China Business Summit 2020: Panel – Building a bridge to China (video)

Building a bridge to China: Panel discussion at the 2020 China Business Summit

E-commerce clearly came into its own during the Covid-19 crisis. But will the trend accelerate? And what will it take to reinstate safe travel between New Zealand and China in the Covid-19 era? Those were the questions we asked experts about and talked about the strategies the tourism and education sectors were to employ to keep the Kiwi brand upper mind until air links could be restored. We also learned about how the ‘Southern Link’ initiative between China-NZ-Latam was proving its worth.

  • Adrienne Young-Cooper, Acting Chair, Queenstown Airport
  • Lisa Li, Managing Director, China Travel Service
  • Rachel Maidment, Executive Director, NZ China Council
  • Pier Smulders, Country Manager, New Zealand at Alibaba
  • Professor Jenny Dixon, Deputy Vice-Chancellor (Strategic Engagement), University of Auckland

Moderated by Tim McCready

APEC 2021: A look back at what could have been. (LinkedIn)

With the recent announcement that New Zealand will no longer host world leaders for APEC Leaders’ Week next year, but will instead take the Summit digital, I took a look through the news archives to see what we are going to miss out on.

When NZ hosted APEC last in 1999:

👮🏻‍♂️ NZ security guards mistook Hillary Clinton’s mother for part of the public crowd and pushed her aside – twice.

🏉 Clinton told Sir Edmund Hillary – then aged 80 – that he might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

🛍️ Suburban shopping centres were busier than ever as the public were encouraged to avoid the city centre.

📰 International media published some bizarre stories about New Zealand and our culture.

THE POWER OF APEC

As Auckland was preparing to host APEC in 1999, the news was dominated by East Timor and its recent vote in favour of independence. The aftermath of the referendum saw mass violence, killings and destruction targeted at the East Timorese.

APEC 1999 was due to be held just days later, with Indonesia present. This introduced a challenge for New Zealand: APEC has strict rules around it that govern what can and cannot be discussed – APEC is about the economy and not about foreign policy.

At the time, New Zealand Prime Minister Jenny Shipley said: “You only get leaders of economies to come if they know that their foreign policy won’t be objected to scrutiny or interfered with. But having said that, the power of APEC, where you’ve got leaders and foreign ministers together physically in a country was always potentially going to be useful.”

Making a tough call

It was decided that an emergency meeting of foreign minister would take place in Auckland before APEC officially began. Shipley had to phone Indonesian President B.J. Habibie to let him know the plan, and said it was a difficult phone call.

“I had a number of officials in the room with me and I held the phone out at one stage where I was being yelled at. But the thing that changed was that not only Western-aligned economies within APEC but also Singapore and others in the region felt that this was something that had to be progressed.”

As Foreign Minister Don McKinnon noted, bringing leaders to one location forced them to take a position on Indonesia’s behaviour they could otherwise have simply avoided.

As a result, after lobbying from Australian Prime Minister John Howard, the United States announced it would no longer support the IMF bailout of Indonesia unless their army withdrew and allowed peacekeepers in. Within hours Indonesia changed their stance, and an Australian-led peacekeeping force left for East Timor just eight days later along with support from New Zealand troops.

THE STAR OF THE SUMMIT

US President Bill Clinton’s appearance at APEC 1999 marked just the second time a US President visited New Zealand (Lyndon B. Johnson visited in 1966 and met with Prime Minister Keith Holyoake). Clinton was warmly received by the public, using his innate ability to charm the crowds during walkabouts.

It was reported Clinton was so fascinated by Māori culture at Auckland Museum that he asked Shipley if she would arrange for the museum’s shop to open for business because he wanted to “buy it out”. With shop staff off duty for the gathering of leaders, it fell on the museum director to open the store for the President. Clinton and the United States National Security Adviser, Sandy Berger, were reputed to have spent “a lot of money” during their 25-minute unscheduled shopping spree, with Clinton sporting one of his purchases – a circular greenstone pendant – around his neck during his time in Auckland.

