Transportation and Energy in New Zealand - the case for promoting Rail
Primary energy: Primary energy is defined as the energy contained within an energy carrier, such as coal, that has not been transformed into a secondary energy form, such as heat energy.
Secondary energy: Secondary energy is energy embodied in commodities (such as refined oil) that comes from human induced energy transformation (Øvergaard, 2008).
Global Energy Consumption
Global energy consumption increased by 5.6% over the period 2009-2010, the strongest growth since 1973 (BP statistics, 2011). China accounts for 20.3% of global consumption and has overtaken the United States as the world's largest energy consumer. Chinese primary energy consumption grew by 11.2%. Oil continues as the leading global fuel source, at 33.6% of energy consumption, although it continued to lose market share for the eleventh consecutive year. Coal makes up 29.6% of global energy consumption and increases on average at a rate of 7.6% each year. China consumed 48.2% of all coal in 2010. 2010 also saw the demand peak for natural gas consumption (BP statistics, 2011). The share of renewables in 2010, not including big hydro or biomass generation was 1.8% and growing.
Energy Consumption in New Zealand
The efficient use of energy is one of the four priorities of the New Zealand Energy Strategy 2011–2021. The mix of energy sources within New Zealand is shown in Fig.1. Currently New Zealand Transportation energy accounts for thirty eight percent of total consumer energy, the highest energy sector by far, and is powered largely by fossil fueled sources.
Fig.1 Energy Supply and Demand Balance (NZ Energy Data File, 2011)
Drivers for change - State of the Environment
In 1956 M. King Hubbert fitted a bell curve to oil production statistics to the lower 48 states in the U.S. so as to demonstrate his theory that production would continue to rise for 13 years before peaking in approximately 1969. This hypothesis proved correct. Colin J Campbell and Jean Laherrere in their article "The End of Cheap Oil" (Scientific American, March 1988) state that "what matters is when production begins to taper off, as from that point prices will continue to rise unless demand declines proportionately". The same article reveals that in the 1960's global discovery for oil peaked and has been declining steadily from that time, the oil conglomerates having found ninety percent of oil reserves. The predicted decline is shown in Figure 3 below, taken from the Peak Oil Association founded by Campbell.
Fig.3 The Hubbert Curve (Association for the Study of Peak Oil and Gas)
The International Energy Association projects a scenario for oil consumption based on IPCC targets, the focus being to minimise fossil fuel usage. The graph depicts a decline in line with Hubbert's bell curve containing scenarios for peak oil and factoring in targets to minimise consumption. In line with this forecast for oil supply, New Zealand should be preparing for a society less reliant on fossil fuels and utilising technoligies with higher levels of energy efficiency.
Fig.4 International Energy Association - fossil fuel scenario based on IPCC targets (IEA, 2010)
Figure 5 shows that the global concentration of CO2 has increased from 280ppm in pre-industrial levels to 396ppm, as recorded at Mauna Loa in August 2013. A cause for concern is the increased acceleration in anthropogenic greenhouse gas concentration over the last decade. Currently, CO2 levels are increasing at a rate of ~2ppm per annum, and are already in the dangerous zone.
The impacts of freight transportation on energy consumption
According to the Ministry of Business, innovation and Employment (MfBIE, 2012), rail is the least energy intensive mode for freight transport.
Freight comprises of road, rail and coastal shipping. Freight activity is measured in freight tonne-kilometres. The energy consumption within this sector increased by 14 PJ over the period from 1990 to 2011. The energy intensity would have increased to 18.7PJ based on data supplied by the MfBIE, but efficiency gains in both rail and road transportation due mainly to more fuel efficient vehicles, better maintenance and loading performance enabled a 7.3 PJ energy saving. These improvements resulted in rail freight becoming 43% more energy efficient per tonne-kilometre travelled, achieved mainly in changes in operational efficiencies (Fig.4).
Road freight continues to dominate within the sector, increasing from 54% to 67% over the period from 1990 to 2011. Over the same period coastal shipping declined in mode share from 27% to 16% while rail was relatively flat, decreasing from 18% to 16%.
Transportation efficiencies are reflected in the total capacity or utilisation of the mode share. This is reflected in the efficiency drop shown in Fig. 6 that occurred due to the global recession in 2008. In 2010 the levelling off of freight volumes caused an excess of freight volume capacity, due to volatile demand, that resulted in a less efficient and more energy intensive freight sector.
