Position Statement

Position Statement of the Clutha River Forum
September 2009

An examination of the proposition, made by Contact Energy, that further large-scale hydro dams are justified on the Clutha River to meet the future energy needs of New Zealand.

We have examined the four Clutha dam options Contact Energy has communicated to the public, and after thorough consideration of the facts surrounding the efficacy of these options, we have chosen Option 5 – no further dams. This statement sets out the reasons for our decision.

1. Introduction
There is no doubt that the energy question concerns all New Zealanders, and that to gain a full understanding of the issues it is necessary to take into account the underlying reasons for Contact Energy’s investigation of large hydro options on the Clutha River. We have done this, taking collective responsibility where others, including Contact Energy, have failed or are unable to do so. We offer some solutions.

2. The Unsustainable Pursuit of Growth
We are witnessing an unprecedented global crisis, directly threatening our way of life. This is to be expected. We have built our civilisation on the myth that we are an exceptional species, endowed with the ability to control “nature.” We believe that the environment exists primarily to serve us as a “resource,” failing to understand that the natural environment already serves us, but cannot do so when destroyed. Somehow, we believe that we can continue to grow our population, able to use dwindling “resources” indefinitely, if only we can manage our problems with better technology. Our economic system is driven by a need for growth. We have fuelled this growth by using an energy source that we have lately realized is disastrously destructive to our climate, our world. After all this, we are now, as a civilisation, standing blind-folded on the slippery slope of our “Peak Oil” culture, fiddling with the peripherals, while the core issue is ignored.

Climate change has arrived, and every “resource” indicator is falling, because we refuse to live sustainably. The best we can do is to seek the least bad outcome. The most important change we can make is to acknowledge our utter dependence on that which gives us life – our environment.

But this will mean absolutely nothing unless we refocus our economy to serve the natural environment, instead of the other way round. Placing meaningful economic values on living rivers, living forests, and the Earth’s ecosystem withal, by implementing proper environmental accounting processes, is essential.

“New Zealand is currently very far from being sustainable, and does not have policies and practices that can achieve sustainability. …We need a new approach to economics that maximises the community wellbeing within the requirement for ecological integrity.” (Strong Sustainability for New Zealand report, May 2009, SANZ Sustainable Aotearoa New Zealand.)[Ref. i.]

However, change will be difficult because our decision-makers, in politics and business, are accustomed to the existing failing paradigms of economics and governance. Can Contact Energy adapt?

3. Adapting to Resource Depletion
Oil is the fundamental building block of the world’s economy, but it is running out. A Merrill Lynch (2009) analysis has concluded that oil production is already in an irreversible decline.[Ref. ii.]

During the 1960’s, the world consumed about 6 billion barrels per year while finding about 30-60 billion per year. The consumption/discovery ratios have approximately reversed themselves in recent years. The world now consumes close to 30 billion barrels per year but finds less than 4 billion per year. The top-10 oil groups spent about US$8 billion combined on exploration last year, but this only led to commercial discoveries with a net present value of slightly less than US$4 billion. In other words, significant new oil discoveries are so scarce that looking for them is uneconomic. In light of these trends, it should come as little surprise that the energy analysts at John C Herold Inc. - the firm that foretold Enron's demise - recently confirmed industry rumours that we are on the verge of an unprecedented crisis.

Evidence shows that oil production peaked in late 2005 (Beyond Oil: The View from Hubbert's Peak, By Professor Kenneth S. Deffeyes)[Ref. iii.] “Peak Oil” arrived as demand continued to soar. Consequently, the price rose almost 400% in only three years. By July 2008, the global economy began to buckle under the weight of soaring energy and commodity prices, until mortgagees – particularly in the “subprime” category, couldn’t keep up, and since the banks had created capital by lending more than they had on deposit, the financial system collapsed. The brief respite we now have in the price of oil will not last. It simply reflects the fact that there is even less money available than oil.

“To meet climbing global requirements, OPEC will have to increase its output from 30 MBD to at least 50 MBD. Significantly, no OPEC nation, except perhaps Saudi Arabia, is investing sufficient sums in new technologies and recovery methods to achieve such growth.” (Joint Operating Environment report, US Department of Defense, Nov25, 2008)[Ref. iv.]

Most estimates state there will be at least a two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production.

An increase in the amount of economic activity requires an increase in the amount of net-energy (i.e. the net-number of BTU’s) available to fuel those activities. As no alternative source, or combination of sources, comes remotely close to the energy density of oil (473,750 BTU’s per litre), a decline or even plateau in the supply of oil carries "game-ending" consequences for the financial system.

In order to survive, we must drastically reduce our dependence on oil. Nearly all the work done in the world economy, all the agriculture, manufacturing, construction, and transportation, depends on energy derived from fuel, with the lion's share coming from declining oil and natural gas. Modern medicine, water distribution, and national defense are each entirely powered by oil and petroleum derived chemicals.

Every product has an oil component. The construction of an average car consumes the energy equivalent of approximately 20 barrels of oil. It takes 1 litre of oil to produce 1 litre of milk. To produce a tonne of copper requires 112 million BTU's or the equal of 17.8 barrels of oil. All our cities and infrastructures have been built, and are maintained, by using almost unfathomable quantities of oil.

In the future, we will face unprecedented shortages of low cost energy, especially oil-based energy. All finished materials and services will become more expensive. Therefore, we will be compelled to conserve and recycle to a maximum. It is necessary to plan for a future where all “resources” are scarce and expensive. All heavy metals will become scarce as they are progressively mined out. The only materials readily available will be based on light metals such as Calcium, Titanium, Aluminium, Silicon, Carbon and Magnesium or their associated compounds. Even steel will be in short supply. The cost of all products will spiral.

As we move away from oil dependence, and all the fossil fuels complicit in climate change, it follows that electricity generation using oil, gas and coal will decline, while the demand for reliable renewable electricity to replace this retired generation, and to power electric cars and other battery-based products, will increase dramatically.

Adapting to this post “Peak Oil” world will require more than repeating the energy solutions of the past, such as large-scale hydro. This is not a time for “business as usual.” We need to develop truly renewable energies; that is to say, not dependant on the exploitation of the declining number of free-flowing rivers, or on metals and minerals in terminal decline, and not subject to the vagaries of the weather. We urgently need to prepare a reliable and expandable supply of electricity.

We are cognisant of the fact that energy companies are handicapped by established business models, and their inability to adapt quickly and effectively away from generation, such as “large-scale” hydro, which has diminishing prospects. However, successful energy companies will recognise, and benefit from, innovative new technologies such as marine power (see ‘Tidal Power and Cook Strait’ below).

4. Energy Conservation First
The lowest impact, quickest and most cost-effective alternative to new generation projects is to reduce waste and improve efficiency. The latest figures from EECA (Energy Efficiency and Conservation Authority)[Ref. v.] show that New Zealand's energy efficiency has improved at only 0.7% per annum over the medium term from 1995 to 2007. Even so, about 34% of the increased demand for energy services was met through improvements in energy efficiency. It is patently obvious that energy conservation measures have the potential to significantly offset, or negate, the need for additional generation, providing a breathing space for the development of more sustainable options, needed to replace unsustainable generation from existing oil, coal, gas fired power stations and ultimately large-scale hydro.

The poor efficiencies already gained do not take into account reported power losses of up to 25% in transmission via the HVDC.

