Environment Committee
Parliament Buildings
Wellington
19 April 2024
Mercury New Zealand Limited: Submission on Fast-track Approvals Bill
Introduction
1. Mercury NZ Limited (Mercury) welcomes the opportunity to submit to the Environment Committee on the Fast-track Approvals Bill (the FTA Bill).
2. Mercury recognises the FTA Bill is part of a phased programme designed to reform the resource management system. This programme is expected to culminate in the development of legislation to replace the current Resource Management Act (RMA). We support the broader reform programme objectives to facilitate the delivery of high-quality infrastructure for the future, doubling renewable energy, while safeguarding the environment, adapting to climate change, improving regulatory quality, and upholding Treaty of Waitangi arrangements1
3. Climate change necessitates New Zealand seeking to reduce its greenhouse gas emissions and electrifying its economy. Renewable electricity generation and network infrastructure have a vital role in enabling this electrification journey and supporting New Zealand becoming a lower emissions economy which in turn has benefits for our natural environment
4. To achieve New Zealand’s emissions reduction targets, it’s crucial that domestic policies, including the FTA Bill, acknowledge the time-sensitive and significant role of renewable electricity generation and network infrastructure have in our path to net zero carbon. New Zealand has an opportunity to significantly increase its investment in its abundance of renewable energy resources at a pace and scale to produce affordable, clean energy. This will drive our transition to a lower emissions economy and deliver on our climate goals and improved environmental outcomes, provided the right regulatory/policy settings are in place
5. Mercury supports the need for a fast-track approvals process that achieves outcomes in efficiency, costeffectiveness, and serves as a “one-stop-shop” for approvals related to the development of nationally or regionally significant renewable electricity projects. Mercury aspires to achieve a balance between infrastructure success and the important aspects of our social licence which plays a pivotal role in shaping Mercury’s investment decisions, guiding our operations, and influencing our relationships with stakeholders
6. Electrification is the most important lever for creating our low-emissions energy future and growing the economy. Mercury has a strong pipeline of developments and have recently completed construction on Turitea and Kaiwera Downs, and in process of constructing a fifth operating unit at Ngā Tamariki . We welcome the government's aim to unlock the significant opportunities New Zealand has in terms of our abundance of renewable energy resources through reducing regulatory challenges. We are excited to work with government to fine tune the FTA Bill. Mercury will, however, always seek to develop and maintain our developments at a pace and in ways that care for the environment, and foster our long term relationships with our communities, stakeholders and society There can be no sustainable renewables transition without this support.
1 Cabinet Economic Policy Committee Minute of Decision – Work Programme for Reforming the Resource Management System, dated 6 March 2024
7. Mercury has engaged with a number of its iwi partners in relation to this Bill. Given the time pressures to respond to the Bill and capacity of our iwi partners to have meaningful dialogue, while we have started these discussions we intend to continue this dialogue in further detail. When considering if future projects should use the FTA process we will communicate directly and early with iwi, and before any project uses the FTA process, we will consult directly with our iwi partners.
8. Mercury’s submission on the FTA Bill focuses on amendments that enhance the Bill’s potential to realise this long-term vision and support renewable electrification.
9. Mercury is a member of the Electricity Sector Environment Group (ESEG), which includes all the major electricity generators. ESEG has jointly submitted on the FTA Bill. Mercury endorses that submission, and the following submission complements and expands on the matters raised in that submission.
10. We recognise that the FTA Bill has been drafted to cut red tape and make it easier for New Zealand to build the infrastructure and major projects needed to get the country moving. While we have considered the FTA Bill in relation to renewable electricity generation specifically, the amendments suggested in our submission and the ESEG submission are provided to ensure due consideration is given to environmental outcomes for all projects that will be progressed through the FTA process.
11. Mercury wishes to present, and will also support the ESEG presentation to the Environment Committee in support of these submissions We also anticipate future consultation processes on resource management reform and would welcome the opportunity to provide further comments on key issues explored during their development.
High level comments
12. Mercury generally supports the FTA Bill on the following matters:
a. For its streamlining of a range of approvals required to enable renewable development – the ‘one-stopshop’;
b. Focus on projects with significant regional or national benefits; and
c. Establishment of expert panels for project assessment
13. Mercury also commends the Bill’s clause requiring consistency with existing Treaty of Waitangi settlements and the recognition of Te Ture Whaimana as the primary direction-setting document for the Waikato and Waipa Rivers.