On another shopping trip, he took daughter Chelsea Clinton on a two-hour trip to Parnell and Queen Street where they bought a handmade clay ocarina (wind instrument), a black pottery cat, a $400 crystal vase, two $49 oil bottles and a $27 vanilla-scented candle.

 

Clinton attracted thousands to the streets to catch a glimpse of him – and not just in Auckland. A crowd of 5000 came to the International Antarctic Centre in Christchurch; hundreds

waited for three hours outside a lakefront Queenstown restaurant to spot the popular president.

For one of his appearances, Clinton shared the stage with Sir Edmund Hillary. He told the audience he was thrilled to share the stage with the adventurer and said he was “referred to in our family as my second-favourite Hillary.” He suggested that Sir Edmund – then aged 80 – might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

Speaking about the upcoming America’s Cup challenge, Clinton remarked: “We even let you borrow the America’s Cup from time to time. We hope to reverse our generosity shortly.”

SUPERPOWERS MEET

New Zealand’s hosting of APEC also marked the start of a thawing rela

tionship between the US and China – with both superpowers reopening talks while in Auckland after the US bombed China’s Embassy in Belgrade.

Another big meeting was between Clinton and Russian Prime Minister Vladimir Putin – it was the first time they had met as leaders.

In a briefing to reporters following the meeting, it was said Clinton warned Putin that corruption could “eat the heart out of Russian society.” Those comments followed reports that Russian mobsters siphoned millions of dollars out of Moscow and laundered it through the Bank of New York. It was said Putin agreed that Russia had problems and suggested a cooperative approach.

Throughout the summit, many large offices in the city centre were operating on skeleton staff, heeding pleas for the public to stay out of the city if possible. Streets and schools in Auckland, Manukau and North Shore cities were closed and many city workers were given a day off. For those that needed to come into the city centre, many travelled earlier than normal resulting in lower than usual peak traffic volumes.

This resulted in the outer suburbs of Auckland being busier than usual, while the city centre ground to a halt – impeded by presidents, protests and police.

“They should have APEC every day,” Lynnmall Deka store manager Struan Abernethy told the media – standing in the toy department and surrounded by the buzz of family shoppers. “It’s the busiest Monday we’ve had for a long time!”

A FORUM FOR FREE TRADE

One of the key themes of New Zealand’s 1999 year of hosting was lifting the support from the public for free trade – although the success of this was limited.

US Trade Representative Charlene Barshefsky outlined the problem with a warning that public opposition was the greatest threat to the world’s multilateral trading system.

“Unless that public support is regenerated, I think the World Trade Organisation is going to face tough sledding in the years ahead,” she said.

Clinton also warned of the need to put “a human face” on the global economy.

Trade Minister Lockwood Smith said the commitment to a new global round was the meeting’s biggest achievement, but export subsidies were the single biggest trade issue for NZ. While the benefits were some years off, it was important to get the world to put the abolition of the subsidies on the agenda.

United States

Shipley joked during the Summit that she had fed President Clinton as much lamb as possible during lunches and dinners – including Manawatu lamb loins and Canterbury lamb noisettes. “I’ve eaten it all,” he joked when asked about lamb tariffs.

Clinton said the United States was the “champion of free trade,” despite his decision to impose tariffs on New Zealand lamb. He said these were “appropriate” given that the recommendation from the International Trade Commission had been made under United States law.

But he said he would study the “very interesting idea” of a free trade agreement between Australia, New Zealand, Chile, Singapore and the United States.

Singapore & Chile

In bilateral conversations, New Zealand announced a free trade agreement with Singapore and a scoping study of a similar deal with Chile.

Business leaders from Chile and New Zealand also met during the APEC summit to discuss the prospect of a free trade agreement between the two countries.

