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Project SHAPESHIFTER

Moana Tuatahi

As a maritime nation Aotearoa needs a world class aquarium to focus on Conservation, Education and Research. The New Zealand Oceans Foundation is delighted to support Project Shapeshifter – a project that is set to deliver such centre of study.

For More information visit: https://www.napier.govt.nz/napier/projects/aquarium-expansion-project/

We need a place that tells the story of the sea. A place that connects New Zealanders, young and old with the realities of their vast maritime estate. Developing a national awareness of our role as guardians and stewards of our maritime environment is essential in the evolution of our sense of national identity and our very destiny as a nation. The National Aquarium must do nothing less than to change the way that we see ourselves and our country.  

We are the inheritors of deep seafaring traditions from our founding peoples. The wisdom of all New Zealanders will need to be drawn on as we work as a country to create a place to learn about our marine environment, the riches that it supports, the fragile nature of its existence and the central role that the sea has to life on this planet. Maori as well as Pakeha, young and old, the well-established and the newly arrived all have a part to play in creating this taonga that will showcase our marine sciences and technology for the benefit of all New Zealanders and our neighbours in the region. 

Project Shapeshifter is a challenge too large for any one organisation to embrace. Instead it will require a nationwide commitment to bring it to life.

Ngā mihi nui,

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MfE report: OUR MARINE ENVIRONMENT 2019

The latest report on the Marine Environment points to a pattern of under-investment in basic science and the collation and interpretation of data that is required for effective national decision making in other areas that relate to the oceans.

Complexity of the marine environment: opening graphic from the MfE report ‘Our marine environment 2019’

On 17 October the Ministry of the Environment released its latest report on the marine environment. It can be accessed at www.mfe.govt.nz/publications/marine/our-marine-environment-2019.

The report makes for powerful reading. There are some positive stories but these seem to be strongly outweighed by the negatives. Amongst the positives, the status of southern right whales has improved (from nationally vulnerable to recovering) and the New Zealand sea lion has moved from being in a nationally endangered state to one which is merely vulnerable. The status of two shorebirds, the northern New Zealand dotterel and the pied stilt/poaka, have both improved. Our fisheries, with some exceptions, have stabilised.

On the other hand, while very few marine species are assessed (see below), of those species that have been assessed, 22% of marine mammals, 90% of seabirds and 80% of shorebirds are threatened with, or at actual risk of, extinction. From a national conservation perspective, this is truly appalling.

Towards a better understanding of our environment

On our reading, one of the issues that emerges most strongly from this report, is the relative paucity of data on which many of the issues discussed are being assessed. The report concludes with a significant list of areas in which our knowledge of the marine environment is patchy at best. Reports of this kind are not written in emotive language, but on the evidence here, there is every reason to think that New Zealand has been under-investing for far too long in basic data collection and assessment and that it is time that we pulled up our socks.

The Oceans Foundation has seen the same pattern of under-investment in basic science and the collation and interpretation of data that is required for effective national decision making in other areas that relate to the oceans. This is true in the area of our offshore minerals and metals and it is also true for the issues covered in this report. New Zealand can do better.

Our native marine species and habitats are under threat
Rich biodiversity at the Mokohinau Islands, Hauraki Gulf. 
Credit: Lorna Doogan, Experiencing Marine Reserves
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NEW ZEALAND’S OCEANS: CONTRIBUTING TO OUR ZERO CARBON FUTURE

PART ONE. BLUE CARBON: THE ROLE OF KELP FARMING

Kelp farming in New Zealand has an obvious future as a macro-algae concentrate for soil and plant health, as an ingredient in various specialty food products and additives, as cattle feed and for the top dressing of pasture. Whether it can ever be farmed in sufficient quantity to act as a useful adjunct to carbon sequestration efforts on land remains to be seen. In her interview with Kim Hill on National Radio recently (12 October), Dr Marjan Van Den Belt mentioned a back of the envelop calculation that apparently showed that if a way could be found to grow kelp on offshore floating platforms in New Zealand’s EEZ, the amount of kelp required to offset ALL of New Zealand’s greenhouse gas emissions would take up a mere 2% of our EEZ.

NZ will need to focus on both land-based and ocean resources to meet its carbon zero goals

Which future do you prefer?
A tree in a field

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Introduction

Current policy in New Zealand towards the lowering of our greenhouse gas emissions is focussed on the land-based economy. But now there is a new reality. If we are to meet our zero carbon goals, New Zealand will need to think of both its land and its oceans as comprising a single interlinked system. To date, it is land use issues which have dominated much of the discussion around zero carbon. At the New Zealand Oceans Foundation (www.oceansnz.com), we think that government needs to give urgent attention to how New Zealand’s oceans might also contribute, along with the land-based economy, to meeting our Paris commitments and the government’s zero carbon goals.

Transition pathways

The most authoritative discussion on transition pathways to a lower emissions economy is contained in a report by the Productivity Commission. This report was released in August 2018:

‘Being asked to advise on how New Zealand can best make the transition to a low emissions economy, while at the same time continuing to grow incomes and wellbeing, is perhaps the most profound and far-reaching mandate the Commission could be tasked with. After an extensive inquiry process, we conclude that New Zealand can indeed make this transition. But there will be tough challenges along the way. It will require consistent and concerted effort across government, business, households and communities – up to and beyond 2050. Among the numerous changes that will be required across the economy – some disruptive some less obvious – three particular shifts must happen for New Zealand to achieve its low-emissions goals: 1) we stop burning fossil fuels and where possible, switch to use of electricity and other low-emission energy sources; 2) we undertake substantial new afforestation (our emphasis); and 3) we make changes to the structure and methods of agricultural production.’[1]

The role of New Zealand’s oceans

There is nothing in the report of the Commission on how New Zealand’s oceans might contribute to a lower carbon emissions economy through carbon sequestration, or carbon capture and storage. The solutions offered are all land-based.