14. Our support of the FTA Bill is subject to the purpose of the Act considering the long-term impacts and contribution of fast-tracked projects to New Zealand’s sustainable economic and environmental future by including reference to natural resource sustainability. We suggest the purpose focus on the positive decision-making outcomes that are trying to be achieved (e.g. efficient, complete), rather than the process.
15. Mercury sees opportunities to strengthen the FTA Bill to ensure its long-term effectiveness by addressing the following matters:
a. The fast-track approvals process is open to development of regionally or nationally significant infrastructure as provided for in clause 17 Mercury supports the FTA Bill being explicit that the fasttrack approvals processes are open to renewals and repowering, upgrades and re-consenting for continued operation of existing renewable electricity sites. While the current drafting doesn’t explicitly exclude these activities, we recommend being explicit that the FTA Bill will apply to approvals for these activities
b. Ensure consultation with a range of stakeholders, including Māori groups, is facilitated and supported by providing sufficient response times for meaningful participation in the approvals process.
c. Advocate for transparency and effective risk management in the fast-track approval process by giving the Expert Panel the authority to approve or decline projects at the substantive application stage – be the substantive decision-makers.
16. Mercury also seeks the following specific changes to the current draft of the FTA Bill:
a. We support the ESEG amendment to Schedule 4, clause 39, that requests the resource consent lapse date to be set more than 2 years A longer timeframe is often required for projects to align with investment decisions, market demand reviews, procurement and supply chain timeframes, baseline environmental studies and national grid connection queues Mercury seeks, a default of 5 years with the option for decision makers to specify up to 10 years lapse period for renewable electricity generation resource consents.
b. We support increasing the timeframes for comments from those groups listed in the FTA Bill, including officials and the expert panel to process applications so that meaningful input and robust consideration of projects can be enabled.
c. We support the ESEG submission point on Schedule 4, clause 2(3)(a) being amended to apply to any part of a listed or referred project by deleting reference to ‘new’. The amendment will mean that not just ‘new’ projects can seek a change or cancellation of an existing resource consent condition, rather renewals and repowering, upgrades and re-consenting for continued operation of existing renewable electricity projects can as well (refer to paragraph 15.a. above). The additional qualifier of “material” to the implementation of the new project, creates uncertainty regarding the availability of a variation to each project, due to the case-specific assessment of materiality Therefore, we recommend deleting the word “material”.
d. Mercury supports the right of appeal against decisions being confined to points of law (FTA Bill cl.26), however the right to appeal should be restricted to the applicant, relevant local authorities, anyone invited to provide comments and the Attorney General. We support the ESEG submission to delete subclause 26(1)(e) which allows “any person who has an interest in the decision appealed against that is greater than that of the general public” to appeal. Restricting appeal rights to those already involved in the process will maintain the process certainty and efficiency the FTA Bill is trying to achieve.
e. We support a provision in Part 2, Subpart 2 that allows for changes to the project scope between listing in Schedule 2A or 2B, or project referral and submitting the substantive application for approvals. This will allow for changes to the project scope resulting from factors not entirely within our control that can occur at short notice, such as landowner negotiations, or renewable electricity generation technological changes
f. FTA Bill clause 17(5) specifically calls out projects that are not ineligible just because the project includes an activity that is a prohibited activity under the Resource Management Act 1991. Mercury supports the deletion of this clause to be consistent with a purpose that considers the long-term impacts and contribution of fast-tracked projects to New Zealand’s sustainable economic and environmental future.
17. To achieve a true ‘one-stop-shop’ Mercury suggests including the road stopping approval process, specifically for unformed legal roads2 , in the list of ‘approvals’ that are included in the Bill (FTA Bill cl.10)
Herenga ā Nuku Aotearoa (the Outdoor Access Commission) estimates 56,000 km of 1 chain wide (approx. 20m) unformed legal roads, also known as paper roads, exist in New Zealand. Most were established in the 19th century as part of the Crown’s settlement subdivisions3 and exist in areas now being considered for renewable electricity generation (particularly wind or solar developments). Further detail of this proposal is included in the next section.
