Normal business in the House was put on hold on Thursday afternoon as Parliment went into urgency to debate the announcement that no further offshore oil and gas exploration permits will be granted.
Urgent debates are quite rare, occurring only once or twice a year and are only triggered in matters of national significance.
The debate was called for by National Deputy leader Paula Bennett who, in her speech, blasted the Government for its lack of consultation with the energy sector.
She also says the ban will do nothing to reduce emissions or the world’s supply of oil and gas.
“Instead, other countries will produce it and we will have to import it at a higher cost,” he said.
But Energy Minister Megan Woods was quite to fire back, calling out the previous National-led Government over its lack of action on climate change during its nine years in power.
She said the Government’s transition away from fossil fuels is good for the environment and the economy.
“We are not willing to put communities in Taranaki or anywhere else in this country what mining communities in England went through in the 1980s because the coal mines were closed down overnight and no one had the foresight to plan ahead.”
Earlier:
The economic reforms of the mid-1980s appeared to be top of the Government’s mind when announcing New Zealand’s transition away from fossil fuels.
On Thursday morning, Prime Minister Jacinda Ardern revealed the Government is banning all future offshore oil and gas drilling by axing exploration permits.
The 31 oil and gas permits currently active, which run out as far as 2030, will not be affected.
Speaking to media, Ardern pointed out numerous times the movement away from fossil fuels was a “transition.”
She was at pains to point out “no current jobs will be affected” by the Government’s decision, as it is a process that will be underway for decades to come.
“Transitions have to start somewhere – unless we make decisions today that will eventually take effect in 30 or more years’ time, we run the risk of acting too late and causing abrupt shocks to communities in our country.”
She referenced the economic reforms of the 1980s, colloquially referred to as “Rogernomics,” where the Labour Government embarked on a campaign of deregulation and market-led restrictions, as a way of illustrating this point.
Ardern says as the Government is giving the oil and gas sector years of notice, the impact on the economy will not be quite so severe as if the transition happened overnight.
“I have seen that happen once in the 1980s, I don’t want to see it happen again.”
Minister of Economic Regional Development Shane Jones, who was speaking at the press conference alongside the Prime Minister, was singing a similar tune.
“There will be those in the regions fearful of this transition.
“I say to them: ‘think back to Rogernomics when change was imposed on people such as my father, a farmer, who was powerless to deal with it.’”
Where will the jobs go?
Minister of Climate Change James Shaw says the announcement represents “the greatest economic opportunity in a generation.”
“It will create new jobs and new technology that our dependence on fossil fuels has held us back from for too long.”
The “transition” will be aided by the Government’s Green Investment fund, agreed to in the Labour/Greens supply and confidence agreement.
The fund will: “Stimulate up to $1 billion of new investment in low carbon industries by 2020, kick-started by a Government-backed Green Investment Fund of $100 million.”
The Treasury is seeking financial advisors tasked with seeking the best use for the money – they will report back in July.
As well as this, Ardern says many of the jobs – such as engineers – which will be lost due to the Government’s plans, will be available in other areas of the economy.
For example, working on the infrastructure for below-ground water pipes.
“There are needs in the future where we can very easily transition some of that specialist knowledge. We just need to make sure we have a plan for it and the onus is on the Government to make sure we are producing that plan.”
Energy industry blindsided
The move away from fossil fuels has been “well signaled” by the Government, Ardern says.
Last month, she met with Greenpeace protestors outside Parliament to accept a petition which was calling for the end of oil exploration. She told them the Government was “actively considering” the request.”
Hours later, in her weekly post-Cabinet Press conference, she appeared to downplay those comments.
“What I [was] pointing out was that every Government, at around this time of year, actively considers how it will manage block offers, that’s what we’re doing.”
Her comments left many in the energy sector confused about the Government’s position.
It is understood that at the Petroleum New Zealand Conference last month, Energy Minister Megan Woods was not able to give a straight answer to questions about the future of block offers.
Thursday’s announcement caught many in the energy sector by surprise.
“We are disappointed there has been no direct consultation with the industry and it is also a surprise given the Labour Party’s 2017 energy manifesto talked of continuing offshore exploration,” The Petroleum Exploration and Production Association of New Zealand said in a statement in reaction to the news.