This is puzzling on at least two counts. First, our oceans are 15 times more extensive in area than our land. Second, the oceans are the world’s greatest carbon sink. If ways could be found to increase the carbon sequestration potential of our oceans, without acidifying or warming them further, or to use the Maui offshore gas fields for carbon capture and storage, this seems to us to be an approach worth committing to. Not instead of necessary changes in land use, or of efforts to reduce greenhouse gases in the first place, but as a supplement to land-based efforts and in order to reduce the potential negative impacts of policies based solely around the land-based economy.[i]

Framing the zero carbon response only in land-based terms ignores an important reality. New Zealand’s land and oceans are a single strategic entity. What happens in one affects the other. Developing our oceans-based economy requires the contribution of resources that only our land-based institutions can provide. Lifting our national wealth, remediating land-based environmental damage and lowering our carbon emissions will require the resources that only the oceans can provide.

Large scale afforestation

We will come back to the role of the oceans. First, some background on afforestation, aspects of which appear problematic.

On large scale afforestation, the Productivity Commission comments as follows:

‘Forestry offsets just under one-third of New Zealand’s gross emissions. Yet, because planting rates have dropped sharply since the planting boom in the 1990s, and many of these forests are shortly due for harvest, carbon offsets from forestry are likely to decline if there is not a significant increase in planting. Land use will need to change substantially if New Zealand is to transition to a low-emissions economy by 2050. In particular, land planted in forests will need to increase by between 1.3 million and 2.8 million hectares, mostly converted from marginally profitable beef and sheep land.’ (pg 325ff Productivity Commission report at www.productivity.govt.nz/low-emissions).

Under this approach what percentage of New Zealand’s land needs to be taken for new afforestation? Our land area is 26.8 million hectares of which roughly one third is in the conservation estate. Mature forests cover 29% of New Zealand’s land area and a further 8% is planted out in commercial forests (mainly in pinus radiata). This means that 37% of New Zealand’s land area is already in forest. If a further 2.8 million hectares is given over to a new mass afforestation programme this will add another 10%, at which point the proportion of New Zealand’s land area covered in forest will be a total of 47%. Very nearly half of all our land will be in either mature or plantation forest.

Practicality and desirability

How likely is it that this much land can be found for new forestry? The Productivity Commission advises as follows:

‘New Zealand has sufficient suitable land to greatly expand afforestation to sequester carbon. This land includes over a million hectares of highly erodible land unsuited to pastoral agriculture (though some of this is also unsuited to forestry). The land is both privately and publicly held. The availability of privately held land will depend on the economics, including the prospective price of NZUs[ii] over the growing period and at harvest. The availability of government-controlled land for further afforestation is uncertain.’[iii]

A herd of sheep standing on a lush green field

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That a significant new programme of afforestation will be required if New Zealand is to meet its zero carbon goal seems beyond doubt. Yet a massive afforestation programme has its problems, not the least of which is the willingness of New Zealand’s sheep and beef farmers to see their more marginal land converted to forestry. There does not seem to be any stocktake readily available of just how much marginal land is suitable for afforestation even if the economics are compelling. The Productivity Commission refers to ‘over a million’ hectares of land as unsuited to pastoral farming, but this is well short of the 2.8 million hectares the Commission envisages being needed for afforestation if New Zealand is to meet its carbon zero goals.

Pinus radiata

There are other problems. If pinus radiata turns out to be the main production species planted, this is not a permanent solution to carbon sequestration since harvesting releases a portion of the carbon back into the atmosphere, and the carbon otherwise ends up being exported as logs or sawn timber, which simply transfers New Zealand’s carbon problem to other jurisdictions. Moreover, if a radiata pine forest is left untended and unfelled, after the carbon planting credits have been pocketed by investors after a quick dollar, it will eventually die (the life of pinus radiata is less than a 100 years) and be replaced by low value scrub and secondary growth of dubious economic value.

There are other objections to pinus radiata related to the effects on landscape and cultural values, and concerns over biodiversity. The Environmental Defence Society does not support a massive expansion of monoculture pine plantations across New Zealand’s landscape, partly because of the decrease in biodiversity and the risks of monoculture planting and partly because of the negative effects on landscape quality and tourism. Overseas visitors do not come to New Zealand because they want to see mass plantings of pine forest.

New approaches to carbon zero required

As the Productivity Commission has noted:

‘It is important to recognise the temporary nature of forest sequestration. Because there are limits to how much forestry the country can sustain, forestry will only buy time. In the longer term, new approaches to bring net emissions to zero will be required. It is critical that emissions reductions in other parts of the economy continue alongside afforestation.’

MOTU Economic and Public Policy Research (www.motu.org.nz) have picked up on this theme in a recent research note on ‘New Offset Options for New Zealand’.

The note synthesises the current state of scientific knowledge around the issues associated with three innovative carbon reduction or removal options in a New Zealand context: soil carbon; marine carbon (sometimes called blue carbon) and carbon capture and storage.