About Mercury
18. Mercury has an important role to play in supporting New Zealand to reach its climate change goals, improving security of electricity supply and achieving the infrastructure outcomes that the FTA Bill is intended to enable. Our operations significantly contribute to New Zealand’s domestic and international emissions reduction targets and have a material role in New Zealand’s long-term lower emissions economy. We are
2 Provided for in Part 21 of the Local Gvernment Act 1974 and Part 8 of the Public Works Act 1981
3 Refer to the Herenga ā Nuku Aotearoa website, Unformed Legal Roads | Herenga ā Nuku Aotearoa, the Outdoor Access Commission (herengaanuku.govt.nz)
one of New Zealand’s largest electricity generators and retailers, providing energy services to homes, businesses and industrial consumers throughout New Zealand.
19. All of our electricity is generated from renewable sources – hydro, geothermal and wind. Mercury’s Waikato Hydro Scheme, constructed between 1929 and 1971, is made up of eight dams, nine power stations and the Taupō Gates. Since 2000, Mercury has invested in geothermal power development, and now operates five geothermal power stations in the Taupō volcanic zone. Three of these geothermal power stations are owned in joint venture arrangements with our partners Tauhara North No.2 Trust (in relation to the Rotokawa and Nga Awa Purua power stations) and Tuaropaki Power Company (in relation to the Mokai power station). In relation to wind generation, Mercury owns and operates the Turitea, Waipipi, Tararua, Mahinerangi wind farms, as well as the newly commissioned Kaiwera Downs (phase 1) We also have a pipeline of renewable electricity generation projects including nearing final investment decision for Kaiwera Downs 2 and construction of Kaiwaikawe likely to begin in FY 2025.
Submission on the FTA Bill
Need for increased support for renewable electricity generation
20. Climate change is the most pressing environmental and social issue of our time. It is imperative that New Zealand’s development approvals framework enables the growth of renewable electricity generation activities that contribute to the necessary reductions in greenhouse gas emissions and support adaptation.
21. As recognised in the Emissions Reduction Plan and the Climate Change Commission’s advice to Government, a significant expansion in renewable electricity is required for New Zealand to shift key sectors away from fossil fuels to meet our domestic and international emissions reduction commitments. Renewable electricity generation is central to that outcome because, unlike other low emission options, the technology is mature, cost-effective and has broad social acceptance, with well understood and mitigable environmental impacts.
22. For New Zealand to meet its Climate Change Response Act 2002 2050 targets and Paris Agreement commitments, it is crucial that domestic policy settings (including the FTA Bill) recognise the importance and time critical role that renewable generation plays in our net carbon zero pathway. Indeed, the renewable electrification of transport and process heat is expected to be the most significant contributor to New Zealand achieving its 2050 net zero carbon target - delivering an estimated 70% of the gross emissions reductions required to achieve the 2050 target (some 22.2 Mt CO2 -e pa).
23. The Boston Consulting Group’s report “The Future is Electric: A Decarbonisation Roadmap for New Zealand’s Electricity Sector” sets out the scale of the opportunity and challenge. It notes that meaningful reform (including of environmental and planning laws) could lead to an almost 100% renewable electricity system by 2030 However, seizing that opportunity will require policy, regulatory and market settings that support significant development:
Deep, rapid decarbonisation at the lowest cost to consumers relies on a swift build of renewable electricity generation that will involve $42 billion of investment in the 2020s, including increased spend across generation, transmission, and distribution
24. Those investments include $10.2 billion in 4.8 GW of new utility-scale renewable generation capacity, which is more than a 50% increase on existing installed capacity. The RMA was specifically identified by the same report as posing the greatest risk to achieving the 4.8 GW of utility-scale renewable investment required this decade to achieve the roadmap. It noted that:
It is imperative that the RMA is improved to support, rather than prohibit, the development of renewable energy and that consenting is easy and fast.
25. Mercury is therefore pleased to see within the eligibility criteria (FTA Bill cl.17) projects that support climate change mitigation, including the reduction or removal of greenhouse gas emissions.
Te Ture Whaimana
26. Mercury supports the express recognition of Te Ture Whaimana as the primary direction-setting document for the Waikato and Waipā Rivers, as set out in clause 7 of the FTA Bill. We recommend improving the clause to be explicit that any decisions made under the Bill shall not be inconsistent with Te Ture Whaimana. This preserves the hierarchy of the importance of this legislation and removes any doubt regarding primacy of Te Ture Whaimana and the facilitation of delivery of infrastructure and development projects (FTA Bill cl.3 Purpose).
