Analysis: The Government’s approval of a new offshore oil and gas exploration permit conflicts with the best scientific evidence about what is needed to limit global warming to 1.5C.
On Tuesday, New Zealand Petroleum and Minerals (NZP&M) – which oversees oil and gas extraction as well as mining – reported that it had accepted an application from Greymouth Gas to search for fossil fuels offshore. It also announced the launch of the next round of bidding for onshore oil and gas exploration, which is the last round until after the election due to a pause on issuing by the Government.
Then on Wednesday, the Environmental Protection Authority (EPA) said an independent panel had approved the development of up to two more drilling wells in the existing Kupe gas field, also off the coast of Taranaki.
The first two decisions clearly conflict with the advice from the International Energy Agency (IEA) and International Institute for Sustainable Development (IISD), which have both said there can be no development of new oil and gas fields if the world is to keep warming to 1.5C.
“Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required. The unwavering policy focus on climate change in the net zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output – and emissions reductions – from the operation of existing assets,” the IEA stated in 2021.
The Intergovernmental Panel on Climate Change (IPCC) also reported last week that half of known gas reserves and 30 percent of known oil reserves must not be extracted to limiting warming to even 2C.
“Significantly more reserves are expected to remain unburned if warming is limited to 1.5C,” the IPCC found. This implicitly means searching for new reserves is not consistent with either 1.5C or 2C, in alignment with the findings of the IEA and IISD.
Climate Change Minister James Shaw told Newsroom it was “bonkers” for Greymouth to be seeking to find new fossil fuels.
“Why would you go looking for new forms of fossil fuels at a time when the whole planet needs to get off fossil fuels? That does not sound like a sound investment to me.”
To some degree, the Government’s hands were tied in all of these decisions.
The Greymouth permit was applied for prior to the Government announcing its ban on new offshore oil and gas exploration in 2018. While officials originally declined the permit, Greymouth took the Government to the High Court and secured an order requiring that the application be reconsidered.
“Since the High Court order in 2020, NZP&M has been engaging with Greymouth on the complex task of re-evaluating the bid under the law at the time it was originally considered,” officials said in a statement on Tuesday.
“The reconsideration of Greymouth’s application had to be carried out in accordance with the law as it was before the offshore oil and gas exploration ban came into effect. This has resulted in NZP&M granting the offshore petroleum exploration permit under delegated authority today.”
Energy and Resources Minister Megan Woods also emphasised that the decision had to be made under the old law and that it came from a permit issuing round initiated under the National government.
The soliciting of new onshore applications is the third of three onshore permitting rounds the Government guaranteed would occur when the offshore ban was announced. Late last year, Woods said there wouldn’t be any further rounds after this one until after the election.
“I am not committing to any further block offers now. Decisions will be made early in the next Parliamentary term when there will be a better evidence base of future demand,” she said at the time.
Finally, the EPA decision on Wednesday relates to an existing mining permit and can’t be easily overridden. The EPA was legally forbidden from considering climate change effects when deciding whether to consent the new drilling wells.
This action isn’t necessarily inconsistent with 1.5C. The IEA, IISD and IPCC all say some known fossil fuel reserves and further development of existing fields are still needed over the coming decades. However, they also say some fields will be shuttered prematurely, with the IISD saying 65 percent of existing production would have to be curtailed by 2050.
Overriding any of the oil and gas decisions made this week would have required new legislation which applied retroactively or stripped companies of their property rights, Shaw said.
“The principle is that if a right exists, it can’t summarily or easily be extinguished. That’s an important factor in the rule of law.”
There are still options to limit the harvesting of fossil fuels from any fields that Greymouth finds. One way the Government is already doing that is by reducing demand for oil and gas through speeding the electrification of industry and transport and through the carbon price.
“The primary way that we’re dealing with that is on the demand side by fixing the ETS, imposing a proper price on carbon emissions, things like the clean car discount which of course don’t use fossil fuels. All of that kind of stuff is where the thrust of Government policy is for the most part, to drive down demand,” Shaw said.
If Greymouth finds oil or gas, then it still has to apply for a mining permit to extract. Susan Baas, the national manager for petroleum and minerals at NZP&M, outlined that process in a statement to Newsroom.
“Among other things, when granting permits, NZP&M assess an applicant’s technical and financial capability, compliance history and assesses whether they will be highly likely to have the capability and systems to meet the requirements of health and safety and environmental legislation,” she said.
“In addition to a petroleum mining permit, before any development or production can occur, the applicant must get environmental approvals through the resource consenting process with Taranaki Regional Council.”
Because the permit area is within 12 miles of the coast, it is Taranaki Regional Council rather than the EPA that decides whether to grant consent. Unlike the EPA, regional councils are now allowed to consider climate effects when consenting new activities.
The Zero Carbon Act specifies that the Government must act in a manner consistent with 1.5C. However, in a recent court case, Crown lawyers successfully argued this was merely an “aspirational” goal rather than an obligation.
Shaw wouldn’t say whether approving new oil and gas exploration meant the Government is now inconsistent with 1.5C, but said it meant they now must “double down on everything”.
“We’re kind of only just in the zone of 1.5. You come back to our [Paris Agreement target] and the last analysis we did when we strengthened the target gets us to within a zone of probability around 1.5 but it’s certainly right at the very outer edges of that.”