New Zealand must bite the bullet and develop an energy plan for the next 45 years which will demand tough trade-offs on high prices and a clean and green country, warns the Business Council for Sustainable Development.

Today, the 50-member business group launches a report to stimulate debate about the options for energy needs to 2050.

The report has been sent to central and local government, and political parties have been given briefings.

Founding member of the group is Stephen Tindall's the Warehouse. Large energy players such as Meridian Energy, Solid Energy, BP and Shell are also members as well as medium-sized companies such as Living Earth and Urgent Couriers.

Business Council chief executive Peter Neilson, a former Labour cabinet minister, is hoping across-party support can be achieved for a national energy strategy not subject to a three-year election cycle.

"We are saying, `look, government, just tell people which path you'd like to go down and hopefully get a bit of broad- based support for that'."

Research shows seven out of 10 Kiwis believe there will be an electricity shortage in the next five years, says the report, and there is no long-term plan to keep the lights on.

The report depicts four likely scenarios for the next 45 years.

In all, fossil fuels are used to a lesser or greater extent. Renewable energy from hydro, wind and geothermal as well as biofuels for transport are part of all scenarios to varying degrees.

The tradeoff in one scenario is to pay high energy prices in return for strong growth and stringent environmental protection.

Another scenario relegates climate change policies, has less concern for environmental protection but keeps electricity and fuel prices competitive by intense development of local coal and gas resources.

Technology development such as clean-coal technologies, hybrid cars, fuel cell technology and making energy liquids from coal and gas are key parts of the 45-year story although not yet commercialised or widely available.

The four scenarios are:

* A growth path where New Zealand develops local coal and gas resources and energy prices remain competitive, we use more energy including imported oil and dilute climate change policy. The economy is still based on energy- intensive industries. Living standards remain high.

* Transformation. The economy moves from energy-intensive industries to a service-based economy. Energy prices rise to much higher levels. The Government sets stringent energy efficiency standards. Some industries relying on cheap power decline.

* Shielded. New Zealand moves to produce more of its own energy with government support where security of supply is the top priority. We develop more hydro power, local coal resources, biomass energy and biofuels. Energy- intensive industries are attracted and protected by subsidies and the resulting high taxes hinder economic growth.

* Conservation. Environmental protection is paramount and energy prices are high. Government intervention drives change in energy use through major energy efficiency policies. New Zealand slashes dependence on fossil fuels and energy intensive industries decline. Economic growth is low.

Neilsen said the business council preferred the transformation scenario and believed New Zealanders would be most comfortable with that scenario.

One of the risks was that new technologies did not eventuate or proved uneconomic.

Energy efficiency alone could not provide the answer.

"If you go on a strong growth path and we don't have, for example, clean coal technology it may mean we are going to get more emissions in the meantime. We are going to pay for it."

--------------------