But Ardern says she would be “surprised if they [the energy sector] were blindsided.”
“We have flagged our interest as party and as a Government towards moving away from fossil fuels. We have always talked about a transition and a lead time.”
She says Woods has met with many within the sector and the Government was aware of its views on the matter.
“If you indicate that fossil fuels are not your future, that means making decisions about the future of oil and gas exploration permits.”
Questions still remain
One of the biggest question marks of the announcement hangs over what will happen with gas.
Almost 30% of New Zealand’s net gas production was used for energy generation – 20% for electricity. Around 45% was used for petrochemicals, methanol and fertiliser.
New Zealand doesn’t import gas; but a lot of the gas that is extracted is used in the production of methanol, which is exported.
At the moment, it is impossible for New Zealand to import natural gas, as the right infrastructure is not in place.
Without a major find that could be monetised, different forms of energy would have to be identified and made accessible at large.
This is likely to mean as New Zealand transitions away from gas, a supply gap will likely form in the market.
Asked if the Government will need to begin exporting gas, the Prime Minister says: “we’re already indicating there is still potential in the existing permits that are already out there.”
Greenhouse gas emissions rising
Meanwhile, the latest inventory of New Zealand’s greenhouse gas emissions shows at as of 2016, there had been an almost 20% increase on 1990 levels.
Gross emissions in 2016 were 78.7 million tonnes of carbon dioxide – 2.4% lower than 2015.
Methane from dairy cattle digestive systems and carbon dioxide from road transport were the biggest contributors to emissions increase.
The agriculture and energy sectors contribute 49.2% and 39.8% respectively to New Zealand’s gross emissions.
113 Comments
There are so many solutions... first of which is to reduce demand. I've addressed the primary method for doing this elsewhere in the comments.
Far better to make a bold statement that result in reducing energy usage, increasing renewable energy generation, increasing societal responsibility in terms of the global ecology. The rather silly statement of stopping permits for future exploration, well... the primary result is to reduce the standard of living for people in NZ with the primary change being a small reduction in petro useage due to the large increase in energy cost. A more efficient method is to increase the tax on petroleum product usage... (yes, I realize that has been announced quite recently... although not in the context of conservation!).
Except we ARE reliant on oil and gas !
Do you drive a car ?
Was that car brought here to NZ on a ship driven by oil ?
Do you buy food delivered to the supermarket with an oil powered truck?
Do you use anything made of plastic ?
Do you drink beer . delivered in a truck and made using gas ?
Do we rely on milk to keep our economy going ? Is it not collected from the farm gate with a truck ?
Ever painted anything ...... like your house ?
Has your family been to school ?
Have you ever used the health system ?......... because oil revenue royalties pay for health and education at around $300 million a year .
We are not Venzuela , we are a diversified economy with the rule of law and 90% employment , but this rabble rousing mob of lefties would prefer it if we were Venezuela .
I said our economy. We export very little oil and gas. Existing reserves will keep us going for quite some time.
However we are at the bottom of the S curve of electric/battery adoption revolution. I cycle to work. People catch electric trains. Many people are already driving electric cars. I have friends with them. And every day I see more people on electric bicycles, which are not replacing existing cyclists, they are enabling people to get out of cars.
Trucks will be electric soon too. Our train network will be fully electrified by the time this move has an impact. It also doesn't have an impact on price, because we are part of the international market for oil. It'll have apply a small upward pressure on price internationally which is a step in the right direction for incentivising alternatives. All in all, this is a good move.
Oil royalties will fall through the floor as profitability in expensive places like NZ become uncompetitive, and our oil and gas sector goes the same way as our coal sector did. Just hopefully this way, it doesn't come with desperate cost cutting to maintain relevance that puts lives at risk.
You know what pays for my health system, mostly my income taxes and GST.
snap...(40%)
In terms of "where" this is indeed a very relevant question. We cannot do much more hydro except when we shutdown the smelter and even that would take a new power line. We do have lots of options for tide, wind and solar so we can double our capacity, but not without huge upfront investment.