In New Zealand, it is likely that we waste so much energy that we do not need to generate much more, if any, especially if our population is held in check, but it is also likely that energy conservation measures such as more household insulation, and appliance “energy footprint” ratings, will continue to move too slowly, held back by a government lacking in urgency and vision.

The move to high energy agriculture, with dairying and irrigated farming, is also seriously impacting energy demand, with associated environmental costs that have not yet been included in the value equation.

According to often quoted figures, we are using about 2% to 2.5% more energy each year, as our population and economy grows, with the potential of an additional 1% if the anticipated growth of electric vehicles eventuates. But as these figures are sourced from producer data, how can we be sure that they represent an accurate assessment? We believe this data deserves the utmost scrutiny.

If we are to believe projected growth figures, then New Zealanders are facing an energy dilemma. There are critical choices to be made in every aspect of our lives. Either we as a culture continue down the path of unchecked growth and consumption without sufficient regard to the unsustainable consequences, or we embark on meaningful changes to reduce wholesale inefficiency across all sectors of our society, from the producer, to transmission network, to the end-user.

The global recession has sharpened our sense of urgency, but it has not focused us on how to avoid more of the same, and worse. The present crisis, of all things, should provide impetus for change, in the way we think about energy, about consumption, and about the environment that gives us what we need to live. In short, we should now realize that we need to move toward a “steady state economy.”

How is Contact Energy responding to this crisis? On the public record, all that Contact Energy seemingly wants is “a return to normal rainfall patterns …. and higher wholesale electricity prices.”

This is typical of a complicit business model unable to adapt. Key indicators of improvement are based on a return to consumption, with the implication that we are meant to consume our way out of recession, rather than address the cause of the recession. Saving, and living sustainably within our means to achieve equilibrium, is not promoted. Contact Energy is a player in this flawed cycle of profit-driven production and consumption. The grim reality is that this disease is endemic, and that change will come painfully slowly, driven by necessity, on the heels of further global crises.

5. The Case for Energy Sector Restructuring
There is a fundamental problem with the New Zealand system. Customers have a cost incentive to save energy, but producers have a profit incentive to sell more. The producer is bound to a business model that is incentivised to build, produce and sell energy for profit. This reduces the producer’s incentive to invest in energy conservation, and demand-side management strategies, such as shifting energy usage from on-peak to off-peak periods.

The irony is that the consumer is likely to fund additional profit-driven generation through higher power prices, which will in turn drive hyper-inflation unless the unit price of electricity can be subsidised by industrial consumers. It is a case of the “tail wagging the dog” as the producer promotes growth. The producer can always point to projected consumption to justify further generation infrastructure, but this presupposes that the most logical first measure, efficient energy use, is not an option.

This “resource” wasting business model is handicapped by similarly inefficient distribution mechanisms. Better real-time price information, and a resolution of long-stalled efforts to create effective transmission hedging mechanisms, would improve wholesale market arrangements.

It is our view that the energy sector must be restructured to incentivise energy conservation at every stage of electricity management, production and distribution. Past restructuring has failed to deliver efficiencies. Instead, energy companies have manipulated the supply and demand equation to reap enormous benefits. Regional and local responsibility must be re-instated, with generation closer to consumption encouraged, and energy conservation must become the norm at all levels of society.

6. Otago in the Supply and Demand Equation
Contact Energy has justified further dams on the Clutha River by telling us, time and again, that we need more power in the south, because of growing demand in Otago, and because of the relatively new phenomenon of southbound electricity across the Cook Strait HVDC. But discreetly kept off the agenda is an examination of just how much power Otago produces already, how much Otago uses and where that southbound North Island power actually goes. You do not need to be an energy expert to work it out. Otago hydro dams have the capacity to generate up to 1730 MW of power. This includes the Clutha dams – Clyde and Roxburgh, the Waitaki dams – Aviemore, Benmore, Waitaki (on the North Otago boundary), and smaller schemes such as Waipori. But how much does Otago actually use?

A visit to http://www.systemoperator.co.nz/ [Ref. vi.]  provides a clear picture of just where the power is being used. There are 14 grid zones listed and, at any time of the day or night, it is obvious that Otago consumes significantly less than any other region in New Zealand, except for Westland.

Canterbury consumes six times as much power as Otago, while Southland – even excluding the gross consumption of power by the Tiwai Point smelter – manages to use about twice as much. Not only does Otago export 70% of its average power generation to Canterbury and Southland, but none of the southbound power across the Cook Strait HVDC goes further south than Christchurch. To say otherwise is to admit to a massive failure of Otago’s hydro generators to deliver even 30% of their capacity, because of lines restrictions or market issues that have no bearing on whether or not we need more dams on the Clutha River.

Otago-Southland has 7% of the country’s population, and 20% of its generation capacity. This generation percentage is set to increase with the construction of Kaiwera Downs and Mahinerangi Wind Farms, as well as – potentially – Project Hayes. Contact Energy’s expert witnesses expressly acknowledged the disproportionate amount of generation in the south in the company’s environment court appeal for MWF.

7. The Decline of “Large-Scale Hydro”
We are told that to maintain our present society and standard of living we need a minimum increase in power availability of 2.5% per annum (peak power), with 170 MW of new generation added each year. Based on this figure, we would need the equivalent of one Luggate dam (86 MW) every 6 months, or one Tuapeka dam (350 MW) every 25 months, or another Clyde dam (432 MW) every 29 months. Clearly, this is not a credible long-term solution. It is a dead-end strategy that will not meet future needs, while wasting time, money, and destroying our valuable rivers.

By continuing to advocate the 1980’s “think big” dam development model on the Clutha River, Contact Energy is taking a backward-thinking approach to energy planning. This reveals a dogged and misguided belief in an outdated model, and it is indicative of Contact Energy’s embedded intransigence born of reliance on old policies and methods that are now failing, worldwide, as evidenced by the WCD (World Commission on Dams) final report, 2000.[Ref. vii.]

Large hydropower has been out of favour for a number of years because it doesn’t meet the international best practice guidelines in the water and energy sector.

Contact Energy appears to have a halcyon view of “large-scale hydro” derived from past “heroic decisions and engineering feats,” without acknowledging that New Zealand has reaped hydroelectric benefits only by exploiting many of it’s free-flowing rivers. In the past, the benefits of building dams were viewed as outweighing the obvious environmental impacts. That has changed.

The intrinsic problems associated with large dams have long been glossed over. Hydroelectricity is often falsely promoted as cheap and reliable. While the operating costs of hydroelectric dams can be low (not the Clyde dam) compared to fossil fuel plants, their construction costs are extremely high, running into the billions of dollars for major projects. They are also prone to cost overruns. The WCD (World Commission on Dams, 2000)[Ref. viii.] found that on average dams cost 56% more than projected. And 55% of the hydroelectric projects studied by the WCD generated less power than planners promised. In New Zealand, the Clyde dam is an obvious example of disastrous cost overruns. According to the public record, the 1982 winning bid of the joint venture of W. Williamson & Co. of Christchurch and Ed. Zublin AG of Stuttgart, was $102.6 million. Ten years later when the dam began producing power, the cost had climbed to $1.4 – 1.8 billion. Conversely, the planned generation of 612 MW had fallen to an actual capacity of 432 MW.

Typically, construction and mitigation costs are underestimated, long-term costs are ignored, the value of the proposed dam and mitigation measures are inflated, while the value of the current and potential benefits from the existing environment are underreported. Contact Energy is promoting its dam proposals according to this pattern.

