A clean economy vision for 2025

1. A clean economy vision for 2025 NZ cleantech/greentech presentation to Hon. Bill English 2 Dec 2009

2. Executive Summary New Zealand's economy is lagging (it is behind Australia) and a change in focus is required just to catch up. An economic accelerator with great potential to do this is the development of a cleantech/greentech economy. This is a fast growth, sustainable opportunity for our economy that has strong alignment with the NZ brand and quality of life. We are a group of business leaders who want to develop a strategy to grow NZ's clean, green economy. We are going to go public with our plans, and invite the Government to join us.

3. We are a group of NZ business leaders who believe NZ needs a game-breaking strategy to reverse its fall down the OECD ladder. We think a cleantech/greentech economy offers the solution. We are a group of NZ business leaders who believe we need a game-breaking strategy if we are to have a serious chance of catching up with Australia in a way that is politically achievable and palatable to the NZ public. A strategy would focus our efforts. The cleantech/greentech sector is likely to drive the world’s next big economic wave, is well-aligned with brand NZ and our comparative advantages, has huge cost-saving potential and will present a compelling long term strategy to the NZ public. We met with the Prime Minister in September regarding this initiative. He was very enthusiastic, gave us a considerable amount of time, and agreed to further substantive meetings with his advisors. Our group has grown significantly since then – mainly by word-of-mouth. This idea seems to excite even the most conservative business people. We are planning to go public with our ideas, and wish to do this in partnership with the government. “Unless we get a good view of what is possible for New Zealand, we will continue to dissipate energy and activity in minor matters.” John Allen The group includes Rob Fenwick, George Fistonich, Rob Fyfe, Phillip Mills, Jeremy Moon, Geoff Ross and Stephen Tindall.

4. Not only is it a $150 billion per annum opportunity, the clean economy builds on New Zealanders’ core values. This makes it a politically and socially palatable solution to achieving parity with Australia and an enhancement to existing successes. A $150 billion high value, low carbon exporteconomy by 2025. We want to develop, commercialise and deploy clean technologies and smart thinking to transform existing sectors and create dynamic new ones. Clean technologies (or cleantech) are products and services that improve performance, productivity or efficiency while reducing costs, raw materials, energy consumption and waste streams. The clean economy is an economic vision for New Zealand that recognises the global reality of a world that is resource constrained and carbon restraining. The clean economy is one of wealth creation based on five foundations: clean energy, clean transport, clean industry, clean agriculture and clean environment. These values fit with what is important to New Zealanders - namely quality of life, quality of environment and social equity. “New Zealanders choose to be poor. We believe that we have a clean economy and a clean green image, and do not see the lack of honesty which surrounds this branding. We are merely a small population spread over a large area which provides an impression of clean and green.” Prof. Sir Paul Callahan This can be changed! Through cleantech it is possible to achieve economic growth, while having an authentic clean green economy to support our national brand.

5. With government agency expertise, some independent advisory assistance and our own proven ability to commercialise, we can offer a major win for the NZ economy. • In 2025, NZ is … • the location of choice for delivering large scale clean technology and green technology innovation • capable of delivering all parts of a large scale clean energy project • capable of global distribution of clean energy • an economy with diversified sources of creativity, industry, finance and entrepreneurship • supporting a mix of fee-for-service activity and ownership in clean energy solutions • the home of world-class ‘star’ companies across all the main sub-sectors of the cleantech/greentech economy • differentiated from its competitors through leading-edge technological innovation and creativity • New Zealand’s cleantech/greentech sector is profitable, self-sustaining and world-class. $150 billion 2025 2020 Invested in INFRASTRUCTURE: to increase domestic competitiveness,and energy independence. 2015 Invested in CAPITAL: to leverage success into ownership opportunities for NZ firms delivering foreign energy and green sector solutions Invested in CAPABILITY: to increase business capability, educational alignment & international connectivity 2009

6. We want to set up a joint business/government taskforce to fully explore the opportunities and quantify the benefits of a cleantech/greentech strategy for New Zealand. This is the crux of our proposal - that we set up a joint business/government taskforce to fully explore the opportunities and quantify the benefits of a cleantech/greentech strategy for NZ. We are confident that a net economic benefit analysis will show that the revenue benefits will far out weigh the costs, which seem to be the sole focus of current dialogue in NZ and many other countries. The most immediate and tangible benefits will likely fall under the following four strategic imperatives.

7. 1 Develop/commercialise clean tech and/or import cleantech 2 Deploy cleantech 3 Build viable long term platform for sustainability 4 Leverage sustainability; brand, knowledge and leadership position Industry and Exporters Primary Sectors Country as whole Earn Clean Image + strengthen NZ Inc brand Integrated Economy Higher value Products Sustainability Solutions Process efficiency + higher value chain Efficiency + competitiveness Resource + energy + brand The opportunities for cleantech and greentech are multifaceted and benefit the economy in a variety of ways.

8. We have identified four pillars upon which the strategy rests: export driven growth, leveraging NZ’s brand, cost savings and risk mitigation. Cleantech/greentech – a large, sustainable contribution to NZ’s economy 1. Unlock $150bn of new export revenues 2. Strengthen and leverage NZ’s brand in a way that complements existing successes 3. Generate cost savings for the whole economy 4. Risk mitigation through resilience and energy independence

9. 1. Clean tech provides much-needed opportunities for growthand we need to export smarter! • To sustain even a modest standard of wellbeing, it is important that New Zealand exports. Its own population is too small to generate sufficient returns for re-investment in world class production development. • There is potential to increase exports: • Only 50 companies have export earnings over $50m. • There were 36,000 exporters in 2008, less than 10% of the 476,000 enterprises in New Zealand. • Of the 36,000, 50 exporters accounted for 60% of total export revenue. • Although the there is a diverse range of export products, over 50% of exports come from just 3 product groups (dairy, tourism and meat). • Only 5 countries make up the destinations for 50% of New Zealand exports (Australia, USA, Japan, China and the UK).

