Economic growth is an essential requirement because it funds our improving living standards and social development. This has been fuelled by increasing energy supply.

Consistent with global trends, New Zealand’s energy consumption (Figure 1) has been increasing steadily. Energy demand growth has averaged 2% per year, compared to the global average of 1.9%.



The close relationship between energy consumption and GDP growth is illustrated in Figure 2.


Industry and transport sectors have had the fastest demand growth. From 1970 to 2003 industrial energy demand increased significantly relative to GDP. Transport demand also increased at a greater rate than GDP as has total energy demand. However residential energy demand increased more slowly than GDP and in line with population growth.

The period shown includes the establishment of major energy-using industries such as methanol production and aluminium smelting. These energy-intensive industries were located in New Zealand in part due to our historical availability of relatively low-cost energy.

By 2050, New Zealand’s population will rise to five million people based on median growth forecasts. More people will need more energy and this is already a concern. Energy efficiency and technological improvement will have a positive impact but history shows that the more people there are the more energy they use. Market research finds that seven out of 10 New Zealanders believe that there will be an electricity shortage in the next five years and nine out of 10 believe that we do not have a long-term energy
plan to “keep the lights on”.