One of those leaders was Carter Holt Harvey chief executive Chris Liddell (now assistant to President Trump and deputy chief of staff for policy coordination in the White House). He and other leaders cautioned at the time that business deals between New Zealand and Chile have had hiccups – including an investment dispute between Carter Holt Harvey and Chilean conglomerate Copec.

CEO SUMMIT

250 executives attended the CEO Summit, including around 60 of New Zealand’s most eminent businesspeople. International delegates included General Motors chairman Jack Smith and Raymond Cesca – who was responsible for handling world trade for McDonald’s.

New Zealand’s delegates to the CEO Summit included just four women – Wilson & Horton corporate affairs manager Fran O’Sullivan (who was also the CEO Summit’s deputy chair), professional director Rosanne Meo, Wellington Regional Chamber of Commerce CEO Claire Johnstone and education publisher Wendy Pye.

The chair of the Summit, John Maasland, said businesspeople were keen to work closely with APEC political leaders to increase the pace of reform and make sure a gap between developed and developing countries did not widen.

Attendees called for critical trade issues to be tackled quickly, including speeding up planned moves to achieve free and open trade and investment throughout the world by 2010 for developed countries and by 2020 in developing economies. They also called for economic governance, development of greater transparency and accountability in the financial sector and a regional approach to building infrastructure in APEC economies.

The attendees recognised that APEC politicians would need a lot of courage if they were to deliver the policies that corporations want – but if that courage was not shown, then free trade would flounder, economies would contract and people would suffer.

“We are certain that the benefits to all APEC communities will become increasingly evident if these specific actions are taken speedily and forcefully,” Maasland said.

The chief executives said their near-term challenge was to make sure the things they had talked about in Auckland over the past two days were turned into some firm policies that could be delivered in the following year’s APEC meeting in Brunei.

UNEXPECTED GLOBAL HEADLINES

There was some disappointment that New Zealand didn’t get the level of promotion that it had hoped for in international media – it was the East Timor developments that dominated the headlines. But some of the international media mentions New Zealand received included:

  • The Los Angeles Times told its readers that New Zealand was “an island nation”
  • The Los Angeles Times also ran a piece on its website explaining what a hongi is – alongside a photo of Clinton greeting Sir Hugh Kawharu: “the gesture is called a hongi, a native welcoming gesture”
  • The Newsweek website mentioned plans for the leaders’ banquet: “In New Zealand, where sheep outnumber people 15 to 1, folks know how to party. Five top chefs have been dispatched across fjords and throughout the forests to find the best ingredients for a massive feast”
  • The Boston Globe reported on New Zealand security guards mistaking Clinton’s mother-in-law, Dorothy Rodham, for part of the public crowd – twice pushing her aside during the President’s shopping walkabout. “The confusion didn’t stop Clinton from going on a buying binge. At one point he stopped in a store called Out Of New Zealand and bought an ocarina, a small traditional flute made of clay.”
  • The Boston Globe also reported that New Zealand would be the first country in the world to celebrate the millennium.

SHIPLEY OUT, CLARK IN

Following the APEC Summit, a TV3/CM Research poll saw her rise from 14 per cent to 20 per cent as preferred Prime Minister – two points ahead of then-Labour leader Helen Clark.

In the same poll, 38% said they had a better opinion of Shipley after APEC, with 8% saying they now had a worse opinion of her.

However, the National party’s support didn’t shift significantly post-APEC. The poll saw its support rise only one percentage point to 33 per cent. Labour polled 39 per cent (compared to 40 per cent one month earlier). Support for Alliance was down one to 6 per cent, support for New Zealand First remained at 7 per cent, Act’s support lifted one to 7 per cent, support for the Greens fell from 2.6 per cent to 2.4 per cent.

The 1999 New Zealand general election was held on 27 November 1999 – two months following APEC. The National party, led by Shipley, was defeated, replaced by a coalition of Helen Clark’s Labour party and Alliance – who led New Zealand until 2008.

