Further evidence shows that the Government’s sudden change in approach to offshore exploration opens it up to the risk of legal challenge, National’s Energy and Resources spokesperson Jonathan Young says.
“At a time of already plummeting business confidence it’s becoming more and more clear that the Prime Minister’s hasty decision to end new offshore permitting was not only ill-thought through but was also inconsistent with the law.
“That was confirmed in Parliament today when Energy and Resources Minister Megan Woods confirmed that she did not make a statutory decision before the Prime Minister sprung this backwards decision on New Zealanders.
“It knew this was an issue before the announcement because the Ministry of Business, Innovation and Employment had told the Government was at risk of a legal challenge, and we know these avenues are now being actively explored by the businesses unfairly affected.
“That’s because around $150 million had been committed in good faith to seismic surveying of offshore areas in the months ahead of the exploration ban announcement, activity which was signed off by Ms Woods, only for this bad decision to be dumped on them out of nowhere.
“The announcement has created real uncertainty around whether these firms will now be able to secure a return on their significant investments. How can businesses have any confidence to invest here when the Government acts in this way?
“What’s more, the Government knows its announcement was inconsistent with the Crown Minerals Act, which is why it is undergoing the charade of creating a statutory framework for a decision it made months ago. The Government knows it got it wrong.
“This is an unacceptable way of doing business with a sector that contributes hundreds of millions of dollars to the New Zealand economy and employs thousands of New Zealanders.
“Now New Zealand will have to bear the financial and reputational costs associated with a third world way of doing businesses – all because the Prime Minister wanted to time the announcement for her trip to Europe.
“It’s little wonder business confidence in New Zealand is plummeting.”
The Government’s goal of moth-balling natural gas power generation will come with a steep price tag, with the Government admitting that it is looking for businesses to be able to shut down during peak times, National’s Energy and Resources spokesperson Jonathan Young says.
“The Government’s ideological target for power generation will come with a steep price tag, and will mean New Zealand must juggle between excessive power prices or electricity shortages,” Mr Young says.
Energy and Resources Minister Megan Woods told select committee that in order to avoid higher power prices she is looking for industries to switch off during peak times, to keep the need for costly overbuilding of renewable generation as low as possible.
“There aren’t many businesses I know that can switch off, without having a significant effect on their productivity.
“If we really want to reduce poverty, lift incomes and enable people to get into their first home, we need businesses to be as active and successful as possible, so switching off seems an incredibly ludicrous suggestion.
“This sounds very third world to me and I am in awe that such common sense seems so rare in Government these days.
“Natural gas needs to remain as the contingency to meet energy demand, rather than Ms Wood’s suggestion of industry switching off to ease energy demand.
“Having natural gas as a backup in our system works perfectly. Gas is the lowest emission fossil fuel, keeps security of supply strong and prices affordable for New Zealanders.
“I’m all for renewable power generation, and I’m proud the previous National government increased renewable generation from 65 per cent to 85 per cent.
“But completely moth-balling non-renewable generation and just relying on businesses to turn the lights off when there are inevitable power shortages when the sun doesn’t shine or wind doesn’t blow isn’t the answer.
“Why Ms Woods would want to punish families and businesses is beyond me. Families don’t want higher prices or power shortages. This would definitely dampen enthusiasm for any transition to a lower emission future,” Mr Young says.
The Government has confirmed it has little idea on how to solve the emerging energy challenges, in spite of its plan to phase down non-renewable electricity generation around the country, National’s Energy and Resources spokesperson Jonathan Young says.
“The Government has promised to make New Zealand carbon neutral by 2050, including by phasing down non-renewable forms of electricity generation like gas-fired power stations. But in what’s become a startlingly regular refrain, it’s given frighteningly little thought to how to deal with the consequences of its ill-thought through decision.
“What we know is shutting down these energy sources and relying solely on renewables will put New Zealand at considerable risk of energy shortages. That’s a real concern.
“Gas supplies are looking at coming off their current plateau within the next couple of years and that combined with increasing electricity demand based on the drive to electrify New Zealand’s transport and economy, means we’re heading into an energy squeeze sooner rather than later.