It is a telling fact that more dams are being decommissioned than built in the U.S., in what is becoming a trend for older large dams. Only the so-called third-world countries, and New Zealand, are still pursuing large-scale hydroelectricity.

8. Climate and Falling Security of Supply
It has become increasingly evident that hydroelectricity is not a reliable source of energy because it depends on the vagaries of the hydrological cycle. Many hydropower-dependent countries, including Brazil, Norway, Ghana, Sri Lanka, Ecuador and Vietnam, and of course New Zealand, have suffered serious power shortages due to droughts.

Contact Energy talks about “… a future role to play for more large-scale hydro projects over the coming years.” Why would a responsible generating company wish to keep relying on a form of generation that is in the front-line for negative climate change impacts?

New Zealand's heavy reliance on hydro has been exposed in past “dry winters” when hydro storage has dropped. The increasing unreliability of seasonal weather is an accepted consequence of a warming climate, which is expected to cause more extreme weather events. This dry year problem is not only worsening, but resulting in greater seasonal fluctuations in both dry and wet weather, causing a “feast or famine” in the supply of water, particularly in the South Island hydro lakes.

According to NIWA (National Institute of Water & Atmosphere Research), climate change will “introduce big changes in the seasonality of hydro storage, because it will change the accumulation and melt of snow in the Southern Alps.” “Long-term variability in lake inflows and rainfall is related to alternating phases of the IPO, a recently identified large-scale pattern of climate variation that affects the whole Pacific basin. The IPO may be changing phase again, back to the pattern observed before 1977. If this occurs, low inflow periods for South Island lakes will be more frequent (and possibly more severe) over the next 20-30 years than was the case during 1977-98. This would pose a significant risk for the security of electricity supply.”[Ref. ix.]

Contact Energy should be rigorously planning to reduce exposure to this vulnerability, since not to do so will impact harshly not only on Contact Energy, but on all New Zealanders. In this respect, large hydro projects can be described as contrary to the “national interest.”

Given the experience of recent years, Contact Energy should be well aware of the serious financial ramifications of changing weather patterns. Can Contact Energy afford to ignore these risks?

9. Large-Scale Hydro is Not Truly “Renewable”
Contact Energy’s claim that further dams on the Clutha are among our “best renewable” options, is an attempt to repackage old strategies with green-washed language.

The distinction between small and large hydro is critical in helping to define what technologies are to be considered as "renewable."

In recent years the definition of “renewable energy” has been increasingly redefined to distinguish an energy source that is both naturally replenishing and environmentally safe and sustainable. The term “new” renewable energy has also been used to define the latest wave of renewable technologies that are truly environmentally sustainable.

By such standards, hydropower over 10 MW is no longer considered renewable because the negative impacts of large hydropower outweigh the renewable benefits. Large concrete gravity dams have a full life carbon footprint at least double that of a large wind farm (another poor option). At the same time, large dams have serious environmental and human consequences, degrading ecosystem integrity, displacing communities, submerging productive land, and imposing riverine regimes that cannot be sustained indefinitely.

At the June 2004 International Renewable Energies Conference in Bonn, large hydro greater than 10 MW was not included as a true renewable because it fails to deliver defensible outcomes in terms of full life carbon footprint, sustainability, and the usual triple bottom line of economic, social and environmental value. The World Bank now excludes large hydro over 10 MW from its “new” renewables calculations.

This failure of large hydro as a true renewable is even more apparent in terms of the ‘Strong Sustainability’ model, Strong Sustainability for New Zealand report, May 2009, SANZ (Sustainable Aotearoa New Zealand)[Ref. x.]

10. The Carbon Footprint of Large Hydro
A carbon footprint is the total amount of CO2 and other greenhouse gases, emitted over the full life cycle of a process or product. It is expressed as grams of CO2 equivalent per kilowatt hour of generation (gCO2eq/kWh), which accounts for the different global warming effects of other greenhouse gases.

When we consider the carbon footprint of a large-scale hydro project (“full life cost”), it is easy to understand why large dams rate so poorly. For example, the Clyde dam contains 1 million cubic metres of concrete, equivalent to about 3 million tonnes. Manufacturing one tonne of cement requires 4.7 million BTU’s of energy, which is the amount contained in about 170 litres of oil or 190 kilograms of coal. Obviously, this combined with emissions from machinery involved in earthworks for foundations, roading, terrain forming, landslide mitigation, and through the loss of river corridor carbon sink forests or vegetation, adds up to an enormous carbon footprint.

A comparative study at the University of Auckland found that large hydro has a full life carbon footprint that is 2.5 times larger than that of tidal energy.

“This study examined the comparative sustainability of four renewable electricity technologies in terms of their life cycle CO2 emissions and embodied energy, from construction to decommissioning and including maintenance (periodic component replacement plus machinery use), using life cycle analysis. The models developed were based on case studies of power plants in New Zealand, comprising geothermal, large-scale hydroelectric, tidal (a proposed scheme), and wind-farm electricity generation. The comparative results showed that tidal power generation was associated with 1.8 g of CO2/kWh, wind with 3.0 g of CO2/kWh, hydroelectric with 4.6 g of CO2/kWh, and geothermal with 5.6 g of CO2/kWh (not including fugitive emissions), and that tidal power generation was associated with 42.3 kJ/kWh, wind with 70.2 kJ/kWh, hydroelectric with 55.0 kJ/kWh, and geothermal with 94.6 kJ/kWh.” (Comparison of Life Cycle Carbon Dioxide Emissions and Embodied Energy in Four Renewable Electricity Generation Technologies in New Zealand, 2009.)[Ref. xi.]

A similar comparative study in the U.K. found that in terms of grams of CO2 equivalent per kWh of electricity generated, large hydro in the U.K. comes in with a carbon footprint 2 to 6 times larger than that of wind power. Specifically, large hydro has been measured at 10-30gCO2eq/kWh while wind has been measured at only 4.64gCO2eq/kWh, the lowest except for nuclear (Carbon Footprint of Electricity Generation, 2006).[Ref. xii.]

If either of these studies had measured the carbon footprint of the Clyde dam, we suspect it would have been much larger than 10-30gCO2eq/kWh, because of the extensive roading and stabilization work that was required, and the additional concrete poured into countless thousands of drill holes between the 14 landslide areas and the river before inundation.

In the above, we haven’t taken into account that scientists have calculated that 95% of reservoir emissions come from water suddenly released through the turbines, in what has been called the "soda bottle effect." By implication, this is no longer just a tropical reservoir issue, because although emissions are less here in New Zealand, we also have many large dams. Scientists at Brazil’s National Institute for Space Research calculate that the world’s large dams are responsible for producing 104 million metric tons of methane a year – making dams the single largest source of human caused methane. We believe this science needs further work in the temperate setting.

It is now interesting to note Contact’s claim that large-scale hydro has after construction benefits of “near-zero greenhouse gas emissions,” – a statement which conveniently ignores the fact that a dam needs to be built. The point must be made that any claim regarding emissions that doesn’t include the full life measure of a dam’s emissions, is worthless. This is nothing short of “green-washing,” in line with past thinking.

11. Where the Carbon Offset Market is Going
We are all aware of the emergence of the carbon regulatory environment. It remains to be seen how this will translate to New Zealand. There are more than a few issues to iron out.

The world's biggest carbon offset market, the Kyoto Protocol's Clean Development Mechanism (CDM) – run by the UN, is intended to reduce emissions by rewarding developing countries that invest in clean technologies. In fact, evidence is accumulating that it is increasing greenhouse gas emissions behind the guise of promoting sustainable development. This misguided mechanism is handing out billions of dollars to chemical, coal and oil corporations and the developers of destructive dams - in many cases for projects they would have built anyway.