Agribusiness: Government agencies stellar job keeps agri exports flowing (NZ Herald)

There is a massive opportunity in front of us to capture premiums. Without doubt, our brand story is at an all-time high at the moment because of what we’ve done with Covid.

NZTE chief executive Peter Chrisp says the impact of New Zealand’s Covid-19 lockdown had immediate consequences for its customers — New Zealand exporters.

“I’ve always worked hard. I’ve never worked this hard,” Chrisp said at an interview at NZTE’s Wellington head office.

Even prior to the coronavirus pandemic hitting New Zealand’s shores, the agency was heavily involved providing support to its customers exporting to the China market.

“China is such a big market for New Zealand with many of our customers,” said Chrisp. “They needed to know what was going on and were desperate for insights. We had 65 people in China – we had to get them working from home. They were keen to contribute and lean in to support customers.

“So that was the beginning of it, and then it just unfolded, into Italy and South Korea.”

When New Zealand entered the alert level four lockdown phase, one of the immediate issues Chrisp’s team needed to face was how to support airfreight. With passenger traffic severely limited, there wasn’t a functioning airfreight market, which many of our high-value exports — including seafood and honey — depend on.

NZTE co-ordinated around 200 charter flights to key export markets, including Shanghai, Los Angeles, Tokyo, Singapore and Australia: “We got good backing from the ministers and the Ministry of Transport. We underwrote the capacity of the plane — the last 20 per cent of the plane.”

He said if a chartered plane wasn’t full it wouldn’t leave. The underwrite didn’t have to be used very often, but it was an important mechanism to provide certainty to exporters that their goods would make it to market.

In the medium term, a new initiative with funding allocated from the May budget will focus on supply chains, building firm capability in freight and logistics and helping to build capability within export firms.

Another of the initial challenges for exporters was ensuring sufficient cashflow for business continuity. NZTE formed partnerships with Deloitte, PwC and KPMG to provide a business continuity service for around 500 of its customers.

“From that, they got a bit of a plan about how to respond immediately, how to get their cash under control and what to do with their working capital and inventory,” Chrisp explained.

He said that while many exporters might be dealing with the current environment, they are starting to ask questions about the sales funnel and how to fill it long-term.

“I’ve been talking to some specialist manufacturers who would normally sell mostly through attending conferences, relationships with procurement mangers, and foot traffic. They are now wondering how they reach their customers.”

Many are turning to digital – which Chrisp said is one of the biggest things NZTE is engaged with at the moment. This will include scaling up e-commerce capability to provide digital commerce content, tools and advice to more exporters.

Keeping track of its current suite of clients, NZTE has developed a heat map that runs a ruler over companies and considers which companies that are thriving, surviving, or struggling.

Chrisp said this gave the agency a good feeling for where the hotspots were, and at the start of the crisis it was the export-dependant specialist manufacturing firms that he was most concerned about.

He said that though a lot of the customers of specialised manufacturing firms were considered essential overseas, they weren’t here — which had made things difficult.

The heat map is now showing around 32 per cent of companies thriving, 60 per cent surviving and about 8 per cent struggling.

“The thriving companies are across categories like food, manuka honey, nutraceuticals. But even in tech you’ve got companies involved with education software or gaming software that are doing well,” though Chrisp noted, you’ve also got people struggling in those categories as well. The Ministry of Foreign Affairs and Trade (MFAT) has developed a trade recovery strategy to address that. MFAT says the next phase of New Zealand’s response is recalibrating New Zealand’s trade policy for a new international environment.

The strategy, launched by trade and export growth minister David Parker, has three pillars: retooling support for exporters, reinvigorating international trade architecture, and refreshing key trade relationships.

NZTE will play a key role in this — in particular, Chrisp said it will be the custodian of the retooling pillar.