10. 1. Clean Tech Provides much-need Opportunities for Growth (cont.) By gaining early mover status in the cleantech wave and managing this in a way that ensures the returns from this are retained with New Zealand-based business developers, there is considerable potential to dramatically grow this export base. It can be grown in a way that as well as increasing export returns, will further diversify markets, products and customers, providing a more sustainable foreign exchange base. The result of this, based on projects done by NZTE, is a move to become a high-value economy, generating high quality employment opportunities in the "new manufacturing" based around innovation. Relative to many countries, New Zealand has a number of natural assets to capitalise on including: - thermal energy - forestry waste (methanex) - tidal power (Cook Strait project) Any of these has the potential to double our national energy generation. Add to this other forms of renewable energy including wind turbines and cleantech will generate even more opportunities for commercialised business development. NZTE has identified hundreds of export opportunities in cleantech, including several that are worth in excess of $10 billion per annum. With the right regulatory framework, we believe local and international entrepreneurs will create thousands more opportunities. In short, cleantech/greentech is our chance to maximise new, high-value export opportunities.

11. 2. Protecting and strengthening NZ Inc brand The previous pillar (maximising new export revenue opportunities) doesn’t mean replacing our biggest existing industries with new ones. Our three biggest exporters are milk, tourism and meat, all of which are driven by the 100% pure image. There are tremendous synergies/opportunities here for farming, wine, forestry, etc, both in terms of developing new technologies and adding value through differentiation. New technologies can occur in areas including milk-processing, stock feeds and carbon farming that have the ability to earn ETS credits and simultaneously add perceived value to our products. Consumer research shows, for example, that 28% of US consumers rate clean, green products highly and are prepared to pay significantly more for them. This market, however, has an impression that we “know our cows’ names and milk them individually by hand”. This is very sensitive to negative publicity. Inaction will not only prevent new opportunities but erode existing successes. Many of our group of business leaders are exporters who are being blocked out of UK supermarkets over the food miles debate right now and who are highly concerned by NZ’s vulnerability to instances like the Guardian articles. The risks of not adopting our strategy, or worse still – from doing nothing around the growing perception that we are dragging our heels on this issue - are untenable.

12. 3. Cost Savings – reduced energy costs gives our whole economy a competitive advantage NZ has tremendous ability here to increase efficiency e.g. EECA study shows that we can reduce energy use by 40%, much of this in simple areas like replacing archaic transmission lines. A Meridian/Contact Energy study shows that we could save $8B at today’s prices by moving to electric cars. Virtually every businessperson we talk to has stories of the huge cost savings they have made by reducing their carbon footprint. These increased efficiency measures are working for businesses. If we take those same steps as a country, we can all reap the benefits of cost savings over the long term. We have a huge challenge ahead with both the government and export deficits. Unless we dramatically improve resource efficiency our economy is likely to risk severe constraints in the near future from escalating commodity costs. There are currently only 1 billion people at first world consumer status, using 80% of the world’s resources – the growth of the emerging economies is likely to see that number increase by 2-3 times over the next few decades and there are no more resources available. Costs will spiral and if we do not reduce our resource cost exposure e.g. become energy independent, we could be destroyed by e.g. $300-450-a-barrel oil. With that comes a paradigm shift and our distance from markets will prevent our ability to compete .

13. 4. Risk Mitigation – we don’t have to be vulnerable anymore If NZ could provide for its own energy needs through low-emissions, low cost per MWh electrical energy production, we would have a very cost-competitive proposition – a competitive advantage for a variety of industries when compared with other nations. This will be increased through the advancement of penalties for the carbon economy, which we would be well positioned to avoid. We would be energy independent – no longer vulnerable to the costs of a barrel of oil as driven by forces beyond our control. Developing electric railways, electric buses and trams, electric cars and motorbikes, all hooked up to NZ’s clean energy smart grid would offer us long-term, low impact energy solution. As international compliance costs and penalties attached to being seen as a free-rider increase the economic consequences would be untenable. However, the big risks that will materialise if negative ecological scenarios eventuate , for example, even a small rise in sea-levels, would not only cost us billions but alter the fabric of our way of life. We would want to have as many friends as possible in the events that would follow sustainability-based economic upheaval or climate-change driven threats.

14. We will commit resources and time to this project. We call upon government to do the same.  We would aim to go public with the initiative over the holiday period. This will be the positive story that the public has been waiting for from this government. It will offer us a once-in-a-lifetime chance to transform our economy and become a progressive, prosperous and globally respected country. Our proposal is to set up a business/government cleantech growth taskforce that would call on the assistance of NZTE, MED, Treasury, MORST and FORST and of business-savvy economic and financial consultants. We need the assistance of central agencies and some top-up resourcing for an in-depth business strategy based on economic and financial analysis to maximise the realisation of benefits. The committee would include top Kiwi exporters like Rob Fyfe that fit the cleantech profile, a top international cleantech entrepreneur like Vinod Khosla, a Kiwi financier in the sector, a leading global economist such as Joseph Stiglitz, and top government officials. Aims would be to identify the biggest opportunities, conduct net economic benefit analysis and recommend strategies for implementation and optimizing the benefits to NZ. It would be jointly funded by business and government with a government commitment to act on the results.

15. Conclusion We can catch up. An economic accelerator with great potential to do this is the development of a cleantech/greentech economy. This is a fast growth, sustainable opportunity for our economy that has strong alignment with the NZ brand and quality of life. We want your assistance to form a taskforce of business leaders and government leaders - to develop a strategy to grow NZ's clean, green economy.