Kelp save the world

At a recent Climate X Sprint event sponsored by the Climate Leaders Coalition, a team calling itself ‘Kelp save the world’ won with a presentation based on the use of seaweed as a Climate X (blue carbon) solution. Aiming to become the ‘Fonterra of seaweed’ its story was based on the following pitch:

‘Seaweed grows 30% faster than land based plants, sequesters 2.3 times more CO2 than pine, requires no additional fertiliser, feed or watering, doesn’t compete for land with other industries, reduces ocean acidification and naturally sheds 11.5% of its biomass while growing – permanently sequestering any stored carbon and removing it from the cycle.

‘Seaweed also has some incredible end-user applications – it is able to be used in agar (petrie dishes), it can be used as a biogas, can be eaten (hello sushi!), is a natural fertiliser – cutting down on nitrates in agriculture and can be turned into PHA plastics that can replace polyethylene, polyurethane and polypropylene. Research is also just coming to light that suggests as little as a 2% supplement of seaweed in cattle feed could reduce cattle methane emissions by as much as 50%! Also, as the emissions trading scheme matures and legislation catches up, seaweed carbon credits could be traded on the ETS.’

The link is at: www.meridianenergy.co.nz/who-we-are/sustainability/climate-x-and-the-seaweed-solution.

Carbon sequestration and capture: a role for New Zealand’s oceans

When thinking about a possible contribution from our oceans to meeting New Zealand’s Paris commitments, three broad approaches are possible: (i) farming kelp; (ii) carbon capture and storage in the Maui offshore natural gas fields; and (iii) understanding and potentially manipulating photosynthetic processes at the quantum level.

In this commentary we discuss the large-scale farming of kelp. In further commentaries we will look at carbon capture and storage and photosynthetic processes in our oceans.

Blue carbon: kelp farming as a complement to afforestation

An introduction to the role of marine ecosystems in sequestering carbon is contained in a recent paper by Harvard graduate students Sylvia Hurliman and Hannah Zucker. Coastal ecosystems such as mangroves, sea grass and kelp sequester surprisingly large amounts of carbon – up to 20 times more per unit area than land- based forests. Moreover, in the case of kelp, which is a macroalgae, the claim is that much of the carbon ends up being stored permanently on the deep ocean seabed in the form of plant detritus.

A close up of a map

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Pathways for sequestration of macroalgae carbon into the deep sea 

The link to Hurliman and Zucker (July 2019) is at: http://sitn.hms.harvard.edu/flash/2019/how-kelp-naturally-combats-global-climate-change/. We note that Hurliman and Zucker quoted a much higher sequestration multiple for kelp over pine forests (up to 20 times) than the ‘kelp save the world’ team. This team quoted a multiple of 2.3 times. Whatever the multiple there is agreement that kelp outperforms pine forests on a unit area basis.

New Zealand giant kelp: Macrocystis pyrifera

New Zealand’s largest and fastest growing species of kelp is Giant Kelp or Macrocystis pyrifera. Sometimes known as bladder kelp, it is often seen washed up on beaches and shorelines around New Zealand. It has been described as the world’s fastest growing plant as well as one of the most ancient plant species in the world. It forms large forests in the deep sheltered waters around the South Island of New Zealand and can be recognised by the gas filled pods at the base of each frond. These bouyant pods help hold the fronds upright in the water, exposing them to the maximum amount of sunlight, aiding their efficiency at photosynthesis and contributing to their extremely rapid growth rate.

Kelp may be much more efficient per unit area at carbon sequestration than land-based pine forests. The question is whether or not it can be farmed in the marine environment of New Zealand (as distinct from growing wild) and, if so, whether the additional hectares ‘planted out’ would qualify for counting under existing international carbon accounting rules and hence qualify for carbon farming credits.

Since kelp grows naturally on submerged rocky outcrops, one measure of suitability for kelp farming is the length of a country’s coastline. On this measure New Zealand, with the ninth longest coastline in the world[iv], looks like it might be a promising candidate.

Estimating a possible upper limit to the potential planting area for kelp is problematic. With a coastal length for New Zealand of 15,000 plus kms, and assuming that kelp might typically grow in a narrow margin out to 30-60 meters offshore, the upper limit for coastal planting is possibly in the order of 45-90,000 hectares. Even assuming Hurliman and Zucker’s figure for the sequestration efficiency of kelp over pine as being a multiple of 20, the total upper sequestration limit is probably no more than around 900,000 – 1,800,000 hectares of pine forest equivalent. There are probably too many assumptions built into this figure for it to be very useful, but given that the Productivity Commission is calling for new plantation forests totalling in the range of 1.3-2.8 million hectares, it does look as if kelp could take up a sizeable portion of the whole and might therefore be a useful adjunct to land-based forests.

There is an obvious objection of course. The prospect of converting sizeable areas of the New Zealand coastline to kelp farming is probably a markedly less attractive idea even than covering 47% of New Zealand’s land area with pine trees. No doubt a careful balance between land-based pine trees and ocean-based kelp farming would need to be struck bearing in mind landscape, beachscape and environmental issues. Perhaps what this discussion best illustrates is the wisdom of reducing gross carbon emissions at source wherever possible, rather than seeking to rely to an undue extent on sequestering carbon.

A large pool of water

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New Zealand Giant or Bladder Kelp: Macrocystis pyrifera.
Image by Shannon DeVaney in iNauturalist.org

New Zealand research into kelp sequestration

Research in New Zealand into kelp sequestration is at a relatively early stage but interest in seaweed farming is developing and a number of researchers have been active in the field.