Fig.6 Changes in Energy Use 1990-2011 (Ministry of Business, Innovation & Employment, 2012)
Fig.8 Energy Intensity of Freight Transportation Modes (1990-2011) (Ministry of Business, Innovation & Employment, 2012)
The impacts of passenger transportation on energy consumption
The passenger transport sector, which comprises cars, busses, passenger rail and domestic air, increased consumption by 39 PJ between 1990-2011. Car usage decreased by 1.7% between 1990 and 2004 to a level of 0.1% from 2004 - 2011. New Zealand has the second highest private car ownership in the OECD at 592 cars per 1000 population in 2011. It is second only to the United States on this statistic. As of 2005 the number of cars per capita is the highest in the OECD at a rate of 607 per 1,000. Italy followed with 595 and Switzerland with 520 per 1,000. The distance kilometres travelled show a marginal increase in car energy consumed whereas the passenger rail statistic has dropped significantly (Fig. 9). Passenger rail has undergone vast improvements in energy efficiency, mainly due to more efficient passenger loads. Bus transportation had a reduction in efficiency of 17% during the period 1990-2011. This was due to a lack of load capacity and operational issues such as traffic congestion (MfBIE, 2012).
Fig.9 Changes in Energy Use (1990-2011) (Ministry of Business, Innovation & Employment, 2012)
Fig. 11 Energy Intensity of Passenger Modes (1990-2011) (Ministry of Business, Innovation & Employment, 2012)
The graph above shows a breakdown of modes of transport utilised in different regions of New Zealand. As is evident, cars and vans dominate in every area, whilst rail transport, which is incorporated into general public transport alongside bus and ferry, currently contributes minimally to shares of trip legs in every region. However, it is interesting to note that the three case-studies that will be examined below (Christchurch, Wellington and Auckland), all have higher than average rates of public transport usage, most notably Wellington at 5%.
Barriers to change
The literature highlights several barriers to addressing the impending energy crisis and need to mitigate climate change, the most significant of which are summarised below:
This form of study or assessment requires that a scenario analysis for any given project must be in the context of a societal problem for which solutions are being investigated. This approach is best suited for long term decision-making for major infrastructure projects such as national passenger rail development. During the process a target is set that could comprise for example, a reduction in car kilometres travelled or rail passenger utilisation targets, and the means are determined to get there without any political objectives being realised. From this a strategy is formulated in order to implement the required change.
The concept of hyperbolic discounting is the human tendency to discount the anticipated effects of an event that is further away, such as the end result of peak oil or rising CO2 levels, with a strong bias to favouring things that are happening soon. This undervaluation of the future is formed as part of a survival instinct causing people to persue short-term rewards and potentially leading to long-term disaster. Understanding the effect of hyperbolic discounting can assist in improving decision-making within planning and implementation stages of new environmental policies. Hepburn (2003) demonstrates how the use of hyperbolic discounting in environmental regulation can have devastating consequences by not committing to much needed development aimed at mitigating adverse environmental effects such as those previously mentioned. Hepburn suggests investigating the possibility of irreversible investment in renewable technologies, such as an electrified rail network, that would provide a mechanism to commit later generations to the plan. Winkler (2006) reinforces the notion of a committment mechanism, stating that without it, investment in environmental protection would most likely not be carried out. Winkler points out that not only can cost-benefit analysis of long-term environmental projects lead to an infinite procrastination, but that the investment in each given period is under the direct control of that generation. The ex-ante investment plan is optimal if the marginal welfare loss at that time equals the present value of the future marginal welfare gains of this investment. Consequently, from the point of view of the later generation the plan is only suboptimal and is likely to be re-evaluated. At this stage there are no means that would ensure the implementation of the ex-ante optimal plan as the enforcement power of the present generation is very limited.