“But Energy Minister Megan Woods yesterday claimed her answer to filling the energy gap the Government are creating is through consented but yet to be built wind turbines.
“Minister Woods says the planned wind farms could potentially provide 3,000 MW of electricity – however Transpower data shows they typically generate at only 30% of their capacity due to intermittent wind patterns and sometimes drastically less.
“The operator of New Zealand’s electricity network, Transpower, says the Government needs to more than double its present electricity generation, adding an extra 50 Terawatts to meet the net zero carbon goal. Essentially that means nearly eight times as many wind turbines in New Zealand than the Minister is counting on. Or if not wind turbines, then 25 more Clyde dams.
“It’s appalling but unsurprising that the Government does not have a stronger grasp of these very real issues. High level rhetoric about net zero carbon in 30 years’ time is one thing but having a plan to get there which doesn’t expose New Zealanders to real risks is another.
“The worrying lack of thought going into ensuring New Zealand has security of electricity supply should have households, hospitals, schools and businesses increasingly concerned.
“Ms Woods needs to be less gung-ho about the future and more focused on the present. She needs to pull her attention back to 2018 and her Government’s duty to New Zealanders.”
The assertion by Infrastructure Minister Shane Jones today that the ban on oil and gas exploration is “irreversible” is incorrect and misleading, National’s Energy and Resources Spokesperson Jonathan Young says.
“Not only was his Government’s ban on oil and gas exploration made without any consultation, without a cost-benefit analysis and without going through Cabinet, Mr Jones today claimed that it is also ‘irreversible’. That is not true.
“National has already assured the hardworking people of Taranaki, and rest of New Zealand, that if elected in 2020 we will reverse the decision to end oil and gas exploration.
“The significant negative economic ramifications of the ban was demonstrated this week when ASB dropped Taranaki to the bottom of its regional economic scoreboard, indicating that it will only get worse.
“And as advice from MBIE has shown, the ban will not reduce carbon emissions and is in fact more likely to increase global emissions.
“Not only is Mr Jones’ false claim another example of the Government’s shambolic approach to its decision to end oil and gas exploration, it also appears to be attempting to take the issue off the table as an area of debate going forward.
“While National pledges to reverse the ill-thought out ban in 2020, we encourage the Government to re-evaluate their decision now, in light of official advice that it will not result in lower carbon emissions. Reversing the ban will provide much-needed certainty to regional New Zealand and prevent the drying up of oil and gas investment in the short to long term.
“If the Government can make a decision based on a vibe, then it can surely reverse a decision based on facts and official advice.”
The horror show of the Government’s lack of process on the decision to end offshore exploration runs on and on, National Energy and Resources spokesperson Jonathan Young says.
“Without a shadow of a doubt the Government’s statements about how the decision to end oil and gas exploration was made were extremely misleading.
“Energy and Resources Minister Megan Woods’ repeated claims to have consulted with the hydrocarbon sector – a requirement of the law she operates under – have been revealed as baseless with the revelation that not even the Cabinet discussed the decision.
“In a reply to my questions in late April, Woods said, ‘On 9 April 2018 Cabinet noted my intentions regarding Block Offer 2018 and associated policy considerations.’
“Alarmingly the Minister is now undertaking a retrospective process, attempting to back-fill her decision by saying she intends to prepare a Cabinet paper in the near future setting out the full details of this new policy.
“This is unacceptable. Taking an oral item to Cabinet on a decision that affects thousands of jobs not only in Taranaki but right across the country is scandalous, and legally perilous.
“This lack of process, which impacts a whole industry and potentially thousands of careers, is the type of decision the Crown Minerals Act is designed to protect New Zealanders from.
“Further, the Prime Minister’s press release announcing decision says ‘Officials will begin work on a review of the Crown Minerals Act to ensure the Act is consistent with this announcement,’ suggesting the Government was aware its move may be inconsistent with the law.
“The Crown Minerals Act specifies a clear process by which decisions are to be made to minimise sovereign risk for investors and for the New Zealand Government, and those processes don’t appear to have been followed.
“That is why there is potential legal action being prepared against the Government.