Associate Professor Dr Nick Shears (Director of the Leigh Marine Laboratory and President of the New Zealand Marine Sciences Society) is working with postdoctoral student Caitlin Blain on research into the role of kelp forests in carbon sequestration and pH buffering.

Dr Wendy Nelson, principal scientist at NIWA and a researcher at Auckland University, is co-author of an award winning paper on ‘Carbon dioxide mitigation potential of seaweed aquaculture beds (SABs)’. This paper appeared in the Journal of Applied Phycology, Issue 5, Volume 29, October 2017.

Dr Mike Packer, Senior Research Scientist in Algal Biotechnology at the Cawthron Institute, has been leading work on biomass generation by algae as a means to mitigate GHG emissions. See the link at https://www.researchgate.net/profile/Michael_Packer/Algal_Capture_of_Carbon_Dioxide Biomass_Gener-ation_as_a_Tool_for_Greenhouse_Gas_Mitigation_with_Reference_to_New_Zealand_Energy_Strategy_andPolicy/.

Popular interest in the potential of seaweed

Popular interest in seaweed farming is also picking up. On Saturday 12 October Dr Marjan Van Den Belt was interviewed by National Radio’s Kim Hill on seaweed farming, carbon sequestration, environmental and economic aspects and the need for government policy in this area. The interview is available as a podcast at  https://www.rnz.co.nz/national/programmes/saturday.

Marjan is a strategic partner at the sustainability consulting firm Ki Uta Ki Tai (from the mountains to the sea) at www.terramoana.co.nz/ and the convener of seaweed collective ReGen Sea. This collective works to promote the role of seaweed in a regenerative economy. Their website is at https://www.regensea.co.nz.

Commercial interest in seaweed in New Zealand

Finally, for examples of how commercial interest in seaweed in New Zealand has been developing, three firms are of particular interest.

Based in Paeroa in the Waikato, Agrisea have been manufacturing macro-algae concentrates and bioactive extractions for use in soil, plant, animal and human health applications since 1996. Their website is at https://agrisea.co.nz/.

Pacific Harvest on Auckland’s North Shore manufacture and export a wide variety of seaweed-based products including agar, furikake, kelp seasonings, kombu, wakame and karengo. Their website is at https://www.pacificharvest.co.nz.

Roger and Nicki Beattie are innovative farmers based on the Banks Peninsula who have been developing food grade kelp under the brand name Valére, and kelp for agricultural and horticultural uses under the brand name Zelp. The Beatties have pioneered sustainable harvesting of Giant Kelp (Macrocsystis pyrifera) in a bay on the Banks Peninsula and they dry the kelp at their farm in Lansdowne Valley. Their website is at https://www.rnbeattie.co.nz/nz-kelp

A small boat in a body of water with a mountain in the background

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Macrocystis pyrifera (Giant kelp) being farmed on the Banks Peninsula
A close up of a lush green field

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Giant Kelp drying at Roger and Nikki Beattie’s Lansdowne Farm in Canterbury

For a short, inspirational video on the Beattie’s approach to regenerative farming that features the farming of a wild sheep breed from the Chathams, weka, blue pearls and kelp, see the link at https://youtu.be/vtoeuKjCBzE.

Conclusion

Kelp farming in New Zealand has an obvious future as a macro-algae concentrate for soil and plant health, as an ingredient in various specialty food products and additives, as cattle feed and for the top dressing of pasture. Whether it can ever be farmed in sufficient quantity to act as a useful adjunct to carbon sequestration efforts on land remains to be seen. In her interview with Kim Hill on National Radio recently (12 October), Dr Marjan Van Den Belt mentioned a back of the envelop calculation that apparently showed that if a way could be found to grow kelp on offshore floating platforms in New Zealand’s EEZ, the amount of kelp required to offset ALL of New Zealand’s greenhouse gas emissions would take up a mere 2% of our EEZ.

This sounds very doable, until we remember that the area of our EEZ is 4 million sq kms. 2% of this is a massive 80,000 sq kms, which implies a series of extraordinarily large floating arrays and an engineering challenge of overwhelming complexity and cost (the largest ship currently afloat is a floating liquified natural gas tanker, the FLNG Prelude, which is 1600 feet long and 243 feet wide). Unless these giant kelp floating arrays were somehow built out of waste plastic engineered to be semi-submersible, the carbon emissions cost involved in building a sufficient array of steel kelp platforms would probably be self-defeating.

An alternative might be to think of concentrating and farming the kelp, or alternatively some other species of a free-floating planktonic seaweed, to form a kind of New Zealand mini-Sargasso Sea[v] in one of our ocean gyres (an area of our oceans that is effectively contained by circulating ocean currents). The South Pacific gyre is too large to be considered, but there is a clockwise circulating gyre in the Ross Sea, for example, that might conceivably be made to serve such a purpose. The waters of the Ross Sea are nutrient rich as a result of the upwelling of cold water from the depths. The area of the Ross Sea gyre is not known with any accuracy but it is probably of the order of 2-3 million sq kms[vi], which puts it into the right range for consideration as a naturally contained but artificially induced, macro algae-based, planktonic carbon sequestration system.[vii]


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End notes:

[i] [i]New Zealand Productivity Commission (August 2018). Low-emissions economy: extract from the foreword to the Final Report. Available from www.productivity.govt.nz/low-emissions

[ii] The primary unit of trade in the Emissions Trading Scheme is the New Zealand Unit (NZU), also called a carbon credit. One NZU represents 1 tonne of carbon dioxide (or the equivalent for other greenhouse gases). Entities that remove greenhouses gases, like those in forestry, can earn units from the government, which they can sell to companies that emit.