“The Government knew it couldn’t just rebuild New Zealand with a domestic fiscal spend. You need an international export recovery leg — and I think you need an investment recovery leg as well.”

Some of the $216 million funding boost it received through the Budget will be used to significantly increase the number of exporters that receive intensive support from NZTE. The agency says that collectively these exporters directly employ over 200,000 people. About 75 per cent of these firms are expected to be SMEs with 50 or fewer employees.

“We will have more customer managers that can deal with more New Zealand companies and services — and more boots on the ground in premium international markets,” Chrisp said.

Business development managers in key offshore markets will be particularly important for exporters while international travel remains restricted. It is envisaged that this team will be able to carry out additional functions for companies in-market – including meeting customers, vetting new employees, and selecting distributors.

Another portion of the funding has been allocated to expand the International Growth Fund, which helps reconnect companies with international markets and supply chain partners, as well as explore new opportunities.

Chrisp said he is keen to uphold the sense of the opportunity in front of New Zealand — particularly in the food and beverage sector.

“We’ve had food and beverage manufacturers in New Zealand that responded very well during Covid.

“The opportunity to be the most keeps agri exports flowing sustainable food producer on the planet is quite a niche — quite an exciting niche.”

One area that Covid-19 might help New Zealand is by spurring the acceleration of the shift from volume to value. Chrisp said food and beverage is at the sharp end of that.

“There is a massive opportunity in front of us to capture premiums. Without doubt, our brand story is at an all-time high at the moment because of what we’ve done with Covid. There is an opportunity to double-down on that brand story and those sustainability settings.”

“The health competitor advantage — growing food and beverage out of this healthy country and the intersection of innovation with our food and beverage story and our agritech sector, there’s some really great things that we can accelerate and advance around this.”

But, said Chrisp, a key challenge for New Zealand will be keeping the New Zealand brand alive in international markets over the next 12 months without international travel.

NZTE is working on strengthening New Zealand’s brand in priority markets by maintaining, promoting and broadening New Zealand’s brand appeal, particularly while the tourism sector is recovering.

Chrisp said it will re-emphasise New Zealand’s reputation for safety, trust, resilience, ingenuity, sustainability and high-value goods and services using the highly successful New Zealand Story strategy.

“When you think about who is probably likely to carry the New Zealand brand story, it is probably food and beverage and tech, because there are such good stories wrapped around those products and services.

“If our food comes out of a Covid-free country, it’s good for human health and it’s got a story wrapped around it about the quality of the country — that’s a particularly good story that will resonate in premium markets.”

Chrisp said it comes back to the underpinning values of kaitiaki — our role as guardians of people, place and planet and protecting what is precious over generations. We think that Covid has demonstrated that story.

“Our high integrity, high transparency, our very low corruption and our ingenuity — they are underpinning values that we think will resonate well on the international stage.”

Agribusiness: Covid impact felt in January in agribusiness (NZ Herald)

Ministry of Primary Industries chief executive Ray Smith says the impact of the Covid-19 crisis started early for MPI “as an agency”.

Smith says in late January, MPI started to observe the impact. Their biosecurity workforce — around 300 people at air passenger terminals — saw about 20,000 people passing through daily.

“The very first issue for us became the safety of our staff with the number of people coming to New Zealand,” he recalls. “At that point in time the concern was China. We acted early to make sure our staff had protective equipment. We were one of the first companies to give our staff PPE (personal protective equipment) and Perspex screens at the airport.

“While we had a few people that had Covid, none of them picked it up through the course of undertaking their work.”

By early February, MPI was countering emerging issues in the forestry sector with too many logs sitting on wharves in China. Similarly for rock lobster where 98 per cent of NZ’s crayfish is exported to China.

“Those were huge issues. But it was when we headed into lockdown that things really started to intensify.”

Following the lockdown announcement, MPI pulled together a conference call with people right across the primary sector. Smith says it was on that call that MPI set a standard for how it would operate through the crisis.