We can get some idea of how things are shaping up by looking at the U.S., where renewable standards are being enacted to regulate the renewable portfolios of energy companies. Qualifying renewable resources must be new, so existing hydroelectric plants are not included. However, definitions of “renewable” vary among different state incarnations of the standards. Some programs define “incremental hydropower” (upgrades of existing hydro dams) as renewable, most grant credit to “small” dams (e.g. less than 30 MW), while others exclude all dams from the list of qualifying renewable resources. The U.S. compliance period for the standard begins in 2012.

Of course, the Copenhagen negotiations – probably extending into next year, will inevitably result in a considerable reshuffle of the global rules, and hopefully a new version of the CDM, impacting on future standards and targets country by country.

For now, it’s clear that the emerging carbon offset market is moving to exclude large-scale hydro. More than 260 organisations have signed on to the International Rivers declaration to exclude large hydro, over 10 MW, from renewable energy initiatives in the carbon offset market. Some U.S. states set their qualifying limit as low as 5 MW.

The offset debate is fraught with controversy. The most alarming fact is that carbon credits do not represent an "emission reduction.” There is no global benefit because offsetting is a "zero sum" game. If a mine cuts its methane emissions under the CDM, there will be no global climate benefit because the polluter that buys the offset avoids the obligation to reduce its own emissions. But worse than this, the CDM is so prone to abuse that 76% of the developments that have so far received offsets were actually already built at the time they applied for offset credits, and so they do not represent “additional” reductions. In other words, the CDM is even failing in the “zero sum” game.

This is why it is so important for Contact Energy to future proof its “renewable” portfolio by selecting generation options with the most defensible low carbon footprint. Financial considerations aside, everyone needs to drastically reduce emissions of all kinds.

12. Long-term Hidden Costs and Accountability
The Clutha dams experience is a case study of hidden costs and creeping long-term issues that were not originally taken into account.

When the Roxburgh dam was commissioned in 1956, the Clutha River was regarded as a southern resource that belonged to the people of New Zealand, a mind-set that has lingered into the 21st century. Electricity was a passport to prosperity, and the wonders of the Roxburgh Gorge were expendable. We can understand why it was built, but we can also lament the loss of “New Zealand's Grand Canyon” and this country's largest rapids, notably the Golden Falls at Island Basin, and the Molynuex Falls. To Māori the precipitous character of the Roxburgh Gorge earned it the name Kā Moana Haehae (the division of the waters). After the 1998 Ngāi Tahu settlement this name was applied to the bed of the Roxburgh reservoir.

The Roxburgh Gorge would certainly have become a whitewater industry draw-card, particularly from the 1980’s onwards when such growth occurred in Queenstown. Unwittingly, the builders of the Roxburgh dam removed this potential tourism windfall from Alexandra and Roxburgh. It can also been seen, in hindsight, that the trails used by gold-miners along both sides of the gorge, now mostly submerged, could have long ago become viable recreation and tourist trails.

It is often said that Cromwell developed because of the Clyde dam, but Cromwell never needed the Clyde dam to make it a successful tourist and viticulture centre. In fact, the area’s tourism development was stifled for over a decade during Clyde dam construction upheaval, uncertainty and delays, at a time when Queenstown was booming. Cromwell actually had everything going for it, including the historic main street, the 1868 bridge (ideal for bungy-jumping) overlooking the Cromwell Gap and the Cromwell Junction – the famous “meeting of the waters.” Cromwell also had Sargood's Rapid, rated no.1 in the world by whitewater sports enthusiasts, and potentially a whitewater Mecca akin to the great rapids submerged in the Roxburgh Gorge.

Cromwell was destined to become a thriving heritage and adventure tourism centre, surrounded by orchards and vineyards. The development at Pisa Moorings would have occurred around Lowburn, on both sides of the bridge, with vineyards and orchards spreading over that excellent farmland, now submerged. Lowburn would have grown into a very attractive satellite town, bordering the “Hundred Islands” section of the Clutha River.

Today, few people can imagine Cromwell’s lost natural setting, and the iconic Cromwell Gorge, all of which would have become increasingly famous. The Clyde dam submerged those unique assets. Perhaps those people who best know the true cost of the Clyde dam are those who loved the wild and scenic Cromwell Gorge, and who can now scarcely bear to look at the dead reservoir, knowing what is beneath.

It was “The single most monstrous environmental sin over the last 30 years,” said Michael Cullen, in May 2009, citing the Clyde dam as his greatest regret when retiring.

In 1995, ECNZ estimated that 1.46 million cubic metres of mostly Shotover River sediment had entered the Roxburgh reservoir every year before the Clyde dam was built, and that a total of 50 million cubic metres of sediment had accumulated in the reservoir, raising the bed profile “considerably.” Repeated attempts to “flush” out the sediment have had little effect, and have not reversed this process. This is probably because of the “Gates of the Gorge,” a narrow bottleneck just below Alexandra. Some 3% of this load, or 43,800 cubic metres of sediment, still reaches the Roxburgh reservoir, and since 1992, some 744,600 cubic metres has accumulated in the reservoir, particularly in the area adjacent Alexandra, and at the Manuherikia River confluence.

When the Clyde dam was commissioned in 1992, the Kawarau Arm became the dumping ground for the Clutha’s sediment load, which to date amounts to some 25 million cubic metres. The Kawarau Arm already has substantial gravel bars, is becoming difficult to navigate, and it will eventually become a braided mess of crack willows, silver poplar and sycamore much like the Shotover delta. What are the flood issues associated with these sediment beds when they reach the Cromwell Junction and restrict flows down the gorge?

At Alexandra, this bed profile building process has lead directly to a serious flood problem that will require a continuing mitigation commitment on the part of Contact Energy. Meanwhile, this sediment interruption has, since 1956, removed replenishing deposits from coastal beaches, notably at St Kilda and St Clair, in what is fast becoming a costly erosion issue for Dunedin, as this combines with more storms and rising sea levels associated with climate change.

Contact Energy has been very slow to acknowledge responsibility for, or involvement in, these problems. In the case of the Alexandra flooding issue, it took specific directives under the RMA and/or NGO consenting processes to achieve that, as evidenced by Contact Energy’s experience during the Clutha dams’ operating consent process in recent years.

We believe that any further Clutha dams would invite serious hydrological issues. For example, a reservoir extending to Albert Town would interfere with sediment and shingle movement entering from the Hawea and Cardrona Rivers, raising bed profiles and increasing the flood risk at Albert Town. Constricted water at this point has the potential to affect Lake Wanaka, in a manner similar to the way in which the Shotover delta has in the past affected Lake Wakatipu.

Rising water tables would likely present expensive mitigation issues, notably in the Miller’s Flat area, where septic tanks would be negatively impacted.

Dams on the Clutha River cannot escape long-term consequences such as reservoir sediment build-up, increasing flood and instability issues, and eventual decommissioning and river restoration costs, which will be considerable. For example, the removal of the Elwha and Glines Canyon storage hydro Dams on the Elwha River, in Washington State, “… is projected to cost over 100% of the estimated cost of building equivalent new hydro-electric power plants.” (Are Hydro Developments Reversible? SPX Consultants NZ Limited, 2008.)[Ref. xiii.]

