As it gallops to implement its ban on new offshore oil and gas exploration permits, the Government is ignoring an inconvenient truth, says Gavin Evans.
Powerco’s quiet message on the Government’s proposed offshore exploration ban was sobering.
Even with the most upbeat outlook for new clean technologies, New Zealand still needs to find another 3,000 petajoules of gas through to 2050 if the country is to maintain a reliable electricity system, while also using gas, biomass and electricity to reduce coal use by heavy industry.
And that’s on top of the current – and fast dwindling – 2,000 PJ of known gas reserves. With no new discoveries or developments, annual gas production will halve by 2026, the Government’s own data shows.
In that environment, stopping offshore exploration – which to date has delivered the country’s biggest gas resources – is an “unreasonable and unnecessary risk,” Powerco told Parliament’s environment select committee last week.
It was not the first time submitters cited the 3,000 PJ figure – derived from the Productivity Commission’s study on ways to deliver the Government’s net zero economy by 2050. But I suspect it was the first time committee chair Deborah Russell, if not her Government colleagues, really took on board its significance.
Russell, keen to resist any “magical thinking” in the Government’s plans for long-term emissions reduction, wanted to understand the assumptions underlying the gas forecast.
The result, Powerco regulatory and pricing strategy manager Andrew Kerr said, is pretty much the same for all the commission’s scenarios. In meeting the 2050 targets the country could expect to need an additional 2,900 to 3,200 PJ of gas.
Onshore Taranaki still has a lot of gas to give up, as do the offshore Maui, Pohokura and Kupe fields. But even if all the upside potential from those existing fields comes good, the country would still be about 1,100 PJ light.
That’s another Pohokura to discover, or a couple of Mangahewas, or three Turangi-size fields. Those numbers triple in the unlikely event that further drilling in existing fields converts none of their contingent resource into reserves.
It’s an inconvenient truth that risks being lost sight of as the Government gallops to implement the hastily thrown-together ban it announced in April.
And that’s a real risk given how dishearteningly polarized the debate has become.
Where is the commitment to science and evidence Labour and the Greens spent years shouting for?
All submitters last week felt aggrieved – either by the lack of action to date, the lack of consultation, or the reckless action now being proposed.
Worst of all, most have stopped listening to each other. That committee members would quibble with submitters over whether unemployment or climate change is the bigger contributor to youth suicide was particularly distasteful.
But that just shows how much understanding has been lost since the Rio earth summit laid out the risks to the climate 26 years ago.
For many, climate change is no longer about how best to reduce emissions. A lot of the public genuinely believe global warming is something the oil and gas industry has done to the rest of us and that shutting down the sector solves the problem.
They misunderstand that oil and gas contributes only about 40 percent of global emissions – and that global use of lower-emitting natural gas will need to increase during the next two decades to meet rising energy demand while also replacing oil and coal use in things like power generation, steel making and petrochemicals.
Many people are convinced the world’s hydrocarbon reserves are an enormous homogenous stockpile – all of which is doomed to be “burned” – as if the world is powerless to discriminate by geography, by emissions intensity or by end-use. Carbon capture and storage doesn’t figure in their thinking.
Not surprisingly, they are convinced oil and gas is a “sunset” industry and that New Zealand can play a proud leadership role speeding its inevitable demise.
They want to lead an international crusade for which they have no followers. And they are prepared to risk increasing emissions to do so.
The global oil and gas sector in 2050 will be vastly different – and probably much smaller – than it is today. The world will ‘burn’ less oil and gas in transport fuels but hydrocarbons will remain important feedstocks for materials. Some of those, like carbon-fibre and resins for laminated timber, may become much more important as low-carbon alternatives are sought for steel in aircraft, cars and buildings.
And New Zealand, an island in the Pacific with a unique dependence on highly variable hydro generation, will require gas for a long time yet to provide affordable dry-year back-up and to reduce its coal use.
It’s complex stuff, even for those trying to come at the issue with an open mind.
At least Greenpeace – which simultaneously opposes oil and low-emission nuclear power – was refreshingly honest before the select committee.
Global oil giants have lied about the climate impacts of their products for 50 years and have to go, senior campaign advisor Steve Abel told the committee.
“There is no future for the oil industry,” he said. “We have to wind this industry out of existence rapidly.”
Former Labour energy minister Pete Hodgson foresaw the danger in that kind of selective thinking. Fifteen years ago, the last time the country faced a rapid decline in gas supplies, he was busy accelerating construction of some of the country’s largest wind farms and working on an emissions trading scheme.
But he and finance minister colleague Michael Cullen were also orchestrating the development of the offshore Kupe gas field – including a debt guarantee for Genesis Energy so it could go ahead with a new gas-fired power station.
The country needed both gas and renewables if it was to have reliable energy supplies. A price on carbon and the ability to commercialise new technology would drive that mix in future and reduce emissions over time, he said.
Blame, and “occupation of the moral high ground”, Hodgson told a 2004 climate change conference, would not work.
“These approaches are the enemy of effective progress. These approaches amount to nothing more than elaborate finger-pointing at an industry, at an activity, at someone else.”
How things have changed.
Both Labour and National share the blame for this latest climate change policy train wreck. What did National expect after their eight years of inaction?
But neither party have shown any genuine interest in a bi-partisan approach on a multi-decadal policy. Nor have they even tried to build a community consensus on action in an area of really complex policy.
But a special prize must go to this coalition Government for a pretend policy that has simultaneously spooked international investors, misled the electorate on the security of our gas supply and may yet slow plans to electrify transport and industry – the two areas of the economy with the biggest scope for emissions reduction.
The foursome would have also done well to hear from Te Atiawa’s Liana Poutu – and other iwi groups – who also now know how worthless the Crown’s commitments on consultation with their treaty partners are.
They could have also taken the time to explain to Bill Simpson – a former lawyer now working in traffic control – their plans to deal with job losses in Taranaki.
Bill is convinced his Waitara hometown faces the biggest youth exodus since the town’s freezing works closed in 1985. I hope he’s wrong.
Fortunately, there is still time to “pause for breath” as Genesis Energy chief executive Marc England reminded his company’s major shareholder last week.
As other submitters noted, the Government’s claimed urgency is entirely spurious. Putting the issue back in the hands of the experts on the interim climate change committee would not only de-politicise it, it may be able to restore a decision-making process hopelessly compromised by the lack of consultation to date.