 
toward research and development of waste stream biofuel, and 
estimated that 2008 will be the first time in 35 years that the US 
will import less petroleum than the previous year.  However, he 
noted that biofuel will only be successful as an alternative to 
fossil fuels when market forces and the profit imperative pull fuel 
companies into the business.  He also invited NZ officials to visit 
the US National Renewable Energy Lab in Colorado to learn more about 
what the US is doing in the field of biofuel. 
 
Tidal Current Energy - At Experimental Stage Only 
----------------- 
 
¶9.  (SBU) Smol noted that tidal current energy has huge potential in 
NZ, but the technology cannot match aspirations at present and it is 
only in the experimental stage. 
 
Transportation - Promotion of Flex-fuels and Electricity 
--------------------------------------------- ----- 
 
¶10.  (SBU) Crawford stated that NZ has approximately 700 vehicles 
per 1,000 persons - a similar ratio to the US.  He explained that if 
NZ is to become carbon neutral, it must first stop the annual 
increase in vehicle emissions, which must begin with the government 
fleet.  There, the GNZ is focusing on improving fuel efficiency and 
the use of flex fuels.  Karsner warned that the use of flex fuels in 
the US caused "an aberration" by actually reducing fuel efficiency 
and requires more study. 
 
¶11.  (SBU) Frost commented that NZ has a goal of being a leader in 
the use of electric vehicles - both buses and cars.  In that regard, 
the Ministry of Transport aims to facilitate the entry of electric 
vehicles into the marketplace by creating an environment where 
electric vehicles are more attractive to consumers.  NZ is also 
working with Boeing Aircraft Company to develop biodiesel fuel from 
algae. 
 
Energy Storage is the Key to Integrating Renewable Energy 
--------------------------------------------- ----- 
 
¶12.  (SBU) PM Advisor Kirkpatrick asked Karsner if the development 
of energy storage sites was a priority for the USG.  Karsner 
responded that energy storage is the highest priority in all sectors 
of US Department of Energy research.  "It is the key to integrating 
renewable energy into the grid." 
 
Antarctica - Karsner Desires a Switch to Renewable Energy 
--------------------------------------------- ----- 
 
¶13.  (SBU) Karsner mentioned his recent visit to Antarctica as a 
guest of the US National Science Foundation, and noted that the US 
 
WELLINGTON 00000048  003 OF 004 
 
 
McMurdo Station, the US Amundson-Scott South Pole Station, and the 
NZ Scott Base are all completely dependent on the import of 
petroleum fuels for power and heat.  He expressed his interest in 
helping those facilities switch to renewable fuel sources to cut 
costs and to demonstrate US commitment to renewable energy. 
Anderson mentioned that NZ's Meridian Energy Company is already 
looking into the construction of a wind energy site at NZ's Scott 
Station. 
 
Roundtable Discussion with NZ Energy Experts 
-------------------------------------------- 
 
¶14.  (SBU) A/S Karsner also participated in roundtable discussions 
with NZ energy experts in the MORST office.  In attendance were 
Karsner, Anderson, Dr. Elspeth McRae (Group Manager, Biomaterials 
Research, Scion Corporation), Colin Harvey (Geothermal Business 
Development Manager, GNS Science Corporation), Dr. Tom Richardson 
(Chief Executive, Scion Corporation), Alan Seay (Corporate Affairs 
Director, Meridian Energy Corporation), Dr. Sean Simpson (Chief 
Scientific Officer and Founder, Lanzatech Corporation), and Poloff. 
 
¶15.  (SBU) McRae explained that Scion is actively working toward 
development of NZ's biomass resources.  However, NZ needs a 
dedicated energy crop for biofuel production because biomass waste 
resources will not be enough to provide for NZ's energy security. 
 
¶16.  (SBU) Harvey explained NZ's current involvement in geothermal 
energy production, noting that NZ has a grid capacity of 7,000 
megawatts (MW) and, of that capacity, geothermal has the potential 
of providing 2,485 MW.  At the present time, however, geothermal is 
providing only 900 MW.  Simpson stated that development of renewable 
energy sources is not the only challenge.  One large unresolved 
issue is how to integrate all sources of energy into the market and 
into the grid. 
 
Photovoltaics - Depends on Efficiency, Cost and Integration 
--------------------------------------------- ----- 
 
¶17.  (SBU) Seay noted that the biggest hurdle for Meridian in the 
development and use of photovoltaic energy is the efficiency of 
solar cells.  Karsner replied that, at least in the case of the 
developing world, efficiency is not as important as cost.  Also, as 
with the use of all renewable energy sources, storage is the key to 
integrating such energy into the grid.  Karsner emphasized that 
energy storage is a priority for his office, and the key to 
integrating renewable energy into existing systems. 
 
Biofuel - Making Ethanol from Steel Production Flue Gas 
--------------------------------------------- ----- 
 
¶18.  (SBU) Simpson outlined Lanzatech's research program, and noted 
that it is developing ethanol production using flue gas from steel 
production waste. 
 
Geothermal Energy - Vast but Challenging 
---------------------------------------- 
 
¶19.  (SBU) Anderson commented that there is a greater incentive to 
develop NZ's vast geothermal energy potential over all other 
options.  Karsner asked why NZ's geothermal potential is not being 
maximized.  Seay explained that the available geothermal resources 
are at inconsistent depths and temperatures.  In addition, many of 
the sites with geothermal potential lie on Maori land (which 
presents licensing difficulties) and geothermal is not without 
disadvantages (chemical effluent/waste). 
 
Wind Energy - Harder than it Looks 
---------------------------------- 
 
¶20.  (SBU) According to Seay, NZ has vast wind energy potential. 
However, the problems in developing that potential include a 
shortage of wind turbines, where the demand currently exceeds supply 
(though a manufacturing plant is now being constructed in China); 
and transmission hurdles (i.e., the most potential exists on the 
south island, while the most demand exists on the north island). 
 
¶21.  (SBU) Seay noted that it is preparing to install 62 wind 
turbines near Wellington, and three turbines at NZ's Scott Base in 
Antarctica by March 2009 and is exploring the installation of 
another 14 turbines.  Simpson added that Lanzatech is exploring the 
use of wind turbines with expandable blades, which promise to 
 
WELLINGTON 00000048  004 OF 004 
 
 
increase efficiency by 40 percent. 
 
A/S Karsner Concludes with Call for Dialogue 
-------------------------------------------- 
 
¶21.  (SBU) In concluding the discussions, A/S Karsner expressed his 
appreciation for the opportunity to confer with NZ officials and 
experts on the subject of renewable energy.  He urged continuing 
dialogue between NZ and the US and renewed his invitation for GNZ 
representatives to visit the DOE National Renewable Energy Lab in 
Colorado. 
 
MCCORMICK