The Rebound Effect
The rebound effect is an increase in consumption that can occur as an unintended side-effect due to the introduction of a policy, market or technology intervention implemented in order to achieve improvements in environmental efficiency. The rebound effect refers to the lost part of energy conservation due to the fact that "one tends to consume more productive services when gains in efficiency are made" (Berkhout, Muskens & Velthuijsen, 2000). The "price induced rebound effect" occurs in cases when efficiency measures result in the reduction of costs and increased consumption occurs due to additional comfort being provided without incurring additional financial expense. The improvements in efficiency thus have an effect on demand for energy consumption. This is triggered when efficiencies increase causing the overall price for consumer energy, such as fuel or electricity to fall, which in turn enables more energy to be consumed. The European Commission in their report "Addressing the Rebound Effect" (April, 2011), determine that the most understood variation of rebound effect is the "direct rebound effect" where more consumption of the same product occurs as the result of a lower price.
Current & Future State of Rail Coverage in New Zealand
Passenger & Freight Rail
Ownership of New Zealand's national rail network is vested in KiwiRail Holdings Limited, and the primary operator is KiwiRail, which operates both freight and long distance passenger services. The condition of the rail network under this form of privatisation has significantly declined since 1993, with patronage falling to a low of 11.7 million in 1998 (KiwiRail, 2012a). Accompanied with this has been an infrastructural deficit in the industry and diminished public confidence in the system (NZTA, 2009). Conversely, this state of affairs has been accompanied by an accelerated increase in the amount of freight moved by rail, becoming an integral part of the country's economic life-blood. As of 2013, it carries approximately a third of all New Zealand's exports (Ministry of Transport, 2013c).
Figure 14: Map to show the extent of rail coverage in Aotearoa New Zealand
In light of this, The NZ Transport Agency's 2009 on "Promoting Sustainability in New Zealand's Rail System" documented that "the greatest opportunity for promoting sustainability in the rail system would be for rail to make up a greater proportion of the national transport task, particularly for freight" (p.8). Documents from New Zealand's Ministry of Transport and KiwiRail's future business models follow this perspective, showing that rail transport will, and continue to be, heavily geared towards freight operations (KiwiRail, 2012a; McGimpsey et al, 2009; Ministry of Transport, 2013a; Ministry of Transport, 2013c). However, preference for expanding freight services in New Zealand comes at the expense of advancements in an already unequal passenger rail network throughout the country. As is shown by Figure 14 above, obtained from MoT's website (Ministry of Transport, 2013b), only four long-distance routes remain, the TranzAlpine between Christchurch and Greymouth, the Capital Connection between Wellington and Palmerston North, the Northern Explorer between Auckland and Wellington, and the Coastal Pacific between Picton and Christchurch. This appears to be a situation that will remain into the foreseeable future, with KiwiRail's 10-year Long-Term Plan, Turnaround Plan and Statement of Corporate Intent for 2013-2015 failing to address this obvious lack of passenger rail coverage south of Christchurch (KiwiRail, 2010 & 2012a). In truth, the overall disparities between North and South Island long-haul passenger rail coverage is not directly mentioned at all. Rather, the documents emphasise the prosperity and potential of freight rail, which is projected to grow by 50% by 2030 and 75% in the volume of loads carried (KiwiRail, 2012a). Indeed, current investment trends focus solely on re-configuring and updating the quality and number of locomotives and wagons, whilst improving the Auckland-Wellington-Christchurch freight corridor.
The Ministry of Transport, although recognising that rail travel is a effective mode of transport, only assimilates this idea to transporting high volumes of heavy freight and managing large commuter numbers in Auckland and Wellington. In light of this, long-term attempts at reinstating the significance of commercial rail travel in New Zealand, especially in the South Island are framed by an immediate need to acquire funding from customer revenue and private investment (ibid.). Furthermore, NZTA (2009) highlights that the most overwhelming barriers to the promotion of a sustainable, economically viable, socially appropriate and environmentally sound passenger rail system in New Zealand are linked to its current under-performance and inability to provide adequate levels of service to satisfy the demands of potential users.
Although only about a third as many New Zealanders travel by train now as they did in the 1950s, a possible commuter rail boom may occur if New Zealand begins to feel the effects of high petrol prices, traffic congestion and concerns of climate change. Therefore, a 'quiet optimism' (KiwiRail, 2013) underlies KiwiRail and the MoT's discussion on the future nature of rail coverage in the country.
