Long Term Plan/Annual
Plan Subcommittee
03 February 2021
File: (21/153)
Report no: LTPAP2021/1/17
Accelerating the transition out of natural gas use at Council facilities
Purpose of Report
1. To present the Subcommittee with estimates regarding the capital costs for completing the transition out of natural gas use at Council facilities, and to request inclusion of these additional funds in the draft Long Term Plan.
|
Recommendations That the Subcommittee recommends that Council: (1) agrees to include an additional $4.5M in the draft Long Term Plan, in order to allow for the complete transition out of natural gas by 2030; and (2) agrees to consult with the community on the recommended preferred option (complete transition out of natural gas by 2030), with the alternative option involving decisions on funding taken in the future and realising this transition by the early 2040s. For the reason as outlined in this report. |
Background
2. On 31 January 2021, New Zealand’s Climate Change Commission (the Commission) released its draft advice regarding the direction of policy necessary to put New Zealand on a pathway to quickly, significantly and permanently reduce greenhouse gas emissions.
3. The Commission notes that in order to achieve the 2050 targets, the total amount of natural gas used needs to reduce. Much of the natural gas currently used for process heat, heating and cooking in buildings, and electricity generation will need to convert to low emissions technologies.
4. The Commission notes further that there are proven options for decarbonising low and medium temperature process heat, such as heat pumps, and it recommends that no further natural gas connections to the grid, or bottled LPG connections, occur after 2025.
5. The recommended direction by the Commission is in line with previous decisions taken by Council, including
a. the development of an Energy and Carbon Reduction Plan 2020-24 to significantly reduce energy use and emissions at its facilities;
b. the development of business cases and requests for capital funding for decarbonising the Dowse Museum and various aquatic facilities, that, if implemented as scheduled, would result in a 70% reduction in emissions associated with the use of natural gas;
c. the requirement for Urban Plus Ltd to only build developments that utilise electricity or renewable sources of energy for space heating, water heating and cooking facilities.
Completing the transition out of gas used at our facilities
6. Since Council’s decision to include $2.7 million in the draft Long Term Plan (LTP) in December last year, officers have been progressing further work related to the decarbonisation our Council facilities.
7. Based on the business cases for decarbonising the Dowse Museum and various aquatic facilities, officers have now been able to estimate the capital costs for completing the transition out of natural gas at the remaining facilities, as shown in the table below (ordered by natural gas consumption).
|
Site |
Capital estimates ($) |
||
|
Lower |
Mean |
Upper |
|
|
Wainuiomata Pool |
300,000 |
350,000 |
400,000 |
|
Event Centre |
500,000 |
575,000 |
650,000 |
|
Huia Pool |
600,000 |
625,000 |
650,000 |
|
McKenzie Pool |
200,000 |
250,000 |
300,000 |
|
Ricoh Sports Centre |
300,000 |
350,000 |
400,000 |
|
War Memorial Library |
300,000 |
375,000 |
450,000 |
|
Myrtle Street (Hutt Rec) |
200,000 |
300,000 |
400,000 |
|
Walter Nash Stadium |
200,000 |
300,000 |
400,000 |
|
Other (smaller) facilities |
190,000 |
502,500 |
815,000 |
|
Total |
2,790,000 |
3,627,500 |
4,465,000 |
8. Note that no detailed site assessments were carried out to derive cost estimates. Instead, officers based these costs on the range of costs incurred at similar facilities. However, they provide a useful measure of the scale of investment required to complete the transition.
9. In light of the high level nature of the estimates, officers recommend that the upper limit be used for budgeting purposes to allow for risks and contingencies. In addition, costs as shown are uninflated, and depending on the timing of the projects, standard inflation adjustments would need to be applied.
10. With regard to the effect of technology changes on operational costs, these are not yet available. However, in a number of cases, it is likely that this would result in operational energy cost savings.
11. Finally, the above table does not include the Grand Stands at Petone Rec. This building is proposed to be refurbished, including decarbonisation, and funding is being requested as part of another report to this subcommittee.
Pathways for reducing natural gas used at our facilities
12. In line with the Commission’s draft advice that New Zealand must transition out of the use of natural gas, there are broadly two pathways available to Council for doing so at its facilities, as shown in the figure below.
13. The faster pathway would complete the transition out of natural gas use by 2030, and this assumes that natural gas in the relevant facilities would be replaced with alternative energy sources earlier than scheduled. This implies that estimated additional costs of up to $4.5M would be incurred by 2030.