This SPX Consultants report also notes that financial instruments such as bonds can be used to ensure intergenerational equity. “Section 108A of the Resource Management Act allows for bonds to be required as a condition of consent to cover the cost of any remediation, restoration, removal of structures and monitoring of long-term effects. Bonds have already been applied to private landfills in New Zealand and information on the use of bonds is available in Ministry for the Environment guidelines.”

We consider bonds to ensure intergenerational equity highly relevant to the Clutha, in light of long-term costs, risks and liabilities associated with reservoir sedimentation, flooding, instability, and very expensive decommissioning. Proper intergenerational accounting, doubtless, would make all large-scale hydro dams on the Clutha River uneconomic.

Reversibility costs for large dams are in the order of “35-150% in proportion to the construction cost.” (Reversibility of Renewable Power, SPX Consultants NZ Limited, 2008.)[Ref. xiv.]

In New Zealand, reversibility is more relevant to large-scale hydro than other generation options.

These hidden costs will become more prevalent as time passes. Questions of accountability will be raised, again and again, until the economic weight of these problems comes to bear on policy, in line with the overseas experience. Will Contact Energy face up to these challenges and costs? Does the company wish to incur more?

13. Alternative ‘Renewable’ Energy
New Zealand has some of the most plentiful renewable energy “resources” in the world. The myth that hydroelectricity is our most abundant renewable energy is incorrect. Our tidal and wind capacity is far greater.

Wind: This is one of the world’s fastest growing energy sources. The European Wind Energy Association projects that by the year 2020 the installed capacity of wind turbines could reach 1.2 million MW (nearly twice the current global hydroelectricity capacity).

It is often said that wind power is intermittent, but this is because generation companies measure constancy in terms of weeks and months, rather than in minutes and hours. Using the latter, wind is more reliable than hydro.

Globally, the potential for wind power has been estimated at 40 times the current energy demand, and it is already economically attractive compared to fossil fuels and large-scale hydroelectricity. But to achieve even a fraction of wind power’s potential, enormous amounts of land would be needed, resulting in serious environmental impacts.

At present, electricity generation from wind in New Zealand amounts to only 2.5% of the total. By contrast, Denmark generates 20% of its electricity from wind, and Spain will generate 15% of its electricity from wind by the end of 2010. New wind-to-battery technology, using “flow” batteries and other non-perishing storage, is also set to dramatically increase the efficiency of wind turbines, with fewer turbines producing more energy.

In New Zealand, we’re seeing the old “think big” methodology applied to the new wind technology. We believe that this is a mistake bound to incite opposition, on the grounds of visual, environmental and noise impacts.

Large-scale wind farms, especially in remote locations, requiring new roading and connecting infrastructure, not only have significant negative impacts on natural values, but also have a higher carbon footprint than less isolated wind farms.

We can see some potential for small-scale wind farms built close to where the power is needed, given the buy-in of local communities regarding siting, operation and investment.

However, we believe that for wind power to reach its full potential, it would need to focus offshore.

“The Hywind turbine opens up a new world of opportunities for off-shore wind power, as the turbines could be placed much more freely than before,” said Albert Goller, Siemens Chairman and Managing Director. “Because the turbine is constructed on a floating structure, the high costs associated with foundation works for fixed turbines at depths of more than 30 to 50 metres are eliminated, making this innovation the clear choice for countries that have been looking to establish large scale offshore wind farms.” Siemens’ wind technology currently provides clean energy for some 28,000 homes in Wellington, with 27 Siemens turbines now connected to the grid at Meridian Energy’s West Wind farm. Siemens has more than 6,600 MW of offshore wind installed around the world.[Ref. xv.]

Geothermal: We note Contact Energy’s $100 million investment in the first phase of the Tauhara and the next phase of the plan to grow Contact’s geothermal capacity, with plans for a further $1.5 billion investment in the area. But there are only a limited number of areas that can be developed, and although geothermal is an established technology with about 8,000 MW installed worldwide, it is only about 10% efficient, while being weather dependent because of the cold sink temperature specification constraints. For these reasons, we do not consider geothermal generation to be a long-term solution.

Solar: While sales of solar photovoltaic (PVs) cells are growing fast they still account for only 0.04 percent of the world’s electricity generation. PVs are expensive for grid-connected generation, although their prices are coming down fast as production volumes increase and research intensifies. The European Photovoltaic Industry Association predicts that solar energy could provide a quarter of global electricity demand by 2040. The obvious constraint to solar is that it can generate efficiently only when the sun is shining. The rapid progress in fuel cell technology should help overcome this problem, but metal component shortages will eventually place severe constraints on solar unless this, too, can be overcome.

In the US, energy companies are worried about losing their grip on the US$130 billion residential energy pie, as solar rooftop installations boom across the country. Rather than get on board with rooftop solar, most generating companies have decided to stick to their old ways, building inefficient centralized generation, while attempting to block solar initiatives in what can be described as protectionism.

Meridian’s recent purchase of San Francisco-based Cleantech America, while promising to speed up solar in New Zealand, will not provide us with significant grid alleviation in the medium term. We would much rather see that kind of money going into New Zealand owned initiatives, such as the Cook Strait tidal option.

Tidal: This requires a separate section.

14. Tidal Power and Cook Strait
Cook Strait is one of the most exceptional sources of tidal energy in the world. The conjunction of the Tasman Sea with the Pacific within a confined waterway forms an alternating difference in tidal levels, creating massive tidal currents. Since tidal movements are driven by the gravitational pull of the moon, obviously, they are reliable and predictable, and since water is about 1000 times denser than air, tidal turbines are extremely efficient, or “power dense.”

“If less than 0.1% of the renewable energy in the oceans could be converted to electricity, it would satisfy the present world demand for energy five times over.” (U.K. Marine Foresight Panel, Select Committee on Science and Technology, Seventh Report, 2000.)[Ref. xvi.]

Tidal power has been on the table for a while, but is now progressing quickly, with a variety of site specific technologies. Most New Zealanders have heard about it, but haven’t realized how well it stacks up against other renewables.

In 2007, an Auckland University study looked at whether hydroelectricity was more sustainable than wind, geothermal or tidal power, and they got a surprise. "We were sort of expecting hydro generation to be the winner, but as it turned out tidal came out first.” “Tidal power projects leave their renewable rivals for dead when it comes to carbon footprint, because geothermal plants use stacks of stainless steel, and hydro dams involve huge amounts of energy intensive concrete and steel. Steel and concrete have a lot of carbon emissions associated with their manufacture and construction," (reported Zeb Worth, Comparison of Life Cycle Carbon Dioxide Emissions and Embodied Energy in Four Renewable Electricity Generation Technologies in New Zealand, 2009).[Ref. xvii.]

A marine energy deployment fund has been set up through EECA (Energy Efficiency and Conservation Authority) to bring forward the development of marine energy in New Zealand. Grants have been scheduled in four rounds, from 2008 to 2012, from a total fund of $8 million. The first grant of $1.85 million was awarded to Crest Energy for a tidal stream generator project at the entrance to Kaipara Harbour, north of Auckland, subject to resource consents being obtained. In round two, $760,000 was awarded to the WET-NZ project put forward by Power Projects Ltd and Industrial Research Ltd.

Neptune Power intends to trial their first turbine in an area off Cape Terawhiti, in the optimal tidal zone, the Karori Rip. The Cook Strait is 23km wide and reaches 250m at its deepest. The generating zone is vast and deep, providing a stable and expandable generating environment. Connection to the onshore grid is conveniently close, as are maintenance facilities.