Potential Causes for Current Coverage
Although natural advantages to rail travel exist over road transport, such as reducing the travel time and difficult topography, capital investment to fund reinstating or creating passenger links, be they inner or inter-city or long-haul, is over-determined by population densities (McGimpsey et al, 2009). For this reason, KiwiRail states that outside of the North Island, these figures are generally too low to warrant any considerable funding (KiwiRail, 2012a) . And overall, long-haul and inter-city rail travel numbers are vastly inferior to those of inner city and commuter links. Of the 21.49 million passengers that use New Zealand's passenger rail services every year, 21 million travel on the Wellington and Auckland commuter links, whereas only 420,000 utilize the long-distance Tranz Scenic services (ibid.). These indicators are figures that support a reluctance by KiwiRail to invest themselves in this sector of the country's rail services, but fail to consider an interchangeability of the cause and effect relationship: questions must be asked about whether a lack of initial coverage leads to small utilisation numbers, or whether this occurs in the opposite direction.
Therefore, it is perhaps not surprising that a $2.15 billion investment in upgrading and electrifying New Zealand's two premier cities' rail passenger infrastructure is the dominant discourse on future investment trends in this form of transport (ibid.).
Conversely to this, any passenger rail investment south of Christchurch beyond heritage tourist routes such as Taieri Gorge Railway, requires considerable private investment in improving every aspect of operations, from infrastructure to customer service. Laird et al (2001)highlight the fact that until the early 21st Century, long distance passenger rail services in New Zealand were able to operate without government subsidy. In their most recent media statement on the matter in July 2013, KiwiRail explained that 'discussions are continuing (to find a long-distance partner), but no decision has been made and the business will be run as normal in the meantime' (KiwiRail, 2012b). NZTA (2009) place this sentiment in the context of rail not being fully integrated in policy and wider social discourse on current and future transport decision-making and funding processes. Coupled with the obvious need for monetary funds, KiwiRail's Statement of Corporate Intent 2013-2015 proclaims that public perception of the viability of rail travel 'has eroded over the past 15 years in many areas through lack of maintenance investment that has resulted in poor transit times and unreliable services' (KiwiRail, 2010:2) .
Lack of integration is a common theme throughout the literature and policies concerning future trends in transport investment prospects in New Zealand. The aforementioned statements by KiwiRail seemingly contravene the long-term vision for transport in the country, outlined in the New Zealand Transport Strategy (NZTS). The document states that by 2040 "people and freight will have access to an affordable, integrated, safe, responsive and sustainable transport system". The National Rail Strategy to 2015 (NRS), released in 2005, expresses the government's objectives under the NZTS' core headings:
Figure 15: Table to show the core objectives of the National Rail Strategy to 2015 in the New Zealand Transport Strategy
It is interesting to note that these objectives seemingly call for the promotion of and investment in passenger rail services in policy plans, but in comparison with the Turnaround Plans and Statement of Corporate Intent from KiwiRail, disparities still persist. Indeed, the NRS is not KiwiRail policy.
The preceding text explains some of the indicators for current and future trends in New Zealand's rail system. Regardless of the energy advantages of stimulating rail, it can be argued that sustainability as a core guiding principle for transport planning in New Zealand has yet to be realized in a practical form (NZTS, 2009).
New Zealand's three largest cities and passenger rail
The three largest cities of New Zealand are Auckland, Wellington and Christchurch, all respectively being the major hubs for the surrounding areas in New Zealand. The council of each individual city has a differing structural approach to public transport plans, most notably for passenger rail. The one thing that they have in common is the projected growth of each city in the terms of population, the increase of public transport use, the increase of private transport vehicles numbers and the room for large improvement of the public transport sector. The issues around private transport is not just the increasing congestion and emissions that are increasingly becoming more important to people, it is also the social impacts of injuries and deaths that cause huge cost to the medical system each year, along with the trauma of lost family members. The answer of passenger rail gives a suitable resolution to these issues (Jakob et al, 2006).
Figure 16: A population graph showing the projected growth of New Zealand's largest cities up to 2041, putting emphasis on Auckland City and the large growth predicted.
Figure 17: Graph comparing patronage between New Zealand's largest cities.
Auckland has a public transport system in place in the form of bus, ferry and rail, but the percentage of trips in Auckland that are via private transport is around 85%, a substantial amount that leaves only 15% between the different forms of public transport. This statistic is followed up by the figure that approximately 15 000 join Auckland's private car numbers every year. This continual increase is only going to add to the social costs of transport through death and injury, with the cost of medical care and loss of workforce (Jakob et al, 2006). In addition, passenger rail is growing within Auckland City with patronage from the years 2011-2012 rising from 65-70 million passengers, this trend helping to prompt the decision to create the future plans to develop passenger rail in Auckland City.