[iii] Productivity Commission Finding F11.14.

[iv] The length of the New Zealand coastline is listed in the CIA World Factbook as 15,134 kms. This gives New Zealand a longer coastline than either China or India, and greater than the UK or France. The length of the US coastline is only a little greater than NZ’s. Japan and Australia have significantly longer coastlines than New Zealand, as does Indonesia.

[v] The Sargasso Sea is located in the Northern Atlantic Subtropical Gyre. It is roughly ellipsoid in shape and has an estimated surface area of 11 million sq kms (nearly 3 times the area of New Zealand’s EEZ). The Sargasso Sea derives its name from a seaweed called Sargassum, a genus of brown macroalgae which is planktonic (free floating).

[vi] The area of the Antarctic continent is usually given as 14 million sq kms. The Ross Sea gyre looks like it is probably of the order of one quarter to one fifth of this in area.

[vii]The potential impact of any such initiative on sustainable fisheries and other ecosystems would need to be considered in terms of New Zealand’s responsibilities as a signatory of both the Antarctic Treaty and the Convention on the Conservation of Antarctic Marine Living Resources (CCAMLR). Presumably none of the signatories to either of these Treaties would have had in mind possible future carbon sequestration requirements at the time these Treaties were originally negotiated (1959 and 1982 respectively).  

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‘WHEN WAR COMES’


Saudi Arabia’s Abqaiq oil processing facility – on fire last week.

‘When War Comes’ was the headline to an editorial published in the 7-13 September 2019 edition of the New Zealand Listener. The Abqaiq and Khurais oil processing facilities were attacked and set on fire on 14 September. Readers will agree that it would be impossible to be more prescient than this.

Earlier, Yemeni Houthi armed forces spokesman Brigadier General Yahya Sare’e claimed responsibility for the attacks. He said that they were a legitimate response to US-backed Saudi attacks on Yemen. US Secretary of State Pompeo has said that there is no evidence that the attacks came from Yemen. ‘Amid all the calls for de-escalation, Iran has launched an unprecedented attack on the world’s energy supply’.

Under the heading: ‘All out war’: The dire consequences of Iran’s Saudi ‘air strike attack, todays NZ Herald paints a different picture with evidence from the Saudi Defence Ministry that the attack emanated from Iran. So, another sign of escalating tension in a region which is key to New Zealand’s economic well being and our interests are at risk. See; https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12269625

Oil industry experts say that the attacks have affected around 50% of Saudi oil exports or 5% of global oil supplies. It is not clear how quickly the damage can be repaired.

For New Zealand, the attacks remind us that we are at the end of a very long supply line for imported oil. They also remind us how dependent the New Zealand economy is on shipping. More than 90% of our trade by value and 99% by volume is transported by sea. Any disruption to this trade, whether at source, as in Saudi Arabia over the weekend, or at sea, would have serious consequences for us.

Energy supply lines at risk – 1 of 4 oil tankers attacked in the Arabian Gulf in June 19

Yet, it also has to be asked, why have petrol prices in New Zealand spiked within a mere three days of the refinery attacks? What is it about the way in which our oil markets operate that drive such an instant response when we should be buffered both by distance and the existence of ample stocks of prepaid oil already in the system?

New Zealand oil stocks and the IEA

New Zealand has obligations to the International Energy Agency (IEA) to hold oil stocks equivalent to 90 days supply (net oil imports). In practice, we meet that obligation through a combination of oil stocks held domestically plus ‘ticket contracts’ tendered for on the international oil market. Governments holding stocks for us under ticket arrangements at the present time include the UK, Japan, Denmark, Spain and the Netherlands. Obviously, it would take some weeks to draw down on these stocks but the question remains: if the oil held in our domestic stocks has already been paid for under an old contract price, what is it that justifies petrol companies responding within days to increases in the international benchmark price?

It appears that there is no good answer from either government or the industry to this very obvious question. The answer is that ‘this is just the way the market works.’ Which is not even the beginnings of an attempt at an explanation. To the ordinary person, this just looks like opportunistic behaviour.

What the AA has said

The AA has a very useful piece on its website that explains how fuel prices at the pump are made up. Government taxes (fuel excise tax, the ETS and GST) comprise 47% of the price paid. The cost of the refined petrol is 29%, shipping costs 2%, and the margin for the importer (the fuel companies) is 22%. See the link at https://www.aa.co.nz/cars/owning-a-car/fuel-prices-and-types/how-petrol-prices-are-calculated/.

What these figures mean is that if the benchmark price changes by 10%, then the cost to motorists should change by only 29% of that again, or a little under a third. In practice, matters are a little more complicated than that because currency fluctuations can intervene. That said, the AA advises that the general rule of thumb still holds good, which is that for every US dollar change in the Dubai benchmark, which is where most of our imported oil comes from, motorists can expect to see about a 1 NZ cent price change at the pump.

This was borne out yesterday (17 September) by BP, which announced a 6 cents per litre price rise, effective immediately, in response to an upwards spike in the benchmark price of around 6 US dollars.