“People were incredibly grateful to be given the opportunity to continue to operate as essential services — there was a great fear at the time that many more things would be closed down.

“We were very clear about the gravity of the situation we were facing. But we had the potential to manage this well and show what could be done.”

Over the course of the following few weeks, MPI officials visited about 4000 premises. Smith says the agency set some high standards, and it was very challenging for some reasons — those in big processing areas like meat plants, dairy companies, horticultural pack houses — where there were large volumes of people working together. Enforcing those rules had a big impact on their productivity and he says MPI was aware of that. “But they adopted protocols, enforced them, and were actually grateful to have someone come out and verify from MPI they were adhering to good practice. We wouldn’t let each other down. It was a real test of positive relationships and working together to achieve a good outcome for New Zealanders.”

Says Smith: “It wasn’t easy in all areas. We did have some people in a couple of meat plants that had Covid, and in the dairy factory — but because of the protocols they never spread the disease, and it didn’t result in any closures. That level of cooperation, and the way we rallied together to get it right for New Zealand shone through and is something we can all be very proud of.”

The Herald put a number of questions to Smith:

Herald: How did you manage early on with your people in market?

Over February and March, we were bringing our people from China and Japan and other countries home. Our deputy director general for China relations — Tim Knox — went the other way. We felt that market was so important that we had our most senior person there throughout. He is still over there, and we have more MPI staff over in the next few weeks. We’ll back to our full complement by August. That has been an important priority for us — to have our people back in market.

Herald: Was there anything that really surprised you as you got further into the crisis?

The level of interdependence. We are managing a biological system, and it works on a season and pattern. You can’t turn off things for four weeks and just go back to normal.

Animals have to be able to reared, farmed, go into works and sold — or else you end up with a backlog somewhere. All of these things are heavily interdependent.

And there is a challenge for us around some of our systems when these crises hit. It was made worse for us because there was a drought as well as Covid. At one point there were worries about feed coming out of Malaysia — but all of these issues resolved themselves. My colleagues across government were critically important to making sure there was good flow at the border.

The forestry industry was largely closed. But we didn’t close it all down. The plant in Kawerau that produces chlorine, which is needed for our drinking water remained open. We have to have packaging materials so that our produce could be shipped offshore; paper produced for newsprint. We made an early call that we needed to allow people that work in nurseries to go and look after the plants. We couldn’t just close everything down — if those people stayed home, we would have lost more than one season of product.

Herald: What about the NZ brand story and implications for how the sector dealt with Covid-19?

The great thing going forward for New Zealand is how it has dealt with Covid has reinforced the confidence for NZ that you can trust the products that come out of it.

The e-certification of products into China emerged through this period as well, and became very important since documents were not able to flow as easily. There is a real opportunity to change things, because people have become more used to doing things digitally. I suspect in some ways our productivity was enhanced!

Herald: Are there any lessons for the future from dealing with the Covid-19 crisis?

We couldn’t have achieved what we did without having relationships, trust and a sense that we are all in this together. What I was really worried about was that New Zealand was making a huge sacrifice by keeping most people at home. When we were sending people to work — particularly in meat plants and packhouses with large numbers of people — we could not become a vector of disease through poor practice. But we proved we could do it.

Herald: What are the big challenges you are facing now?

We have a great primary sector, but one of the big challenges we will have is attracting more New Zealanders to come into the workforce as part of the recovery effort. We will have a campaign over the next few weeks to encourage Kiwis to come and work right across the primary sector.

Also maintaining our presence in market, and the inevitable levels of protectionism that might creep in as people see jobs disappear in other economies. And in getting that message out that New Zealand is here, we have great products, and you can trust us.

http://bit.ly/2Q4FlvI

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World War II acted as a catalyst for town planning.

One of the solutions to the overcrowded, polluted and bombed areas of Britain was to get people out and into new town developments.