Ultimately "where from" doesnt matter (its actually when), with both Peak oil and CC its a "we have to and really soon. The problem is almost no one wants to take that investment leap required not even the Green's and especially now they have a new female co-leader who seems to have little genuine interest in addressing our long term environment problems. Kind of got to the stage I hope the Greens score under 5% in 2020 and we see a clean out of the non-greens in amongst them.
I suggest double checking your info. Our electricity sector has about 75~80% from renewables sure, but renewables in the total energy mix is more like 40%,
"New Zealand has the third highest rate of renewable energy as a portion of primary supply in the OECD (after Norway and Iceland). 40% of our energy comes from renewable sources.
While we rely heavily on renewables, such as hydro, geothermal and wind to produce our electricity, 60% of our energy still comes from fossil fuels."
http://www.energymix.co.nz/our-consumption/new-zealands-consumption/
Boatman,
I am curious as to what you believe regarding Climate Change. Your post makes a number of valid points,though to claim that oil revenues pay for our health and education budgets is just ludicrous.
If you believe that CC is real,then as a signatory of the Paris Climate Agreement,we have committed ourselves to a significant reduction in our carbon emissions. The fact that our total emissions are tiny in global terms,is irrelevant. Every country needs to play its part. Apart from reducing the herd numbers,we still have no way of reducing our methane emissions,so we have to look elsewhere.
We can and should plant lots of trees and we certainly should stop using any coal as soon as possible.
To fall back on cheap insults-'rabble rousing mob of lefties' is childish.
if you do accept the reality of Global Warming-and the oil companies themselves have long acknowledged it,though not publicly,then we have to start moving the country in a different direction and as the Westpac report shows,the sooner the cheaper.,
I recognize that we are consuming the planet to death , but for actual measurable climate change I do not hold specific view, and am keeping an open mind .
In the meantime we do need to mitigate all forms of environmental damage and pollution as best possible
There is still not enough empirical evidence with hard data to prove irreversible climate change , or that we humans are 100% the cause .
I dont dispute that there the climate may well be changing, but this may be natural or cyclical , we just dont know for sure .
Bollocks Tim this is just appeasing the GREENS and is a frontal attack on big business .( in this case Oil Companies )
Why does she not BAN COAL MINING on the South Island while she's at it ?
i'LL tell you why .......The Unions would go ape-shit
Coal is way more pollutant to the atmosphere and damaging to the landscape than gas and oil , so why do we persist with Solid energy mining coal ?
Oil companies (big ones) in case you have not noticed have already deserted NZ with Shell leaving just recently.
As to your coal argument, this is on new oil not shutting down old oil. This then would or could apply to coal just as much.
Why does existing coal still persist? because because of jobs and votes, pure and simple, its down to vote loss.
Meanwhile you may have missed that Solid Energy's crazy plan to mine brown coal into synth-fuel collapsed, hopefully it will stay dead.
We will find clean energy solutions and the governments actions today will help in a big way to action these.
The worlds technology and its use is not static. Although this seems obvious I think around 90% of the population doesn't really understand this. Decisions like this make a big difference in the way NZ will see its future, invest and research for solutions.
... better recycling of plastics ... a tax on unrecyclable plastics ... a carbon tax ... push money into energy education and research .... incentives to reduce and to innovate ....
Or , just flap on about " transition " , and shut down a viable export earning industry .... SIGH !
Mostly wind as far as I'm aware. Meridian list their consented sites here, with >400MW of wind generation on the cards
https://www.meridianenergy.co.nz/about-us/our-power-stations/future-pro…
Genesis have a section at the bottom here, the example given is a consented up to 860MW wind farm.
https://www.genesisenergy.co.nz/assets
"In the short term, Genesis Energy's focus is to maximise the efficiency of the Company's existing generation assets and fuel supplies, and to purchase from the wholesale market effectively, rather than to build new generation assets.
However, the Company has a diverse portfolio of longer term generation growth prospects to increase capacity or to displace higher-cost generation in the future. These prospects include greenfield generation investments and opportunities for enhancing existing thermal, hydro and wind assets."
For reference, total installed capacity is ~10,000 MW according to Wikipedia, so these two companies have consents for wind generation adding ~13% to this. Other companies will have sites in the pipeline too.