14. The faster pathway could avoid up to 3,000 tonnes of CO2 until 2050, depending on the remaining emissions intensity of New Zealand’s electricity production.
15. The slower pathway would complete the transition out of natural gas by the early 2040s, and this assumes that natural gas would be replaced with alternative energy sources at the time of the scheduled renewal or upgrade of a facility.
16. Officers recommend that the faster pathway become the default pathway for Council facilities. This is because by completing the transition earlier, it means that Council uses up less of its “carbon budget”. It also recognises that the transition out of natural gas is relatively straight forward, as technology is readily available, whereas in other areas, such as emissions from landfills, reducing emissions is significantly more challenging.
17. Note that in the faster pathway, there are risks regarding the feasibility of completing these works by 2030, due to the number of large and small projects involved. The projects will have to be spread out in order to manage the work load, and a number of the projects will have to be completed in the second half of the 10 year period.
18. For the faster pathway, the potential changes at the various facilities could be timed as follows:
|
Year |
Group |
Upper |
Site |
|
2021/22 |
HUBS |
15,000 |
Wainuiomata Library |
|
2024/25 |
Parks |
100,000 |
Notty House |
|
2024/25 |
Libraries |
450,000 |
War Memorial Library |
|
2024/25 |
Parks |
100,000 |
Mary Crowther Park, Wise Street |
|
2025/26 |
Parks |
100,000 |
Boxing club at Fraser Park |
|
2025/26 |
Parks |
100,000 |
Kirks Avenue, Petone |
|
2026/27 |
Parks |
100,000 |
Fraser Park, Taita Drive – Long Bldg |
|
2027/28 |
pools |
100,000 |
Stokes Valley - Misc |
|
2028/29 |
Ricoh |
400,000 |
Ricoh Sports Centre |
|
2028/29 |
Parks |
100,000 |
Memorial Park |
|
2029/30 |
Pools |
400,000 |
Wainuiomata Pool |
|
2029/30 |
Pools |
650,000 |
Huia Pool |
|
2029/30 |
Parks |
400,000 |
Myrtle Street (Hutt Rec) |
|
2029/30 |
HUBS |
400,000 |
Walter Nash Stadium |
|
2029/30 |
Parks |
100,000 |
Te Whiti Park Changing Rooms |
|
2030/31 |
Halls |
650,000 |
Event Centre |
|
2030/31 |
Pools |
300,000 |
McKenzie Pool |
|
|
|
4,465,000 |
|
Options for LTP consultation
19. In the current draft LTP consultation document, investments to decarbonise the Dowse and various aquatic facilities (about $2.5 million) are already embedded, ie the draft document assumes that these will take place and does not request feedback from the community.
20. However, officers propose to strengthen the draft LTP’s climate change focus, by adding additional funds to complete the transition out of natural gas, and to request feedback from the community on whether it agrees with this approach.
21. This could be done by offering the following two options in the draft LTP, for consultation with the community:
a. Option 1 (preferred): Provide funding for decarbonising all of Council’s facilities by 2030, reducing natural gas use by 100%. This option involves additional capital funding of up to $4.5 million for decarbonising all remaining facilities by 2030, on top of the approximately $2.5 million previously approved for decarbonising the Dowse and some aquatic facilities.
b. Option 2: Provide funding for decarbonising key Council facilities only, reducing natural gas use by 70%. Decisions on capital funding for further decarbonisation would be taken in the future and the transition would not be complete until the early 2040s. This option would delay the capital funding requirements of $4.5 million until some future time compared to Option 1, albeit would result in additional carbon emissions of about 3,000 tonnes of CO2.
Note that Option 2 is the default option in the current draft LTP consultation document, whereas in the revised document, it would become the alternative (less preferred) option.
Climate Change Impact and Considerations
22. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.
23. An accelerated transition as proposed in this report would avoid a further 3,000 tonnes of CO2.
Financial Considerations
24. The proposed increased capital investment programme of $4.5 million would be funded from borrowings. The financial impacts of this proposed budget change, together with other budget decisions by Council at 10 February 2021 meeting, will be worked through by officers and reported to the LTP Working Group for decisions. It is likely that the rates increases for years 4 to 10 of the ten year plan will need to be adjusted upwards slightly to ensure that the Balanced Budget target position of 2028/29 is maintained.
There are no appendices for this report.
Author: Jörn Scherzer, Manager, Sustainability and Resilience
Reviewed By: Jenny Livschitz, Chief Financial Officer
Reviewed By: Matt Boggs, Director, Strategy and Engagement
Reviewed By: Helen Oram, Director Environment and Sustainability