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6 Risks and Uncertainties

Section 32(4)(b) of the RMA requires an evaluation to take into account the risk of acting or not acting if there is uncertain or insufficient information about the subject matter of the policies.

The foregoing analysis of the status quo has identified that the RMA does not clearly establish the significance of the benefits of renewable electricity generation projects, which by their nature can compete with other environmental values and are often felt at the national level.  This has led to uncertainty in the marketplace, potentially discouraging investment in some instances and potentially frustrating development opportunities into the future.  The risks of not acting to address this issue are as follows:

  1. Insufficient renewable electricity generation capacity will be consented and developed to meet growth in demand and the government’s renewable electricity target of 90 per cent by 2025.
  2. As a result of the above, New Zealand risks facing security of electricity supply problems, with significant associated social and economic implications.
  3. Any shortfall in generation capacity will need to be made by fossil-fuel generation.  If this occurs, New Zealand will face higher economic costs to meet its Kyoto obligations.  Increasing the country’s reliance on fossil-fuel electricity generation would, therefore, have direct financial implications for the nation.  Such a move would also have indirect economic costs as it is likely that New Zealand’s international image would suffer in the markets of its increasingly ‘climate change aware’ trading partners.
  4. Continuing uncertainty for local authorities, the Environment Court, the development community and the general public should government fail to articulate the benefits of renewable electricity generation in a statutory RMA instrument.

A trend had become apparent for decision-makers to address the benefits of renewable electricity generation in an inconsistent way.  The Environment Court is able to balance local and national, costs and benefits in relation to renewable electricity generation proposals, and case law is emerging in this area.  Also, the status quo has possibly become more favourable for renewable electricity generation projects since the release of the New Zealand Energy Strategy.  The imminent introduction of the New Zealand Emissions Trading Scheme is also expected to have a significant effect on the weight given to the benefits of these projects in RMS decisions.  Therefore one cannot conclude with certainty that insufficient renewable electricity generation projects will be developed under the status quo to meet the government’s renewable electricity target of 90 per cent by 2025.  Given the potentially significant consequences of failing to meet this target, the introduction of an NPS is nevertheless considered an appropriate risk-management intervention.

There are inherent risks involved with the proposed NPS.  These include:

  1. Lack of local and/or regional action.  Although only a handful of plans and policy statements specifically address renewable electricity generation, some councils may argue that their plans already meet the requirements of the proposed NPS, and therefore no further change is necessary.  This may lead to potential confrontation, and possibly litigation between the Ministry, generators and local government as to how to best implement the proposed NPS.  This risk can be mitigated by ongoing consultation and discussion between the Ministry and local authorities to ensure all parties clearly understand the Minister’s intentions.  Non-statutory guidance has a role to play in this regard.  It is also noted that any potential lack of clarity may be resolved by the Board of Inquiry in its recommendations to the Minister.
  2. Underestimation of the costs and time it will take to put required changes in place: timeframe risks are relevant as it is not clear what will happen if a local authority fails to meet the timetable.  The need to act quickly is largely addressed by targeting key policies to the decision-making process without requiring plan changes.  Plan changes required by the proposed NPS are intended to enable small-scale development, research and innovation.  These are all matters that will assume relevance over the medium term, and the four-year timeframe set by the proposed NPS should be long enough for councils to tackle the plan changes.  The Ministry for the Environment will continue to monitor implementation of the NPS and, should it be necessary, the Minister can use his or her powers under sections 25 and 25A of the RMA to intervene.
  3. Uncertainty about how best to give effect to the proposed NPS could lead to delays and increased litigation costs.
  4. The proposed NPS will require councils to undertake additional investigative, monitoring and policy development work.  An estimate of these costs is provided in Appendix A of this report.  One key risk to delivering on the proposed NPS is a lack of ‘professional’ resources at regional and district councils.  Should additional resources not be available (due to labour supply), some tasks may not be completed within the timeframes stipulated.  Also, the proposed NPS could result in the resources of regional and district councils being diverted away from the processing of consents for renewable electricity generation projects towards policy development, or away from other high-priority programmes.  This could create tension between the Objective and the policies of the proposed NPS.
  5. Discouraging investment.  Policy requiring decision-makers to have regard to the relative ‘reversibility’ of effects of different technology types could discourage investment in relatively ‘non-reversible’ renewable generation technologies such as hydro generation.  However, when making decisions on hydro generation, decision-makers will need to have regard to the benefits of renewable electricity generation and make an ultimate judgement as to whether a particular project promotes the sustainable management of natural and physical resources.  Under this framework, only appropriate hydro generation projects will gain resource consent; although this policy may add another hurdle, it is unlikely to be determinative when compared with consideration of the actual and potential effects themselves.
  6. Environmental effects.  The policies of the proposed NPS could promote development in some instances where consent might not have been granted under the status quo.  However, it is noted that the NPS does not amend the existing environmental protection emphasis of section 6 nor the need for decisions to promote the sustainable management of natural and physical resources.

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