Everyone seems intent to focus on "energy" as in burning oil in an internal combustion engine for residential use. It is so much more than that.
Without oil (and it's derivatives)
We have no:
- Minerals
- Metals
- Plastics
Large scale agriculture comes to a stand still as we have almost no fertilizer.
All infrastructure ceases as there are no
- Computers
- Electronics
- machinery
All this means, no:
Electricity
Food
Water
and seemingly most important for everyone these days - no smart phones.
We simply don't have any known product/products that are as versatile as hydrocarbons, and this sort of thinking is not going to create new ones.
Do you really, in your heart of hearts, believe that a tiny Pacific country banning exploratory drills will completely eliminate the use of oil worldwide, leading to no minerals, metals, plastics, computers, electronics, machinery, electricity, food, and water? And they call the left hyperbolic. Sheesh.
Is that all we're doing? I think most of this is about serving our own environmental interests - i.e. an interest in avoiding catastrophic oil spills in NZ. Is that a consistent moral position? That's the debatable bit. I agree this is verging on out-of-sight out-of-mind.
That is actually a very good question. If you look at starving ppl they will eat just about anything to stay alive today even if it means certain starvation tomorrow. So yes its entirely possible that we'll see such similar events to what you suggest elsewhere in the world if not here in the future as we get desperate.
.. the PM says that the transition has to start somewhere ... blithely ignoring the fact that pretty much everything in our world is in a constant state of transition ....
Along with bio-technology , artificial intelligence , medical sciences ,& telecommunications , the energy sector is undergoing a massive transition right now .... these are unstoppable forces swirling around us ... promising a healthier and cheaper future ... regardless of Labour & the Green's smug smiles and empty rhetoric ...
1. Go to http://sectorsdashboard.mbie.govt.nz/
2. Go to Sector Situation and Performance
3. Choose Petroleum and minerals under Primary
This move isn’t without zero upside as eventually we will have to move to more renewable sources however trying to force the issue will have more unintended consequences as many have pointed out particularly with the use of coal instead of gas for industrial purposes for example. Regarding their plan around “investment,” I certainly hope Jacinda means incentives for private investors who choose to invest and not to tax everyone and let the government choose who gets what however I think we know the answer to that.
That aside, I find it interesting that this ideologically driven move counters one of their other core principals of poverty reduction. Globally, nothing has done more for the reduction of poverty than affordable, reliable energy and capitalism/free markets and NZ is no different. By expediting this move I think we are at risk of lessening our earning capacity while spending more trying to develope alternatives rather than letting progression take its more natural course and having a smoother transition. I can see this path they just chose lowering our living standards rather than raising them as they no doubt intended to do.
"I can see this path they just chose lowering our living standards rather than raising them as they no doubt intended to do."
And that is EXACTLY what the Green party wants and is working toward that with complete foolishness ... completely disconnected from this world.
They cannot dare changing their minds or belief, it will mark their miserable END ... so they will walk the same stupid path till the bitter end !
The opposite is also true and in buckets. ie we have to move to renewables which takes time, decades. if however we are not well along this path then we will see energy shortages and huge economic strife result, this of course isnt "un-foreseen" its is wilfully ignored.
Poverty reduction and cheap energy, indeed sort of. Cheap energy allows us to grow whcih means we consume more plus more per capita while we are on a finite planet. simple math should ell you doing that for ever is impossible.
I very much challenge you assumption the transition will be smoother, natural yes, extinction can be a natural event. So really I see no basis of fact on your ideologically driven guesses.
This action will not prevent the production of a single drop of oil globally.
In fact it will result in more production because we will have to transport more imported oil - using oil of course.
And it will do nothing for the environment because we will just transfer production to countries with poorer controls and a worse record than ours.
No wonder Megan Woods and Shane Jones look in despair in the photos on Stuff.
... Winston has a problem ... ironically , 'cos usually in a coalition he is the problem .... but on this occasion , his bigger partner is coming over with some seriously flawed policies ...
How will that affect NZ First's support in the 2020 election .... if this government manages to last that long ...