What we say

We are vulnerable to attacks such as those over the weekend. We are at the end of the whip. The effects appear to be magnified the further we are away from the source of the trouble. Maj Gen Sir Howard Kippenberger, Commander of the New Zealand Division in WWII, used to say that the approaches to New Zealand begin in the Middle East. In some ways, 70 years on, that may still be true.

Certainly, the attacks on the Abqaiq and Khurais oil processing facilities and the immediate spike in petrol prices at the petrol pump seem to underline General Kippenberger’s belief. They also underscore the importance of our sea borne trade routes and our ability to protect those routes. And they remind us of the importance of finding ways to defuse tensions in the Middle East and accommodate the legitimate aspirations of all regional actors, Iran, Yemen, Saudi Arabia and the Gulf States included.

That said, there can be no excuse for the attacks on oil refineries when the UN and other international bodies have ample dispute resolution mechanisms available with which to address grievances. The sanctions imposed by the United States on Iran following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA: the Iran nuclear deal) may well be exacerbating the problem and driving the behaviour of Iran and its allies in ways that could lead to a very serious miscalculation. But there are reasons for these sanctions in Washington’s eyes, and Iran and the United States need to address those reasons urgently.

A New York Times Editorial just published contains a sober assessment of US President Trump’s limited options. It can be read online at  https://www.nytimes.com/2019/09/16/opinion/iran-attack-saudi.html

Guidance for New Zealanders doing business in Iran is contained on the MFAT website at https://www.mfat.govt.nz/en/countries-and-regions/middle-east/iran/doing-business-with-iran/.

In the meantime we are reminded daily at the petrol pump of the consequences of a failure to find enduring solutions to the problems of the Middle East, including most particularly between the US and Iran.

What the Listener Editorial said

The Listener Editorial (September 7th) raises some very timely points. It asks if New Zealand is in danger of ignoring, or at least underestimating, the risk that New Zealand will be caught up in war again. It argues that the rise of a new generation of politicians, many of whom are veterans of protests against the Vietnam War, brought a sea change in attitudes. The result was a shift away from offensive capability to a defence policy focused on politically less contentious capabilities.

We think that this factor is now dying out. To have been politically active during the last phases of the Vietnam War would mainly apply to the generation of 60 year old New Zealanders and older. Age may not weary them, but this generation is passing from the political scene. Younger New Zealanders, seeing Trump sabre rattling over Iran, China asserting itself militarily in the South China Sea, and North Korea posturing over nuclear missiles, are more likely, we think, to see New Zealand’s defence requirements in a different and more sombre light than the Vietnam generation.

The Listener queries whether we still live in what Helen Clark memorably described as ‘an incredibly benign strategic environment’. As the Listener argues, while developments over Iran, the South China Sea and North Korea may not directly imperil New Zealand, our economy depends on trade and the maintenance of open sea lanes, which could be threatened in the event of war. ‘We cannot pretend to be immune from risk’.

The Listener is to be congratulated for raising these questions. It notes that under Defence Minister Ron Mark, the Government has ‘taken long-overdue strides towards upgrading its defence inventory’. This is true. But much remains to be done still to equip New Zealand to promote and protect its maritime and oceanic interests in the strategic environment of the 30s, 40s and 50s.

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MBIE Releases Green Hydrogen Discussion paper

Strategic messaging from The Minister for Energy and Resources

Our thoughts……..

On 2 September MBIE released a 92 page discussion paper on ‘A vision for hydrogen in New Zealand’. In her foreword to the paper, Hon Dr Megan Woods, Minister for Energy and Resources, says that the government’s aim in releasing the green paper is to signal the opportunities that hydrogen can bring to New Zealand and frame nation-wide discussions around a national strategy for hydrogen. Public consultations close on 25 October. The link to the green paper is at https://www.mbie.govt.nz/have-your-say/a-vision-for-hydrogen-in-new-zealand-public-consultation/.

For the Oceans Foundation, one of the most interesting sections of MBIE’s very comprehensive discussion paper is on the potential role of hydrogen as a value-intensive new export commodity. Within our own region Japan, Korea and China are heavily dependent on imported energy. They could be partners in a new energy relationship with New Zealand (and Australia) based on hydrogen. This could dramatically reduce their dependency on Middle East oil supplies, lowering the risk of interdiction by Iran and other international actors in the Persian Gulf and the Straits of Hormuz, and adding a valuable new energy export dimension to our international relationships.

The export of green hydrogen looks like being a very promising opportunity. With abundant renewable energy sources available to it, New Zealand has the potential to significantly increase its production of renewable energy and this could enable us to position ourselves as a reliable, long term clean energy exporter to international energy markets using green hydrogen as the energy carrier. The government sees this as a strategic advantage that New Zealand should be actively exploring, and the Oceans Foundation agrees, noting only that the flow of a constant parade of bulk liquid hydrogen carriers from Australia and New Zealand to Japan, Korea and China has significant security implications that we should be thinking about and planning for at the outset.

Hydrogen

Hydrogen is the simplest and most abundant element in the visible universe, comprising 74% of all baryonic mass (planets, comets, stars, black holes etc). It is the raw fuel of the universe and is burnt by stars to create energy. Our Sun consumes some 600 million tonnes of hydrogen evry second in a process known as fusion energy.