“This Government has delivered a decision without consultation with the sector it affects; without a cost-benefit analysis from Treasury; without an understanding of whether domestic or global emissions will be reduced and without any appreciation of what a constrained gas market will do for prices.
“Now we discover there’s no Cabinet paper nor any considered discussion by the Cabinet.
“This is the worst form of decision making any government could impose on a community and an industry.”
The oil and gas industry will be devastated to learn that the Government has more law changes in store for it – changes it hasn’t been up front about, National Party Energy and Resources spokesperson Jonathan Young says.
“I understand the Government has hatched a secret Marine Mammals Protection Seismic Surveying Bill,” Mr Young says.
“This wasn’t in either of the two published coalition agreements. Exactly when they planned to reveal this to the industry and the wider public is anyone’s guess.
“I also understand it’s the Government’s intention to introduce the Bill this year, yet today is the first notion anyone has had that legislative change was coming to an area that already has very high environmental standards. The Government needs to explain what the Bill would do.
“Alarmingly we’re also hearing that beyond the Marine Mammals Protection Seismic Surveying Bill, the Government plans to very soon introduce legislation amending the Exclusive Economic Zone and Continental Shelf (Environment Effects) Amendment Bill.
“Again, the Government has said nothing about this, and if it’s true then there’s every reason to think it will have a big impact on the viability of the oil and gas industry.
“The Government’s primary defence of its completely irresponsible decision to axe new offshore oil and gas exploration has been that there’s enough potential resource in existing permits to transition away from them.
“But adding further legal and regulatory red tape to the areas covered by those permits will just do more to make them stranded assets.
“The permitted areas may contain reserves of oil and gas, but at this rate the owners of those permits aren’t going to be able to convince other operators to come into the market to help share the very high cost and risk of exploration – a practice known as farming out.
“What doesn’t make sense in all of this is that it’s happening at a time when natural gas is being seen as the most cost effective and environmentally responsible fuel to transition away from oil and coal.
“New Zealand’s natural gas resources could play a real role in reducing global greenhouse gas emissions, but this Government would rather make headlines by banning it.
“In doing so, they risk harming our domestic economy and the global environment.
“It’s clear that under this Government the door is closed to the resources sector.
“This is economic vandalism cloaked in naïve environmental sanctimony,” Mr Young says.
The Government’s decision to ban gas and petroleum exploration is economic vandalism that makes no environmental sense, National MPs Jonathan Young and Todd Muller says.
“This decision will ensure the demise of an industry that provides over 8000 high paying jobs and $2.5 billion for the economy,” Energy and Resources Spokesperson Jonathan Young says.
“Without exploration there will be no investment in oil and gas production or the downstream industries. That means significantly fewer jobs.
“This decision is devoid of any rationale. It certainly has nothing to do with climate change. These changes will simply shift production elsewhere in the world, not reduce emissions.
“Gas is used throughout New Zealand to ensure security of electricity supply to every home in New Zealand. Our current reserves will last less than ten years – when they run out we will simply have to burn coal instead, which means twice the emissions.
“The Government says that existing wells will continue but that’s code for winding the sector down.
Climate Change Spokesperson Todd Muller says the decision makes no sense – environmentally or economically – because less gas production means more coal being burnt and higher carbon emissions.
“Many overseas countries depend on coal for energy production. Those CO2 emissions would halve if they could switch to natural gas while they transition to renewable energy.
“By stopping New Zealand’s gas exploration we are turning our backs on an opportunity to help reduce global emissions while providing a major economic return to improve our standard of living and the environment.
“We need to reduce global CO2 emissions. But there is no need to put an entire industry and thousands of New Zealanders’ jobs at risk.”
Mr Young says the Government’s decision today is another blow to regional New Zealand, and Taranaki in particular.
“It comes hot on the heels of big decisions that reduce roading expenditure, cancel irrigation funding, and discourage international investment in the regions.
“This is simply Jacinda Ardern destroying an industry in the cause of a political slogan pushed by Greenpeace.”
The Prime Minister’s blinkered view on natural gas exports could cause New Zealand to miss a significant opportunity in contributing to a reduction in global emissions, National Party Energy and Resources Spokesperson Jonathan Young says.