The “new towns” were conceived by the post-war Labour government, and built between the 1940s and 1960s with the New Towns Act of 1946 giving the Government the power to designate areas of land for new town development.

Now home to 2.7 million people, they are situated 30 to 70 kilometres from big cities and close to motorways and railway lines. Most are the very definition of a concrete jungle — monolithic brutalist architecture with myriad concrete underpasses and walkways.

The first new town developments — such as Harlow and Stevenage — only allowed for social housing, which limited the diversity of residents. Milton Keynes was in the third and last wave of new town developments and included semi-detached housing that was offered for private sale.

It is the largest of the new towns, and is considered one of the most successful — it had the fastest-growing economy outside London between 1997 and 2011.

The new towns were guided by several fundamental planning principles, including economic self-containment with a drive to attract industry and employment, and the creation of socially mixed communities.

One of the important lessons from the developments is the links to bigger cities that foster growth.

Key to Milton Keynes’ success is its links to central London — the trip takes under an hour with an average of 224 trains making the journey on a weekday.

But some 70 years on, the legacy of new towns is mixed.

Though they had been economically successful and are recognised to have made a significant improvement in the housing shortage, some are now experiencing major problems.

The new town master plans resulted in low-density housing with large amounts of open space and residential areas segregated from jobs, shopping and businesses services.

Low-density infrastructure is expensive to maintain, and has created a car dependency which is now not considered sustainable.

Since infrastructure within the new towns was constructed at the same time, it is now ageing at the same rate.

Similarly, the rapidly built housing developments are approaching the end of their design lives and give the towns a tired look.

Some local authorities do not have the capacity to resolve the problems and have had difficulty agreeing on the detail.

Today’s housing shortage makes new developments in Auckland an attractive option.

Taking lessons — good and bad — from last century’s new towns will ensure we create residential areas that Aucklanders will want to live in now, and in the future.

2019, in one minute (video)

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Stephen Colbert’s Late Show: 56 mentions of New Zealand

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Sustainable Finance: A hydrogen-powered future (NZ Herald)

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Technology is playing a key role in changing the whole energy sector and enabling sustainability, says Vector chief.

Meeting the needs of current generations without compromising the ability of future generations to meet their needs, is about striking the right balance between the environment, society and the economy.

New Zealand’s largest distributor of electricity and gas, Vector, says it is leading the transformation to create a new energy future.

“Meeting the needs of current generations without compromising the ability of future generations to meet their needs, is about striking the right balance between the environment, society and the economy,” it says.

Vector chief executive Simon Mackenzie says that technology is playing a key role in changing the whole energy sector and enabling sustainability.

“Primarily this is through the decarbonisation of the energy space, but also very much through changing the whole consumer interaction in an industry that has been very low on the consumer interface,” he says.

He explains that the old model was always about generation being built and transmitted into cities or regions, with consumers turning on the light with no choice.

“When you think about that from an economic perspective, that was all very much a market-orientated supply side, but with an elastic demand side,” he says.

“What we see now is a massive change to technology, primarily through digital platforms, and also new solutions — whether they are solar, battery, microgrids or digital environments where people can shift energy.”

He says these are all emerging and putting shape into the demand side of the energy sector.

New Zealand’s energy production is different to many other countries in that it uses mainly renewable energy sources including hydropower, geothermal and wind energy. But it is the large fossil fuel generators that are investing massive amounts into emissions-free production to decarbonise their energy production systems.

This is changing the cost curves of these technologies, and is encouraging a shift to a decentralised model. For example, as residents put solar panels on their private property, they are beginning to ask: “I’ve got solar, I’ve got a battery and I’ve got an electric vehicle — how should I use my energy to the best effect?”

And it is here, Mackenzie says, where digital platforms come in — such as Vector’s investment in Internet of Energy (IoE) company mPrest.

He says mPrest’s technology is the most comprehensive monitoring, analytical and control system available anywhere in the world.