Christchurch scientists David Beach and Chris Bathurst applied for funding in the third round of EECA’s Marine Energy Deployment Fund, but were rejected on the grounds that the first phase is Research and Development, not deployment. They hope to secure private investor funds to enable a turbine to be built and placed 90m deep off Sinclair Head on Wellington's south coast. They plan to be up and running by 2011, but say 2012 is more likely.

It is interesting that the multi-million dollar research project received a resource consent from the Greater Wellington Regional Council in April, having gained the support of every affected party (19 in total) who were required to give their unqualified approval. Altogether, 23 organisations gave the project their approval.

A major advantage is the relatively small up-front cost involved in the Cook Strait infrastructure, of cabling and the sub-sea connection unit. The cost of turbines/moorings is related only to demand. By comparison, dam costs are all up-front.

Although using tidal energy will not directly bring down power prices, it will reduce the need for exposure onto the volatile and expensive spot market during peak winter demand. It will also be reliable, as exactly how much power would be generated, and when, will be known in advance through tide charts, unlike hydro or wind generated power. Guaranteed power production is very attractive to major industrial power consumers, especially when it is also independent of weather and climate effects.

Potential output from Cook Strait is estimated at 17,000 MW, and Foveaux Strait could produce another 5000 MW. Ultimately, the generation cost is estimated to be about 15c/kWH, and output (kW per tonne of material) some 4 times more efficient than wind turbines.

In terms of carbon footprint (“full life cost”), tidal is a clear winner, being less than any other form of renewable energy. (Comparison of Life Cycle Carbon Dioxide Emissions and Embodied Energy in Four Renewable Electricity Generation Technologies in New Zealand, 2009.)[Ref. xviii.] (Note that tidal turbines should not be confused with wave converters, which rate poorly because they use large quantities of steel.)

All sustainable power generation is weather/climate dependent (even geothermal because of the cold sink temperature specification constraint) – except for tidal.

The work being done by Neptune Power encapsulates all the best features of tidal power in an ideal location. We believe that the Cook Strait tidal power development will be the envy of other countries, and we hope that this new technology will remain in New Zealand hands. Denmark has embraced its new wind technology and has sold it to the world. We feel that New Zealand should do the same with tidal power.

15. Distributed Generation
We often hear that decentralization is the future of energy. We believe there should be greater incentives for more distributed generation, from small-scale systems used on-site, or nearby, to generate electricity for homes, farms, businesses and industries. It’s obviously win-win when these generation projects are hooked up to a local distribution network, and in turn connected to the national grid, because of course electricity can flow both ways.

At least 5% of New Zealand's electricity comes from distributed generation, and this could increase markedly if local monopoly lines companies were further encouraged to become competitive retailers. This could be achieved by lifting current restrictions that prevent them retailing more than they can generate from their own renewable energy projects.

Off-grid stand-alone generation systems should also be encouraged.

New Zealand’s energy revolution will require moving from 20th century electricity systems based on large hydro stations and large-scale fossil fuels, to a 21st century energy system based on new renewables, increased decentralization, and massive improvements in the efficiency with which we produce, transport, store and use energy.

16. A Question of Ethics
The public has been inundated with misinformation, recent and historical, and Contact Energy has been acting according to its business model, rather than truly in the “national interest.” Assumptions have been made, much information has been withheld, and the public have been left to dwell on their “preferred option,” in what many people have referred to as a “divide and rule” strategy. Contact Energy has been disingenuous in the way it has presented the four dam proposals. We’ve been given a “Hobson’s choice.” At no time is Option 5 – no further dams, mentioned. The issue has not been presented in the wider context of energy problems and solutions. Poorly informed people cannot make informed decisions.

From the outset, we are asked to believe a projected need for generation at levels determined by producers, after which we are asked to believe that Contact Energy are motivated by the “national interest” when we all know that shareholder profits are the bottom line. Contact Energy follows this with the claim that the Clutha River provides some of the best options for this generation, while neglecting to provide convincing evidence of any of this to the public.

Deceptively, the public has been lead to believe that Contact Energy has a mandate to pursue further dams on the Clutha River, by virtue of the fact that it already controls existing dams at Hawea, Clyde and Roxburgh. How can Contact Energy justify this mandate?

There is a perception that Contact Energy has a legal right to use the Clutha River, whereas no such right exists.

Contact Energy speaks of “the plans that were originally developed for the Upper and Lower Clutha River by Contact's predecessor, the Electricity Corporation of New Zealand (ECNZ),” as if these were tenable plans, whereas they were proposals, and as if these 30+ year old “plans” are ready to proceed given a favourable consenting process.

As can be expected, there has been more than a little “spin” surrounding Contact Energy’s promotion of Clutha River dams during the “conversation.” We have noticed that no mention of “large-scale” dams is made in the media, and yet internally, such as in Contact’s 2008 Annual Report, this wording is prevalent. In that document, reference is made to “at least one - and possibly two - new large-scale hydro projects.” But nowhere in the public “conversation” are “two” large dam projects mentioned.

Much is made of the proposition that “New Zealand needs more energy to power our growing country for the next 100 years and beyond,” with the implication that this need is proven, and that “large-scale hydro” has a roll to play in the 22nd century? Does Contact Energy genuinely believe that a 20th century technology will be indefinitely relevant? Surely this is maladaptive.

Communities have been living in limbo since dam investigations began in 1945. Some 4,400 hectares of land along the Clutha River has been locked up for dam schemes that have come and gone, depriving local communities of other investment, causing property values and community services to decline. Contact Energy has taken up the mantle of its predecessors, and has shrugged this off as part and parcel of “keeping options open.” This has inevitably created a history of distrust, and it has caused genuine suffering for communities, businesses and families.

The dams we already have on the Clutha River are not shining examples of best practice. The river communities have seen their river sacrificed to provide enormous benefits to others, while receiving only minimal or temporary benefits themselves. Many disaffected people have been ignored, and communities still live with dam related risks associated with flooding, landslides and earthquakes, imposed upon them by dam builders who have glibly accepted such risks upon their behalf.

Much noise is made about “A long-term increase in local economic activity through tourism, lakeside developments and the increase in local agricultural output resulting from potential irrigation projects,” but we have long since learned that any benefits from hydro do not outweigh the long-term environmental and human debt we incur.

We do not agree that further dams on the Clutha River can provide us with a better future. We are fully aware that the incentive is weighted on Contact’s side of the benefits equation, and so we naturally say “Beware of energy companies bearing gifts.”

To date, Contact Energy has consulted with Mayors and Councillors etc, not directly with affected communities, and especially not with the people they are proposing to submerge. Contact’s website forum on this issue was tightly moderated, with relatively few people interacting, and yet this still passes as so-called “community consultation.”

Although Contact Energy has stated a wish to consult with communities, this remains difficult because there is a perception that the game is not being played on a level playing-field.

Part of corporate responsibility is serving the public trust, and Contact Energy has shown that it doesn’t value such trust. At every step, the public has been misled. Providing credible information and communication is the only path to trust, or to customer loyalty. Some 40,000 former customers voted with their feet over the debacle about Director’s fees, revealing how out of touch Contact Energy really is with its customer base. Such disregard is also familiar to us.

We are the people of the Clutha River, and so we are naturally the guardians and stewards of the mighty Clutha Mata-Au. We act for and represent our river because we know that we cannot depend on others to do so, and because we hold it to be the one true iconic feature of our region, at the heart of who we are. In good conscience, we cannot further sacrifice this part of ourselves and our land, in as much as we have lost too much already.

