New Zealand has an ‘energy security crisis’ – Christopher Luxon

The coalition is making moves to respond to what the prime minister has called an “energy security crisis”, but none of the changes will come into force immediately.

A raft of measures outlined on Monday, aiming to ease New Zealand’s energy security and affordability, include a review of the performance of the electricity market.

Christopher Luxon called it a perfect storm for New Zealand’s energy security and affordability when the country this year had a dry winter.

“The bottom line is less gas means more coal. More coal means higher emissions because coal has around twice the carbon intensity of natural gas for the same amount of energy.”

“New Zealand can have abundant abundant affordable energy if we clear away the blockages and unleash investment in solar wind geothermal natural gas and everything we need to keep New Zealand moving.”

The government will also pass legislation by the end of the year to reverse the oil and gas exploration ban. Previously, the oil and gas exploration reversal legislation was only due to be introduced this year.

And regulatory barriers will be removed for the construction of facilities to import Liquefied Natural Gas (LNG). LNG is used widely overseas to provide flexible and scalable energy supply, and Cabinet has now agreed to legislation consents for an LNG terminal.

Cabinet has also agreed to:

• Ease restrictions on electricity lines companies owning generation – details to be confirmed later this year
• Ensure access for gentailers to hydro contingency – any changes will be progressed before Winter next year
• Improve electricity market regulation – details of the review will be finalised in coming weeks

Energy Minister Simeon Brown said New Zealand currently has inadequate supply of natural gas to meet demand.

“New Zealand needs abundant, affordable energy. That’s why the Coalition Government is taking a series of immediate actions to restore confidence to our energy sector and remove regulatory barriers that have stopped firms generating electricity or bringing in the fuel that Kiwis need.”

Brown said the past few weeks have shown the importance of an affordable and reliable supply of energy. He said the key issue is the supply shortage.

“That is the focus, we want to make sure we have competitive markets, that we have affordable prices and a secure supply of energy.”

“That’s the most important element of what we’re doing.”

Resources Minister Shane Jones added New Zealand is blessed with energy resources.

“Natural gas has drawn new industries to our shores, created well-paying jobs in our regions, and powered the producing, manufacturing, and exporting businesses that are the backbone of our economy.”

The prime minister hit out against the previous Labour government’s 100 percent renewable target by 2030 for putting energy security at risk.

“The reality is we didn’t need to be here if we hadn’t banned oil and gas in a cap handed way that the previous administration did. It’s a bumper sticker, post it note, didn’t-think-through the second and third order consequences and now we pay the price for that. So thank you Labour.”

Brown said the government was advised that since the ban was put in place, the amount of investment in terms of exploration activities in the country has reduced.

“That’s had a significant impact.”

Luxon urged opposition parties to support the changes.

“It would be the sensible, common sense thing to do if they genuinely cared about New Zealand’s energy security, a lower emissions future and hard working New Zealanders.”

Labour leader Chris Hipkins said the Coalition government has officially given up on tackling climate change.

Hipkins says there’s an abundance of renewable energy.

“There is a lot of already consented renewable electricity that could be built right now in New Zealand that the large electricity generating retailers are choosing not to build because it’s in their commercial interests to keep energy scarce and maximise profits.”

He says the Coalition is taking the country backwards by focussing on fossil fuels.

“The issue here is not that we’re short of energy, we have an abundance of renewable energy.”

Hipkins says Labour isn’t to blame.

“If you want to really start to apportion blame you could go back to 2012 when the mixed ownership model was introduced, and it said to the electricity generator retailers they should maximise profits instead of investing in new generation, because for the better part of a decade that’s exactly what they did.”

The Green Party said the move to enable the import of Liquefied Natural Gas is another step away from the sustainable and affordable energy network the country needs.

“Investing in fossil fuels in the middle of a climate crisis is like buying stocks in the Titanic. Fossil fuels are a sinking ship we cannot afford to tie our future to,” said Green Party Energy spokesperson, Scott Willis.

“We should re-invest profits from gentailers into enhancing our energy efficiency and bolstering our supply of renewable energy. Delaying this is partly why we’re in this situation now – but it’s not too late to turn this ship around.

On reviewing the market, Brown said the Electricity Authority and the Commerce Commission are also looking into the sector.

The government’s focus will be the market regulatory regime, and whether it is delivering competitive affordable prices.

“We all know we don’t have the affordable prices, but we want to ensure it’s competitive, and that we’re seeing that investment in New Zealand and that the regulatory framework can deliver at a time of great change.”

“We want to make clear to energy companies both in New Zealand and abroad that NZ is open for business. We need your investment, we need you to get constructing and we need more production and generation to power New Zealand’s economy.”

On power prices, and when New Zealanders might see prices drop, Brown said the changes are short, medium and long-term.

“The message to consumers at home is your retailers for the most part are well-hedged, but we need to make all of these changes … to protect their interests so that we’re not putting their power bill at risk over the long term.”

The government will also move ahead with their Electrifying New Zealand plan, including a package of reforms to make it “easier and cheaper to consent, build and maintain renewable electricity generation as well as electricity distribution and transmission” said RMA Reform Minister Chris Bishop.

Bishop said the government will make fundamental changes to the planning and regulatory settings in the country to support renewable energy production, in order to achieve their ambitions.

“It costs too much and takes too long to consent renewable energy projects.”

One of the changes is to amend the National Policy Statement on Renewable Electricity Generation and Electricity Transmission.

“They will be far more enabling and directive around the fact that the government wants more renewables and the transmission and distribution to facilitate that.”

The government will also introduce a Bill to enable offshore renewable energy to be in place by mid-2025.