Steve Rotherham – Thu, 21 May 2020
New Zealand has the potential to be a world leader in innovative clean energy. But to achieve this – and to accelerate the post-Covid economic recovery – local firms must partner with large international companies, says World Energy Council member Massimiliano Cervo.
Government subsidies and pump priming can only do so much to revive the economy, Cervo told a BusinessNZ Energy Council webinar this morning.
“Countries need private capital to get out of this crisis,” he says.
Cervo – an Argentine energy consultant – says New Zealand already has a good reputation for renewable energy, and its response to the pandemic has attracted international attention.
New Zealand looks well placed to rebuild its economy more quickly than most other countries – and Cervo says potential investors can see opportunities.
“Many large international energy companies are interested in investing in New Zealand,” he says.
Energy partnerships needed
They are particularly keen to test and develop innovations in renewables, hydrogen and ammonia, and carbon capture, according to Cervo.
Even relatively small proportions of major international companies’ budgets could have a big impact in New Zealand’s small economy.
Cervo says the best form of foreign investment would involve partnerships between local and global companies, as this would help build capacity and scale in New Zealand.
“Partnerships between major international companies and small local companies should be promoted,” he says.
“New Zealand needs an entity to manage this.”
If governments promote small local companies as partners with large international players, this will attract investment and reduce the need for ongoing subsidies.
Diversification
Cervo says the energy market will become increasingly diversified in the next few years.
Many companies in sunset sectors will seek to ensure their survival by building assets in growing segments of the energy market.
He predicts the next shift will be oil companies redefining themselves as energy companies and diversifying into renewables and hydrogen/ammonia.
Companies will find ways to adjust existing infrastructure to reduce risks and costs and avoid stranded assets.
Cervo says the proportion of energy delivered by fossil fuels will decline, and the proportion delivered by renewables will grow.
“But all energy sources will be needed for the foreseeable future,” he says.
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