27. Mercury also recognises the other river iwi settlements that will need to be considered (FTA Bill cl.16) as a matter of course for any project that may be proposed in their rohe.
Resource consent lapse date
28. Securing the required resource consents for a renewable electricity generation project is a crucial component in the project lifecycle. It provides a level of certainty required prior to making a final investment decision. However, it’s important to understand that this consent is just one piece of a complex puzzle that leads to the investment decision4
29. There are numerous other variables at play, some of which are external and not entirely within our control. These include factors such as electricity demand, landowner agreements, advancements in technology, supply chain timeframes, and the queue for connection to Transpower’s national grid5
30. These variables are dynamic and may shift over time, necessitating regular reviews of project timelines. The investment decision, therefore, is a delicate balance between the confidence gained from obtaining resource consents and the ongoing management of these external variables. It’s a multifaceted process where all elements must align to support the investment decision.
31. While conceptually a consented project should be ready to construct, there are still going to be variables outside the investors control and so some flexibility with lapse date is required. Therefore, Mercury supports the fast-track resource consent approval having the ability set the timeframe of a resource consent lapse date of 5 years, and ability to request a lapse date extension to 10 years. This will provide the flexibility needed to help manage the external variables while maintaining investment confidence.
Processing timeframes
32. Mercury recognises the principles of the Bill (FTA Bill cl.9) which includes the requirement to “take all practicable steps to use timely, efficient, consistent, and cost-effective processes” when performing functions, duties or powers under the Act. However, we are also supporting a fast-track approvals process that delivers good and robust outcomes, that provide for long-term benefits
33. We consider the timeframes proposed in the FTA Bill to constrain the ability of stakeholders, officials and Ministers to meaningfully engage or adequately consider projects of the nature, scale and complexity likely to be considered of regional or national significance and meet the eligibility criteria as set out in clause 17.
34. Therefore, Mercury endorses the ESEG submission to increase timeframes when processing applications for referral and substantive approval.
Unformed legal road stoppage
35. One of the ways the proposed FTA Bill achieves its purpose is to provide a “one-stop-shop” approvals process for regionally or nationally significant infrastructure projects. Feasible wind and solar renewable generation sites that are considered of regional or national significance often include unformed legal roads
4 Refer to the Concept Consulting 2023 update on the generation investment survey prepared for the Electricity Authority, available here https://www.ea.govt.nz/documents/4414/Generation_Investment_Survey_-_2023_update.pdf
5 Transpower are currently seeking feedback on the review of the conncections management framework. An overview is available here https://www.ea.govt.nz/documents/4760/Transpower_NCTG_presentation.pdf
(also known as paper roads). Approval to encroach into and occupy a paper road for a renewable electricity generation project requires a road stopping or closure approval from the applicable local authority
36. To achieve the efficiencies of the Bill for approvals on regionally or nationally significant infrastructure Mercury seeks that the approvals process under the Local Government Act 1974 and the Public Works Act 1981 for unformed legal roads be added to the list of applicable approval processes (FTA Bill cl.10)
37. Obtaining approval for encroachment or occupation of an unformed legal road is one of the approvals needed for a project that can have varying timeframes
38. The road stopping approval significantly influences the design and access arrangements for these project sites Therefore, it is an essential approval that influences how the project occupies the project area. The FTA Bill provides a one-stop-shop and aims to streamline the approvals process across multiple statutes required for regionally or nationally significant infrastructure.
39. In conclusion, Mercury believes that the FTA Bill has the potential to significantly enhance New Zealand’s infrastructure development and transition to a low-emissions future, subject to those changes to strengthen the FTA Bill outlined above. These refinements to the FTA Bill will ensure its long-term effectiveness and alignment with the principles of social licence, stakeholder engagement, and sustainable management Mercury looks forward to contributing to this ongoing process and helping shape a resilient, sustainable future for New Zealand.
40. Should you have any queries regarding the content of this submission please contact Kristina Healy, Principal Policy and Planning Advisor on 027 365 2792 or via email at kristina.healy@mercury.co.nz.
Yours sincerely
Phil Gibson
Lucie Drummond Executive General Manager, Portfolio Executive General Manager, Sustainability