Our allegiance is not to shareholders and entrenched interests, but to our identity. In the end, we are defined not only by what we create, but by what we refuse to destroy.

17. The Many Unique Values of the Clutha River
The Clutha River is an Outstanding Natural Feature. But the health of the river, and its natural values, continue to decline as it is subjected to ever more pressure from invasive species, abstraction, pollution, real estate development, and hydrological dysfunction associated with hydro dam reservoirs.

This decline is consistent with what is occurring elsewhere. Most of our east coast waterways, particularly the braided outwash ones, are now a mass of weeds – broom, gorse, brier, willows; you name it – a problem often associated with the upstream hydro control of flow rates. Exotic aquatic weeds – Elodea, Lagarosiphon, Didymosphenia etc., now abound in many confined waterways, restricting recreational activities.

On the Clutha, below the dams, the riverbanks are scoured daily as the river is ramped up and down according to energy demand, a regime that continues to cause damage to the riverrine ecology. We have seen the Dunstan reservoir quickly become infested with Lagarosiphon, while the Roxburgh reservoir and the Kawarau Arm have become sediment dumping grounds – homes for the invasive species already mentioned.

Many of New Zealand’s fresh water species are negatively impacted by dams, because almost all of them are migratory (unlike most fresh water species found in the rest of the world). As such, they migrate up rivers in the course of their life cycle i.e. species of whitebait and eels. The Hawea Long-Finned Eel is almost extinct because it cannot migrate as it once did along the free-flowing Clutha.

Contact Energy states a preference for further dams on rivers “already modified” by dams, but this is particularly untrue of the Upper Clutha River, which is one of the most unspoiled, and least modified large wild and scenic rivers in New Zealand. It has characteristics that can rightly be claimed as unique in the world. It ranks among the swiftest of rivers anywhere, and it’s distinctive, clear turquoise waters are produced by a highly rare upland lake filtering process, decidedly atypical of glacial rivers which are normally discoloured to some degree by blue-grey rock flour. Other extraordinary features of the Upper Clutha River include a series of swift water ox-bows called the “Snake” in the first reaches – ox-bows are normally gently-flowing lower reach meanders, and a high volume switchback known as the “Devil’s Nook” at Luggate – one of the world’s rarest hydrological river features. The glacial terrace flights of the Upper Clutha River corridor also rate among the best such examples in New Zealand, and when we look more closely we find a range of unusual plants and invertebrate animals, signifying that this river environment is different from anywhere else.

The Upper Clutha River corridor is home to many important plant populations, including pillow native daphne (Pimelea pulvinaris), desert broom (Carmichaelia petriei), cushions (Raoulia), heath plants such as Leucopogon muscosus, and in more sheltered areas yellow-flowered Corokia cotoneaster, and the tree daisy Olearia odorata. Among the many native insects in the Upper Clutha, beetles are prominent. At least two are found only in the valley, including an undescribed chrysomelid in the genus Allocharis.

So important are these species that a 165 hectare Scientific Reserve has been proposed at Long Gully Flat on the true left of the river above the Maori Gorge between Luggate and Queensberry.

Numerous gold-rush era heritage sites are found along the upper and lower river. The newly established Reko’s Point Conservation Area beside the river near Luggate is an example of one such site, but many more remain virtually untouched.

On the Lower Clutha River, the Rongahere Gorge has nationally significant conservation values. The forest type is rare in the east of the South Island, having remained unchanged for 12,000 years. Birch Island / Moa Nui (1km long and covering seven hectares) is an ecological 'Noah's Ark' in the Upper Rongahere Gorge. It became a protected area under the Conservation Act in 2001, primarily because it has a nationally significant population of invertebrates. In 1995, scientists discovered several new species, including a Peripatus, a genus of Onychophoran, warranting priority for conservation owing to their status as living fossils, being unchanged in 570 million years. Scientists also discovered rare and undescribed beetles, moths, snails and springtails. Birch Island has what is considered to be the most intact ecosystems of its kind in New Zealand.

The recreation and tourism values of the Clutha River are well-known. There is no other river in Otago, perhaps New Zealand, which is so well suited to such a wide range of river activities.

We do not agree with Contact’s interpretation of a reservoir as a “lake with recreational opportunities,” because Otago is already well supplied with real lakes. It has been pointed out that many New Zealanders have boats, but any observer in the summer period knows that most of these are jetboats designed for rivers. There is nothing more attractive to a jetboat enthusiast than a jetboat friendly river, such as the Clutha. Processions of them can be seen jetboating the Upper Clutha between Cromwell and Wanaka, even in the winter.

River tourism is particularly well developed on the upper river, with kayaking, rafting, jetboating and fly-fishing operators, while commercial activity on the lower river includes jetboating, guided-fishing, and kayak schools.

Of course, recreation and tourism are not limited to water-based activities. We are seeing increasing numbers of mountain-bikers and walkers using new trails.

18. Why River Trails Lead to a Better Future
There are several existing river trails along the Clutha River that are extremely popular. Local community groups are working to join up the existing trails to create a contiguous trail from Wanaka to the Pacific. There is a strong economic incentive for doing so, as the Otago Central Rail Trail experience reveals.

We believe that Contact Energy’s suggestion, that river trails be relocated along reservoirs, doesn’t provide an economically viable alternative. By definition, a river trail needs a free-flowing river, and we are already having to compromise on that because of the two existing dams. Realistically a reservoir trail is not exactly marketable.

This ‘Mighty Clutha River Trail’ is well underway, with years of planning work already done. The Clutha Gold Trail Trust is working on a new trail from Roxburgh to Lawrence, while the Upper Clutha Tracks Trust is working on a new trail from Albert Town to Clyde. The trail section from Albert Town to Luggate is already partly operating and scheduled for completion within 6 months.

The Clutha Mata-Au River Parkway Group is a network of these river groups and other river stakeholders, providing a framework for a contiguous trail within a vision for a regional park along the river corridor.

Investment in trail development will amount to many millions of dollars, and this investment will return to the river communities many times over, as trail-based tourism generates new jobs and services in towns that have been starved of tourism traffic. This investment and these economic benefits must be protected, and not eroded by uncertainty over further dams. Walking and cycling will continue to grow in popularity, and we believe that the Mighty Clutha River Trail will become one of New Zealand’s most important and economically valuable trails.

We are adamant that river trail development, linking all the river communities, will provide all of us with a better economic future. A mini hydro building boom would provide temporary benefits, and some negotiated trade-offs, but such advantages by no means outweigh the long-term disadvantages.

What price a river?

The Clutha River is at the heart of our Otago identity. It cannot be replaced. It is our responsibility, our past, our future, and it is not for sale.

