Time for a rethink
When I asked Megan Woods, Minister of Energy and Resources, if she would support the proposed natural gas fed plant that 8 Rivers wanted to build in Taranaki, she claimed she has never said she wouldn’t support it, however in the next breath she said ‘‘what this Government is very clear about is we have sent very clear long-term signals to the market around what the future of oil and gas is in this country’’.
As a backdrop, the Government’s ban on new oil and gas exploration is across all onshore New Zealand, (except for Taranaki), and the total offshore exclusive economic zone.
If the issue around climate change is emissions, then one might think the Government would be encouraged to learn that the proposed facility ‘‘is built around the world’s highest-efficiency hydrogen production process coupled with a cutting-edge natural gas power generation system that includes inherent 100 per cent carbon capture’’.
If all that is achievable, then the Government ought to rethink their rationale of their exploration ban, especially concerning New Zealand’s vulnerable energy security and affordability.
But Woods’ ambiguous answer to the question whether she was for or against an emissions free natural gas plant, only creates the perception that the Government prefers abolition rather than innovation in the hydrocarbon sector.
There are several things that need to happen to facilitate an 8 Rivers type plant to be built in Taranaki.
First, the Government needs to enable carbon capture and storage, so that natural gas can become a truly clean fuel. This will require some regulations put in place.
None currently exist. I am not confident the Government will progress this, so I am working on this now and looking at examples from other countries, notably Norway.
Secondly, the future exploration ban the Government put in place, needs to be repealed, as gas reserves are decreasing and need increasing.
National has pledged to do this and I will be leading the charge on this. We fundamentally disagree with the Government’s ban at every level, be that lack of consultation, lack of scientific evidence, lack of economic analysis and lack of democratic process.
Gas is needed not just for industrial users, but it is important for our electricity generation.
An 8 Rivers size project needs a guaranteed supply for gas, as does Methanex. Production from both Methanex and an 8 Rivers plant, would displace higher emitting products that are currently on the market, with methanol also contributing significantly in reducing emissions in liquid fuels around the world whether that is land transport or sea.
More successful carbon capture and storage would enable gas peaker power stations to help us reduce our emissions footprint in electricity generation.
The 100 per cent renewable electricity goal by 2035 being promoted by the current Government is not as widely supported in the electricity sector as I would have thought, as the cost of achieving that would increase electricity prices substantially.
That in turn would deter industries transitioning to more expensive electricity. In turn, that slows down a transition to a low-emission economy. Natural gas electricity generation needs to stay as part of our energy mix.
In fact, as Energy and Resources spokesperson for the Opposition, I have met over 150 different energy sector leaders around New Zealand this past year. I ask them if they see a future for natural gas in New Zealand.
The overwhelming majority say yes. They see natural gas as having an essential long-term role in the supply of energy and electricity. Especially when the lakes are low, or the wind isn’t blowing, and we experience that occasional cloudy day; a natural gas power plant can be relied to instantly turn on when needed.
And because of that, we keep connected, we keep productive and we keep electricity prices lower.
Over the last two months, New Zealand has experienced unusually low lake levels and gas supply problems because of issues at the Pohokura gas pipeline.
The result being wholesale prices for electricity increased by 300 per cent mostly because of having to rely on more expensive imported coal for generation. So not only was electricity more expensive without gas, but emissions were higher as well.
I remain sceptical at the Government’s sense of reality when it comes to energy security. What we need is an energy system that does embrace innovation, that doesn’t pick winners and losers; but above all is reliable and affordable.
Natural gas electricity generation needs to stay as part of our energy mix.