Figure 18: This is an old graph, but shows the cost of loss of production caused by private motor vehicle accidents, which has been rising over the last years due to increased numbers on the road.
The Auckland City Rail Vision is set to see a new single system approach to benefit Auckland in many ways around economic, environmental and social means. Combined with the fact that the city is seeing the fastest growth in its population of an any area within New Zealand, rail was recognized as the sole sustainable option with which the city can move forward and achieve its goal of being a desirable city to live in on the international arena(Auckland Council, 2013b).
Shifts to implementing electric trains are part of an effort to reduce costs and sustainability in the long-term as well as to diminish greenhouse gas emissions, of which transport currently accounts for 39.7% in Auckland. This new infrastructure will go some way to helping the city to reach its reduction targets of a 40% drop by 2040 (based on 1990 levels). The three components required to address current congestion problems, accommodate future business and population growth, and move to a single transport system are to:
• Improve and complete the existing road and rail network
• Encourage a shift towards public transport
• Support environmental and health objectives through walking and cycling.
The council and planners are looking to implement better design around how public transport is constructed so as to allow easier flow and increase the safety of commuters in-between home and public transport(Auckland Council, 2013b). This vision clearly looks to improve the image of rail to Aucklanders, which is already on the rise. The transport system must be integrated into future land use development plans to ensure that transport links support growth centres and transport corridors as set out in the council's plans. This will necessitate improvements to the existing road and rail system. Several connections must be completed to optimise investment to serve the needs of Aucklanders (Auckland, Council, 2013a).
The Auckland City rail link future plan has very close connections to the central government, and within this seeks to create a delicate process of cooperation with the public, especially since the majority of funding will come from tax payers' money. This is justified by the fact Auckland alone brings in a third of New Zealand's GDP annually and what benefits Auckland benefits New Zealand.
Wellington can boost the most integrated public transport system out of the three largest New Zealand cities, but is not without its share of problems often being plagued by the unreliability of the passenger rail system (Greater Wellington Regional Council, 2011). The total amount of patronage for public transport within the Greater Wellington Region is approximately 36 million per year, with over just over 10 million being the use of the passenger rail system . The statistic that 14% of Wellington's inhabitants are wholly reliant on the transport system gives an indication of the ability of the Wellington public transport system (Greater Wellington Regional Council, 2011).
Figure 19: This graph shows the projected increase of the Greater Wellington Region's public transport usage over the next three decades.
As shown in Fig. 19,Wellington has an projected increase in the usage of public transport. Currently underway is the improvement of the public bus system to increase user satisfaction and the planned upgrade and extension of the public passenger rail system (Greater Wellington Regional Council, 2011). In an effort to do this the Greater Wellington Regional Council has created a vision to achieve, "a modern, effective and efficient integrated public transport network that contributes to sustainable economic growth and increased productivity while also providing for the social needs of the community" (ibid.). The use of bus and rail seeks to establish a smooth integration that will allow access to public transport for the communities that are in need of it and to offer an attractive alternative to private vehicle use (Greater Wellington Regional Council, 2011). This is in an attempt to become more economically viable, but also to reduce emissions with a view to combating climate change and improving general public health. The basis for these changes takes inspiration from the European models of urban passenger rail in wanting to offer a service that Wellington's residents would actually choose to use. Like Auckland, the council aims for an all-around improvement of services so as to increase the general public optimism surrounding rail.
The only city in this study situated in the South Island, Christchurch is currently still recovering from the earthquakes and after-quakes that have troubled the city since 2010. Since the earthquakes the population of Christchurch has seen a period of decline, dropping below Wellington and leaving it the third largest city in New Zealand. Christchurch city has a public transport system in the form of a comprehensive bus network (Buchanan, 2006). Unlike Auckland and Wellington, Christchurch does not have a pre-existing urban passenger rail system within the city, only long tourist scenic rail trips that are struggling, reflecting the state and position of rail in the South Island as a whole. The patronage of Christchurch public transport pre-2010 was around 16 million per year, under half of Wellington's, a New Zealand city roughly the same size. However in comparison, Christchurch has a more successful integration system of all bus routes in the form of the Orbiter bus line that circulates the city regularly (Mees et al, 2010). Although this bus system is good, road congestion is still projected to increase by 40% by 2041. This statistic and the fact that 45% of Christchurch roads were damaged in the earthquakes leaves a good opportunity to implement rail in the rebuild plan (Christchurch City Council, 2012).