Shane Jones impresses me more and more as time goes on. He's a pragmatist on the policies he doesn't agree with in principle - in many ways like Key was with respect to Accommodation Supplement, interest free student loans, etc.- but he also is prepared to let you know exactly where he would stand were he in the top spot. In my books that bodes well for his future in NZ politics.
LOL Hilarious..
You'll have to settle with how they reported him on this issue instead;
https://www.stuff.co.nz/national/politics/103043172/shane-jones-says-en…
That's what I was referring to.
"And it will do nothing for the environment because we will just transfer production to countries with poorer controls and a worse record than ours." I would not start talking about NZ as if our track record for the environment is anything to crow about. Hectors dolphin verging on extinction, (along with many others we allow continual hunting of species near extinction), several species we have made extinct already like the Moa, and to top it off we cannot even protect a few native Kauri & other plants. At best we can say we have not intentionally aimed for extinctions & destruction of all future use of land. Much like no one intentionally aims to kill children with city smog.
This is complete nonsense from the PM. The idea that no jobs will be affected is simply not true - there won't be new investment into the sector. Again a person who has never had a job in her life is trying to explain how the economy works. I guess Labour/Greens/NZ First have decided they don't want votes in Taranaki. Shane Jones champion of the regions - what a sad joke that now appears.
Ardern trying to prove her green credentials before applying to the UN
, while throwing our economy under the bus. Oil and gas producing countries will be laughing at the extreme naivety of our L plate government. They should not be allowed to virtue signal with our vulnerable economy. Renewables will be a long slow transition, and our little country doesn't need to be an early adopter experiment for tree huggers playing at government.
Oh dear, it's a bit of a shock to the system when a new generation takes over :-). As the tiny, relatively pristine country in the South Pacific that we are, neither do we need to be taking on the risk of deep sea drilling. When it all goes tits up, even if you're the US and it happens in the Gulf of Mexico - with all the might of population and heavy equipment to hand that they have... disaster.
You've likely not read this;
https://www.maritimenz.govt.nz/public/environment/responding-to-spills/…
And then thought about how we couldn't even manage to adequately respond to the Rena spill.
The plan that you link to is dated 2017, well after the Rena event. Therefore the Rena event proves nothing about whether the arrangements now in place could have responded to it.
Your comments here also show absolutely no awareness of the need for proportionality in emergency preparedness. Nothing is of such infinite value that no price is too high to pay to protect it.
Getting real was the engineering fault with capping around the Deepwater Horizon by the multinational leaving a multibillion dollar cleanup job to the locals and getting off with a rather small fine. Something NZ is completely unprepared to face and likely will have severe and permanent damages to the economy in affected areas (including screwing the fishing industry royally).
Oil and gas in Taranaki has a breathing space and time to transition (in theory) whether it will actually move is to be seen.
Meanwhile more than a few large ominous signs we ignore at our peril,
https://climatecrocks.com/2018/04/12/more-evidence-implications-north-a…
To the COL song sheet of tax and spend .............. we need to add the word BAN !
It seems the want to BAN just about anything they can think of .........
Ban foreign investment
Ban foreign home-buyers
Ban oil
Ban gas
Ban Diesel vehicles
Ban V8 cars
Ban all cars and ride a horse
Ban tax cuts
Ban live animal exports
Ban immigrants ( Winston Peters wants this )
Ban straight white men
As a long standing NZ First voter who left them for Labour last election - I'm likely to return - not because I'm disappointed in Labour but because I'm impressed with how they are working in this coalition. Hope next to see Tracey Martin get some runs on the board in education.
have you ever played a moded game? the one with oil fields?
What happens when you ahve used up all the local oil (and coal)?
Its actually great way to drive home how using up resources in a scale an individual can understand as that individual has to do all the work to get these resources.
Quest for Oil by Maersk Drilling? impossible you cannot get enough money to pay to drill the whole lot in the game, (although you can run out of money quite quickly). Those drill bits, rigs, exploration & geotechnical scans do not come cheaply. However that assumes the generational use & international use is fixed & limited. On international terms across multiple levels of generations (& population growth) well, it is enough to say it is a shame China ditched the one child policy and that more countries do not take that up as an ideal rather than a family size around 15.
My goodness, These Noobs are taking Oil industry engineers for ordinary plumbers who can transfer their skills anywhere including building infrastructure and underground pipes... They have NO idea how specialized and sought after most of these people are !...