Hydrogen – the simple and most abundant element in the visible universe

Green hydrogen is hydrogen produced by the electrolysis of water using renewable energy sources such as geothermal, hydro, solar, biomass and wind. What difficulties would New Zealand need to overcome in realising this opportunity? Apart from the need to create the conditions in which industry can produce, transport and store the green hydrogen in sufficient quantities to service an export industry, the principal difficulty is in the nature of hydrogen itself. Although it is by far the most abundant element in the universe, it is highly reactive in its natural state. Because of its reactivity, it is invariably found in combination with other elements in the form of water, hydrocarbons, carbohydrates and other organic matter.

Hydrogen is a uniquely difficult and expensive commodity to ship, whether by pipeline, or as a cryogenic liquid, or as a pressurised gas. On a weight for weight basis, hydrogen has three times the energy content of gasoline. But on a volume basis the ratios are reversed. To use hydrogen as an energy carrier it needs to be pressurised or liquified. To liquify hydrogen requires cooling it to minus 253 degrees centigrade. This cooling process typically takes 30-40% of the energy content of the hydrogen. And maintaining that temperature during shipment requires highly specialised engineering techniques based on the construction of massive double walled vacuum vessels, not unlike a giant thermos flask. Kawasaki Heavy Industries of Japan, who are industry leaders in the construction of such industrial scale vacuum flasks, are building their first pilot scale ship now. If successful, they plan to scale up to a fleet of bulk carriers of liquid hydrogen within the next year or two. This will enable the large scale export and import of liquid hydrogen.

New infrastructure and special handling equipment will be required to support the industry

Hydrogen is difficult to handle for other reasons. Because it has a very light molecular weight, it diffuses rapidly. It embrittles ordinary steel, requiring special coating and valve techniques. It has a broad flammability range relative to hydrocarbons. It is colourless, tasteless and odourless and it burns with an invisible flame (those dramatic black and white newsreel pictures of the LZ129 Hindenburg dirigible on fire in 1937 notwithstanding). These characteristics of hydrogen gas require special safety and handling considerations which also add to the cost and regulatory requirements.

But the great virtue of hydrogen as an energy carrier is that it burns without producing greenhouse gases. Water and heat, or electrical energy when combusted in a fuel cell, are the only by-products of recombining hydrogen with atmospheric oxygen, making green hydrogen the leading ‘fuel of the future’.

In addition to having the ability to scale up its renewable energy production, New Zealand has other advantages in the field of green hydrogen technology and export. We have good government to government relationships with Japan and Korea, both of which countries have established detailed roadmaps under which they plan to incorporate hydrogen as a major fuel in their economies. In October 2018, Hon Megan Woods signed a Memorandum of Cooperation with her Japanese counterpart, Hon Hiroshige Seko, Japan’s Minister of Economy, Trade and Industry to collaborate in the development of our hydrogen economies. The Tokyo Summer Olympics in 2020 will be a major showcase for hydrogen as the principal energy source for the games.

In New Zealand, several firms are already working with central and local government to develop pilot projects. Ports of Auckland are working with project partners Auckland Council, Kiwi Rail and Auckland Transport to build a hydrogen production and refuelling facility for a range of fuel cell vehicles.

Balance Agri-Nutrients Ammonia Urea plant at Kapuni, the site for a new hydrogen production facility

In Taranaki, Ballance Agri-Nutrients has a $50 million partnership with Hiringa Energy to develop 16 MW of wind energy at its Kapuni site which it will use to produce green hydrogen as a feedstock into its ammonia -urea plant and for possible use as zero-emission trucking fuel.

This is a key element in a Taranaki Hydrogen Road Map produced in partnership between Hiringa Energy, the New Plymouth District Council and Venture Taranaki, assisted by the Provincial Growth Fund. A link to the road map is at https://about.taranaki.info/Taranaki2050/Work-Group-Files/H2-Taranaki-Roadmap.pdf. The road map is intended to act as a guide to the development of Taranaki’s hydrogen economy. It is a product of the Tapuae Roa Taranaki Economic Development Strategy.

Tuaropaki Trust geothermal power plant at Mokai

In Taupo, the Tuaropaki Trust has entered into a partnership with Japan’s Obayashi Corporation to build a pilot hydrogen production plant using geothermal energy from its Mokai field, 28 km NW of Taupo. The 1.5 MW plant will be completed in 2020 and will be used to explore the viability of hydrogen production in New Zealand and the development of domestic and international markets. 

These are all important first steps towards a New Zealand hydrogen economy. Once the technical, economic and regulatory issues around the production, distribution and storage of green hydrogen have been resolved, and sufficient renewable energy has been developed, the way will be open to use hydrogen as a clean heat source in industry and as a transport fuel. This will open the way to carbon zero heat processing in industries such as steel and cement making, pulp and paper, milk powder and other large industrial consumers.

Seen in this way, a national New Zealand strategy for hydrogen is an absolutely key component in the government’s commitment to achieve net zero carbon emissions by 2050. Reaching the 2035 goal for 100% renewable electricity generation is also an important step along the way to a hydrogen economy. But to support an export industry for hydrogen will of course require New Zealand to put in place the policies needed to result in an excess of renewable electricity generation over and above domestic requirements that can be used for the generation of green hydrogen for export.

This represents one of the most challenging tasks ahead for Dr Megan Woods and the government.

New Zealand Hydrogen Association

This Association was established in September 2018 with seed funding from MBIE to support the progression and uptake of low emission hydrogen in New Zealand. Its website is at https://www.nzhydrogen.org/. The Association has broad support from a wide array of both private and public sector organisations.