“Switching from coal to natural gas reduces emissions by 50 per cent. If Jacinda Ardern would support the export of New Zealand gas to coal dependent countries, we’d be doing far more to reduce global CO2 emissions than we would by making this industry the sacrificial lamb of her climate policy,” Mr Young says.
“We must reduce global CO2 emissions, but the Prime Minister ought to think outside the classical Greenpeace bias.
"Global energy-related CO2 emissions stopped increasing for a third straight year in 2016 for two reasons - an increase in renewable electricity generation and also the switch from coal to gas.
“Climate Change Minister James Shaw has refused to support the export of New Zealand natural gas to coal dependent countries. Not only would such a move help reduce global emissions but the economic return for New Zealand would help our own transition.
"We need a Prime Minister who is pragmatic and won’t disregard genuine and significant opportunities to make a difference in the battle against rising emissions. Ending an industry won’t change our liquid fuel emissions profile.
“There is no need to throw an industry and over 8,000 New Zealanders under the bus. There is a win-win here. Let’s not miss it.”
Eugenie Sage has questions to answer on her reasons for turning down the sale of the Sullivan Mine on the West Coast to Bathurst Coal Limited against the advice of overseas investment officials, National Party Energy and Resources Spokesperson Jonathan Young says.
“Ms Sage needs to give an absolute assurance that her views as Conservation Minister and as a Green Party MP have not coloured her statutory role as Minister for Land Information,” Mr Young says.
“Bathurst is a significant investor on the West Coast and Southland, creating jobs and economic activity in each region.
“They have been allowed to purchase land previously at Nightcaps. What has changed in the meantime apart from the arrival of Ms Sage on the scene?”
Mr Young says that the Sullivan mine, while currently closed, is an existing mine.
“Therefore suggestions that it would not be available for mining under the Government’s policy of no new mining, is incorrect.
“Or is Ms Sage and her supporters now effectively saying that the sale of any mine now constitutes ‘new mining’ by the purchaser?
“There is already a concern amongst investors that this Government has put the shutters up for new overseas investment in regional New Zealand. If that were the case it would mean fewer job opportunities and regional stagnation, after a period of good growth.
“Ms Sage needs to properly explain why she rejected official advice and turned this sale down. She needs to be absolutely clear that she isn’t conflicted in making this decision.”
National Party Energy and Resources Spokesperson Jonathan Young is calling on the Government to make a positive decision on access for the Te Kuha Mine after visiting the site recently.
“The Te Kuha Mine is a crucially important regional development opportunity for Westport and the Buller region,” Mr Young says.
“Fifty-eight high paying jobs would make a big difference to a region that’s had some tough times. And those pay packets will flow into more jobs in the retail and service sectors in Westport.
“It’s a big deal for the town, and local MP Damien O’Connor should be supporting it.
“The Government’s new policy that will stop new mining on DOC land needs to be rejected. While National agrees that there should be no mining on schedule four land, not all DOC land has high conservation value, and modern mining ensures sites are rehabilitated with net environmental benefits to the region.
“A 497 hectare biodiversity management and habitat enhancement programme will be developed adjacent to the mine as well as a further 5000 hectare programme off-site.
“It’s important to understand that the high-grade metallurgical coal from this mine can be used for the development of products like activated carbon used in filters for water and air purification and in kidney dialysis machines.
“Te Kuha coal is most likely to be used for steel production. Today’s renewable electricity infrastructure requires high quality steel. Whether it is for wind, hydro or geothermal turbines, high pressure water and steam piping, or the cables electricity runs through, it’s definitely still part of our future.
“The West Coast coal fields are New Zealand’s only known source of metallurgical (coking) coal, which is valued internationally for its low ash and sulphur content. The world still needs this high quality coal, and will use it in a myriad of ways – other than burning it for heat.
“The Government is incredibly myopic if they think closing down the opportunity to extract such high grade coal is in the best interests for New Zealand or the West Coast, or will accelerate us to a net zero carbon future. That future needs the high quality products Te Kuha coal can create.”