“You can think of it as a system of systems. The software sits over customer, market, distributed energy resources and network systems managing performance in real-time.

“Through self-learning, it is able to assess and predict multiple factors including loads, market dynamics, storage, customer demand and capacity. This greatly enhances the resilience, security and efficiency of customer solutions and our network.”

Mackenzie says if you can understand customers’ behaviour and shift them to flatten consumption by 20-30 per cent, then “that’s a massive change in the energy system”.

“Some of these modern electric vehicles (EVs) are turning up in the driveway with in-car battery capacities that are equivalent to seven houses’ worth of demand,” he says.

“This means to charge them quickly, you can have five to seven times the consumption of a house being needed. How do you manage that from an overall efficiency? If you can digitally control when the EV is charged, it is much better than creating new peaks that have to be managed — the costs are significant”.

As an example, EV chargers can help to facilitate energy flow both to and from an EV, allowing it to act as a rechargeable energy source. When connected at home or work, charge from the EV can be used as a power boost for the building, as a cheaper power source when electricity prices are at their peak — and will eventually be able to power homes during power outages.

“Many homes could be powered by their EVs at peak time. Similarly, EVs will be releasing energy back to the grid to support grid demand while taking advantage of a higher peak energy buyback rate,” says Mackenzie. However, he warns that one of the big challenges from a New Zealand perspective in the movement toward sustainability is a risk of complacency.

“We are getting asked questions about our sustainability position and our carbon reporting and we won’t get capital to New Zealand if we are not completely over what the trends are globally and financially.”

He says that just because we are small, at the bottom of the world, and perceived as clean and green, we must not think we are immune from these trends.

“We still have to raise capital from offshore and we need to be able to address questions about our sustainability position and carbon reporting.”

When Vector issued capital bonds, Mackenzie was asked a lot about what Vector is doing in decarbonisation.

“On the capital bond roadshow in New Zealand, some of the brokers were asking the question.

Offshore agencies are also asking about it … it is becoming much more prevalent.”

He says if we are complacent, we will be economically cast adrift.

“We won’t get capital if we aren’t completely over what the trends are globally and financially. But if we act, we can lead the way and create growth opportunities.”

Mackenzie sees this as an opportunity for Vector, because the company can adapt quickly and deploy new technologies.

He has seen rapid advances and focus in this space from global technology players that are developing new digital solutions for the energy sector.

“Vector has great international partnerships, so we see this as a way in which we can demonstrate how a market or a business can respond to these challenges and continue to learn,” he says.

This is an opportunity because Vector’s partners are keen to work with New Zealand to test out new innovation — “almost like a Petri dish”, which Mackenzie says will also provide export and other growth opportunities.

He adds that those who don’t show absolute concrete initiatives and actions will be left in an ever-increasingly difficult situation as social, regulatory and political pressure is applied.

We already hear of flight-shaming, which is encouraging people to shun air travel for the sake of the planet. Mackenzie has no doubt there will be energy shaming at some stage as well.

“Directors and business leaders need to be thinking of their carbon risk and appreciate that carbon is the new tobacco. Pressure will mount on them — including potential legal claims — if they can’t show action.”

This view is shared by the governor of the Bank of England Mark Carney, who earlier this month said companies and industries that are not moving towards zero-carbon emissions will be punished by investors and go bankrupt.

He said it was possible the global transition needed to tackle the climate crisis could result in an abrupt financial collapse, and the longer action to reverse emissions was delayed, the more the risk of a collapse would grow.

But he noted that great fortunes could be made by those working to end greenhouse gas emissions.

Carney told the Guardian that disclosure by companies of the risks posed by climate change to their business was key to a smooth transition to a zero-carbon world as it enabled investors to back winners.

“There will be industries, sectors and firms that do very well during this process because they will be part of the solution,” he said. “But there will also be ones that lag behind and will be punished.”

Sustainable Finance: No such thing as waste (NZ Herald)

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