The International Energy Agency's 2001 review of New Zealand's energy policies and programmes. It finds that New Zealand is very active in all areas of energy policy. This report focuses on electricity deregulation and on policies to reduce greenhouse gas emissions. But gas supply depletion and the 1998 Auckland power failure are reminders of the fundamental importance of energy security.

New Zealand is working towards ratifying the Kyoto Protocol by mid-2002, the only OECD country to make such a commitment outside the European Union. Agriculture is the main contributor to greenhouse emissions in New Zealand. Electricity generation contributes very little at present. The focus should be on agriculture and transport. International agreement on emissions trading and sinks, on which progress has been slow, is vital to New Zealand’s approach.

New Zealand is preparing a National Energy Efficiency and Conservation Strategy. Attention needs to be given to transport. Residential energy consumption must not be allowed to grow too fast, as the economy recovers. New Zealand has demonstrated that electricity market liberalisation can succeed in a small country, although government shareholdings remain high, and the government owns Transpower, the transmission and system operator. Small consumers have not always benefited from changes in the electricity market. The government’s Power Package aims to strengthen industry self-governance, to bring the benefits of market reform to the retail market, and to address weaknesses in industry regulation.

New Zealand’s approach to energy sector regulation is unique in the world. The report discusses the strengths and weaknesses of New Zealand’s regulatory system.