19. Summary

• The energy issue stems from the unsustainable pursuit of growth without a proper environmental accounting process to protect our future. All our so-called resources, especially oil, are in terminal decline, as are our rivers. Change will be difficult because our decision-makers, in politics and business, are accustomed to the existing failing paradigms of economics and governance. Contact Energy’s profit-driven business model is part of this wider problem.
• Energy sector restructuring is needed because the current system encourages growth and profit, which reduces the producer’s incentive to invest in energy conservation, and demand-side management strategies, such as shifting energy usage from on-peak to off-peak periods. Customers have a cost incentive to save energy, but producers have a profit incentive to sell more.
• Soaring power prices cannot be addressed by building new generation, because history shows that the consumer is likely to fund this additional generation through higher power prices, which in turn drive hyper-inflation unless the unit price of electricity can be subsidised by industrial consumers.
• Energy efficiency measures, from producer to consumer, can significantly reduce or negate the need for new generation capacity. In most cases, demand reductions can be achieved at less cost than constructing new generation.
• Otago-Southland has 7% of the country’s population, and 20% of its generation capacity. This generation percentage is set to increase with the construction of Kaiwera Downs and Mahinerangi Wind Farms, and potentially Project Hayes. Otago exports an average of 70% of its power. Generation closer to the end-user is more energy efficient, more equitable, and costs less to supply.
• Large dams are not clean and green because they have a full life carbon footprint that is 2 to 6 times larger than an average wind farm (another poor option), cause serious environmental and community impacts, degrade ecosystem integrity, submerge productive land, and impose long-term costs, risks and liabilities relating to reservoir sedimentation, flooding, instability and eventual decommissioning. If these full life costs were included from the outset, few if any large dams would be economically viable.
• Large hydro (over 10MW) is no longer defined as a true “renewable” energy by many organisations, because the full life negative impacts of large hydro outweigh the renewable benefits in terms of being environmentally safe and sustainable.
• More than 260 organisations have signed on to the International Rivers declaration to exclude large hydro, over 10 MW, from renewable energy initiatives in the carbon offset market. Contact Energy’s “renewables” portfolio should move away from large hydro to seek maximum advantage from the emerging carbon market.
• Because of long-term costs and liabilities associated with reservoir sedimentation, flooding, instability and very expensive decommissioning, financial mechanisms such as bonds as described in Section 108A of the RMA, to ensure intergenerational equity, are highly relevant to the Clutha. Proper intergenerational accounting is likely to make all large-scale hydro dam plans on the Clutha River uneconomic.
• If energy demand grows as predicted, we would need the equivalent of one Luggate dam (86 MW) every 6 months, or one Tuapeka dam (350 MW) every 25 months, or another Clyde dam (432 MW) every 29 months. This is unsustainable. Clearly a long-term solution is needed.
• New Zealand’s security of supply is threatened by our heavy reliance on large hydro because climate change is causing more unreliable rainfall patterns. NIWA has identified large-scale pattern variations that pose a significant risk for hydro storage. This has already been financially devastating to Contact Energy.
• Neptune Power’s Cook Strait marine power development is the single largest, and the most promising “new” renewable energy available to New Zealand. It has very large expansion potential (17,000 MW), gives a guaranteed weather-independent output, and has a relatively low material cost. This innovative new energy technology offers substantial opportunities in a quickly changing world.
• The Clutha River corridor is home to many unique and endangered species. However, ecosystem integrity is declining because of invasive species, abstraction, pollution, real estate development, and hydrological dysfunction associated with hydro dam reservoirs.
• The outstanding natural, recreational, tourism, heritage and cultural values of the Clutha River cannot be replaced. There is no other river in Otago, perhaps New Zealand, which is so well suited to such a wide range of river activities, both recreational and commercial, including kayaking, rafting, jetboating, canoeing, fly-fishing, triathlons, kayak schools, and river trail walking, mountain-biking and cycling.
• River communities are working on river trails, which will provide long-term economic benefits without destroying the free-flowing river. Investment in trails will amount to many millions of dollars, and this investment will return to the river communities many times over, as trail-based tourism generates new jobs and services. This investment and these economic benefits must be protected.

20. Conclusion
As we said at the outset, we have found it necessary to examine the reasons for this investigation of large hydro options, because the energy issue concerns all New Zealanders. In the process, we have noted what we believe are the shortcomings of Contact Energy’s energy agenda, and we have pointed out some examples of misinformation. But we have not done this to begin a round of recriminations, since that would serve no purpose. We have taken this path to find solutions, to define what needs to be done and by whom.

This issue is about all of us – the future of New Zealand, and beyond. We all have a part to play.

Contact Energy has a leading part, but is not yet showing innovative leadership.

For all New Zealanders, failure to adapt to the challenges we face will incur many costs, but taking a lead will both improve our society and bring new opportunities for business.

If Contact Energy moved its portfolio toward the best and most promising renewable solutions, business and societal benefits would follow. The phrase “in the national interest” would no longer ring hollow, and the “green” credibility of Contact Energy would grow in the eyes of New Zealanders.

On the Clutha question we are united. We are for Option 5 – no further dams, and as such our decision is final.

21. References
i. Strong Sustainability for New Zealand report, May 2009, SANZ Sustainable Aotearoa New Zealand
http://www.phase2.org/documents/SSFNZ_web_310809.pdf

ii. Association for the Study of Peak Oil and Gas USA, ASPOUSA, Peak Oil News
www.aspousa.org/?dl_id=301 PDF

iii. Beyond Oil: The View from Hubbert's Peak, By Professor Kenneth S. Deffeyes
http://www.princeton.edu/hubbert/ Author’s website

iv. Joint Operating Environment report, US Department of Defense, Nov25, 2008
www.jfcom.mil/newslink/storyarchive/2008/JOE2008.pdf
(PDF recently taken offline but available from Clutha River Forum)

v. Energy Efficiency and Conservation Authority, EECA
http://www.eeca.govt.nz/efficient-and-renewable-energy/energy-efficiency-and-conservation Website

vi. Transpower Systems Operator
http://www.systemoperator.co.nz/

vii. World Commission on Dams report 2000
http://www.dams.org/report/

viii. World Commission on Dams report 2000
http://www.dams.org/report/

ix. National Institute of Water & Atmosphere Research, NIWA
http://www.niwa.co.nz/news-and-publications/publications/all/wa/13-4/climate

x. Strong Sustainability for New Zealand report, May 2009, SANZ Sustainable Aotearoa New Zealand
http://www.phase2.org/documents/SSFNZ_web_310809.pdf

xi. Comparison of Life Cycle Carbon Dioxide Emissions and Embodied Energy in Four Renewable Electricity Generation Technologies in New Zealand, 2009
http://pubs.acs.org/doi/abs/10.1021/es900125e

xii. Carbon Footprint of Electricity Generation, Parliamentary Office of Science and Technology, 2006
http://www.parliament.uk/documents/upload/postpn268.pdf

xiii. Are Hydro Developments Reversible? SPX Consultants NZ Limited, 2008
http://www.spx.co.nz/docs/Reversibility_of_Hydro.pdf

xiv. Reversibility of Renewable Power, SPX Consultants NZ Limited, 2008
http://www.spx.co.nz/docs/Reversibility_of_Renewable_Power.pdf

xv. Siemens Australia and New Zealand
http://aunz.siemens.com/NewsCentre/2009/Pages/20091407_%20Siemensleadingtheworldinrenewabletechnologies.aspx

xvi. U.K. Marine Foresight Panel, Select Committee on Science and Technology, Seventh Report, 2000
http://www.parliament.the-stationery-office.co.uk/pa/cm200001/cmselect/cmsctech/291/29105.htm

xvii. Tidal Power Rides Wave of Popularity, TVNZ News, 2007
http://tvnz.co.nz/view/page/536641/1474541

xviii. Comparison of Life Cycle Carbon Dioxide Emissions and Embodied Energy in Four Renewable Electricity Generation Technologies in New Zealand, 2009
http://pubs.acs.org/doi/abs/10.1021/es900125e



By Forum Coordinator, Lewis Verduyn, and co-edited by the Forum.