Maritime safety and security issues associated with shipping liquid hydrogen by sea

The development of regulations covering the safe shipment of liquid hydrogen by bulk carriers is under discussion in the International Maritime Organisation. Bulk gas cargoes are carried under the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code). This is a mandatory code under the Safety of Life at Sea (SOLAS) convention.

New international standards will be required to regulate the carriage of hydrogen in ships such as Damen’s liquid hydrogen carrier

The IGC code does not currently allow for the transportation of liquid hydrogen. But Australia has been working with Japan to develop interim carriage requirements for the transportation of liquid hydrogen in bulk from Australia to Japan. And as part of a pilot project scheduled to commence in 2020, ship containment systems are being developed in Japan that will be capable of safely transporting liquid hydrogen in bulk from Australia to Japan (and, by extension, from New Zealand to Japan).

The interim carriage requirements specify the construction standards of containment vessels for liquid hydrogen carriers. These are intended to mitigate the safety risks associated with transporting liquid hydrogen by sea. Kawasaki Heavy Industries (KHI) of Japan has been active in helping to develop these standards.

The interim carriage requirements are a critical milestone in the Hydrogen Energy Supply Chain Project that has been developed by the Victoria State Government to transform the energy locked up in its world scale brown coal reserves in the Latrobe Valley into liquid hydrogen for transport to Japan.

Links explaining what is involved in this pilot scale project, expected to be operating in 2020, are at https://hydrogenenergysupplychain.com and  https://hydrogenenergysupplychain.com/port-of-hastings/.

Kawasaki Heavy Industries’ concept design for a bulk carrier of cryogenic liquid hydrogen

Safety at sea for a pilot scale shipment in 2020 is one thing. The security issues associated with the potential development of new high density energy sea lanes carrying liquified hydrogen bulk tankers from Australia and New Zealand to power the massive economies of Japan, Korea and China are quite another. While this potential sea borne trade may take a decade or more to develop, it is a security factor that needs to be in the mind of defence planners and strategic thinkers in Canberra, Wellington, Tokyo, Seoul and Beijing.

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The future is here – open ocean aquaculture

Could open oceans aquaculture, at some point in the future, be as prominent in food production as Zealand land-based agriculture?

Some of the answers to these questions were addressed at a Symposium, ‘Unlocking the Potential of Our Oceans’ held by the Cawthron Institute in Nelson 5-7 August 2019.  The programme featured the following headline:

Open ocean aquaculture is New Zealand’s newest and most challenging frontier. We’re lifting the lid on how to meet this challenge through state-of-the-art environmentally sustainable technologies and world-class science.’

The concept has been heralded as a potential game-changer for Norway’s salmon fishing industry. All images courtesy of NSK Ship

Norwegian Dr Hans Bjelland, Director of the Centre for Exposed Aquaculture operations in Norway, spoke about recent developments, including a salmon farm with the hull characteristics of a very large ship. Each of these vessels would be capable of producing 10,000 tonnes of fish at a time.  The structure itself could be turned to face turbulent waves and wind to help ride out the weather. These ideas require further research for New Zealand conditions. The link is at:

https://www.ship-technology.com/features/havfarm-fish-farm-vessel/

The Havfarm concept has been heralded as a potential game changer for Norway’s salmon fishing industry. This image courtesy of NSK Ship Design / Nordlaks.

Other contrivances for both shellfish and finfish that can be lowered or raised to protect against inclement weather illustrate the opportunity to overcome some of the physical challenges presented by the oceans.  Already there are open ocean aquaculture installations in place in New Zealand and producing quality food to add to existing inshore output.  In the Bay of Plenty offshore from Opotiki and in Pegasus Bay north of Christchurch two mussel farms are gradually increasing output and have plans for further expansion.  The farm near Opotiki illustrates the beneficial economic impact that open ocean aquaculture creates for local communities and particularly for local Iwi who have invested in this facility. 

Open ocean mussel farm off Opotiki

To support the venture, planning to develop and to build a new port to service the farm is well advanced.  The new docks will house facilities for comprehensive management of the entire operation from platform operations, spat capture, harvesting, processing, packaging, distribution as well as ancillary services including ship maintenance, riggers, information technology operators and the like.  Clearly there will be significant employment opportunities.

Open ocean aquaculture is a sophisticated operation requiring input from government agencies, a broad range of academic disciplines, practical engineering and diverse knowhow.  It is early days but the potential for open ocean or exposed water aquaculture operations in New Zealand is clear and the rewards could be significant.  The Foundation congratulates the Cawthron Institute for taking the lead in this way.

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My Wish: Protect our Oceans

Legendary ocean researcher Sylvia Earle shares astonishing images of the ocean — and shocking statistics about its rapid decline — as she makes her TED Prize wish: that we will join her in protecting the vital blue heart of the planet.

https://www.ted.com/talks/sylvia_earle_s_ted_prize_wish_to_protect_our_oceans?utm_campaign=tedspread&utm_medium=referral&utm_source=tedcomshare

American, Earle has led more than 50 expeditions and clocked more than 7,000 hours underwater. As captain of the first all-female team to live underwater in 1970, she and her fellow scientists received a ticker-tape parade and White House reception upon their return to the surface. In 1979, she walked untethered on the sea floor at a lower depth than any other woman before or since. In the 1980s, she started the companies Deep Ocean Engineering and Deep Ocean Technologies with engineer Graham Hawkes to design undersea vehicles that allow scientists to work at previously inaccessible depths. In the early 1990s, she served as Chief Scientist of the National Oceanographic and Atmospheric Administration.