Christchurch's rebuild is a massive opportunity for the implementation of a public transport system that can successfully integrate passenger rail. Despite this, there is only a small recognition that plans should consider constructing a passenger rail network, and no explicit commitment as in Auckland or Wellington. Any rail emphasis that does occur is put on freight rail, a common theme in general KiwiRail plans as mentioned before. In addition, the desire to re-identify Christchurch as a 'bicycle city' is considered during the rebuild due to the ability to restructure pre-existing traffic corridors. The overall vision for Christchurch can be seen along the same lines of both Auckland and Wellington, striving forward to create a sustainable, easy, reliable and safe transport system that will continue to benefit future generations as they seek to achieve this in the coming decades (Christchurch City Council, 2012). However, the specific characteristics of the plans are not yet fully in motion, and the likelihood of passenger rail being developed in Christchurch appears very small.
Social obstacles to passenger rail development
There are two main reasons that passenger rail is contested and hard to implement in New Zealand cities, namely financial costs and the existing layout and design of New Zealand cities. The aforementioned concept of hyperbolic discounting is also relevant here, as it is often difficult in planning to convince stakeholders to recognize the long-term benefits of plans that are disruptive and costly in the short-term. This is exemplified in the current global economic recession.
The development of passenger rail is always going to incur high costs, the $81 million that will be spent in the Greater Wellington Region being a prime example of this. An amount that is likely to rise in the near future, it is going to be shared between the regional council and central government agencies (Greater Wellington Regional Council, 2011). This cost is even higher in the Auckland City Rail project with a predicted $2.86 billion needed to complete all rail projects. Again, it will be shared between the regional council of Auckland and central government agencies, meaning that even those not living and using the service in Auckland will be funding the project(Ministry of Transport, 2013a). The figure of $40 billion that has been attributed to the planned rebuild of Christchurch makes it the most expensive ever undertaken in New Zealand. The strong likelihood of additional costs on top of this make the issue of major importance to taxpayers.
Layout and Design
The problem of layout and design is one that adds extra costs to the development of passenger rail within New Zealand cities, due to the fact that many areas need space creating from nothing. The near $3 billion costs in Auckland are mainly due to the fact that no physical space exists above ground to construct a rail network, meaning that plans must be initiated under-ground (Ministry of Transport, 2013). Conversely, Wellington's pre-existing rail has the ability to be adapted, minimizing the cost of development, whilst the rebuild of Christchurch sits at the opportunistic point for rail infrastructure to be constructed which will only get harder to implement in the decades to come.
With regards to the current indicators available that are concerned with future investment trends in rail infrastructure in New Zealand, it appears that although wider policy documents indicate a need to promote the development and subsequent utilisation of passenger rail services in all its forms (metro, commuter, inter-city, long-distance), there are disparities in KiwiRail's investment plans. Most obviously this concerns the lack of a coherent and robust programme to provide long-distance passenger rail travel throughout the country. This is due to a number of reasons, most notably lack of an investment partner and economic viability in areas that lack dense populations, this latter aspect being most evident south of Christchurch. Despite these trends, the prosperity of freight rail infrastructure has been realised, and there is going to be heavy investment in expanding the network and carrying capacity of this mode of transport in the coming years. In addition, an examination of investment trends in Wellington, Auckland and Christchurch has shown that passenger rail in the form of metro and commuter links are high on the agenda of transport plans in the first two cities. Although there are realistic opportunities for developing passenger in Christchurch, these are yet to be realised in policy documents. With regards to the energy efficiencies of rail, this is an aspect that has been realised internationally. For example, many European countries have long-term investment plans for replacing domestic air travel with high-speed underground rail systems. This is to complement existing rail infrastructure. Conversely, despite the potential for a widespread passenger rail network powered by abundant renewable energy resources, New Zealand appears to be solely investing in rail freight and inner-city metro and commuter links.
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