So , we have nothing to lose ; a $ billion or so a year for 30 years to make few Greenies happy and spend more on supporting the 10,000 people who will lose their jobs and create new businesses to accommodate them - Super
I am guessing that we are really going to witness a special term in NZ politics , most probably will end up History's rubbish bin.
Those oil industry engineers are so specialised and sought for they do not come from or get education through NZ. There is no actual entry level engineering jobs in the industry here, neither any mid or senior jobs for NZ engineers in those roles. However there is training & employment overseas. The truth was that the industry was never going to improve the NZ employment opportunities. Unless hospitality is a new skilled engineer category.
Try only international companies & training now. Even the options for the last 2 generations of engineers has been overseas only. Overseas for both initial training and overseas for career development. The conferences & engineer pool in NZ has been shrinking for a long time (those companies were out of NZ & primarily based internationally a long time ago, you should check their tracks, NZ offices & hires are close to non existent unicorns for the past couple of gens). But sure a person in the boomer generation could get a job with a bit of grease and can do attitude. After all it worked for the Navy boys back then. Although they did not need to get 5 years of university first and compete with 2000 other graduates for a couple positions, (whereas even now there is not even the capacity for the Navy to take all interested & applicable candidates, trust me many grand kids & other young grads have tried).
Oh well - these sort of really dumb initiatives should be enough to finally push NZF and the greens below 5 % and bring about the inevitable COL demise.
This will all be reversed when reality strikes - BUT the damage for future investment has been done and is now irreversible.
If anyone is concerned about emissions - just remember Governments don't emit - Individuals and the companies that employ them do.
So the believers can start right now. No more flying, driving, gas for the home. Welcome to the stone age !
After reading the comments from Mr. Little and Mr. Shaw I now understand that this isn't really an environmental issue per se. Rather, it's about "sticking it to big oil". I think they know it will be harmful to the economy but they don't care since it hurts "big oil".
... it is truly amazing Mr Boatman ... I was so enraptured that Jacinda Ardern's Labour Party won the 2017 election ...
Relieved that the 9 years of sit on our hands and do nothing Gnats had ended ... the Jolly Kid was gone ... thank God ... good riddance to a populist lazy twat ...
... and yet now , just 6 months after Jacinda's ascension to the throne , I have gone from totally loving to absolutely loathing ... one half of one year to turn 180 degrees .... loving to loathing within a heart-beat ...
If I was the Leader.....
I would want to encourage self sufficiency in oil production.
I would rather have control of oil/gas production in NZ than be importing Oil from Countries that are run by despots and/or have a disregard for the environment. ( that would be hypocritical )
I would Rather have money flowing thru our own economy, than simply borrowing foreign exchange to import oil.
I would accept the need to lower emissions, and would work from the bottom up.
I would approach it at the individual level, possibly thru incentives and that encouraged both change and research. ( eg.. If all MPs halved their travel each yr, ... that would be a start ).
If each individual used less, ... that would make a difference.
On an individual level, people who could afford to take a moral and environmental stand, could transition, while those that can't afford it ( lower social economic group, marginal energy intensive businesses..etc, can transition more slowly, with the rest of the world.)
The process could be accelerated thru incentives...economies of scale etc..
I would try to influence, but not control, the natural evolution away from fossil fuels.
I realize that I am not wise enuf to properly understand the implications( social and economic ) of transitioning to higher cost environmentally friendly energy alternatives.
I realize that we are a small export trading Nation that , somehow, needs to be competitive.
I realize that fossil fuels are still the cheapest, most practical energy source that we use to power the economy.
This is excellent. It's so good to see proper leadership happen in this country. We could be world leaders in sustainability and environmental issues but sadly we are far behind. 2050 does seem too far away, and 2035 for 100% renewable energy is also too slow (we could achieve this far sooner, surely?) but at least it's a start.
I think the radical approach and announcement (without consultation!) of banning new oil & gas exploration permits is bold and decisive. That's what true leadership looks like - especially when it will benefit everyone long-term. Good work to the three parties involved for coming together to make it happen and stepping up, showing this country how it's done.
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