Petroleum ban - wrong tool for right goal
Banning new oil and gas exploration is a crude and unnecessary way to achieve emissions reduction goals and blights New Zealand’s entire energy sector, says the BusinessNZ Energy Council.
There will be no overall reduction in global emissions, and potentially an increase in emissions as a result of this ban as global exploration from places with lower environmental standards fills the gap left by our reduced output, BEC Executive Director John Carnegie said.
“This is a strong signal to investors that they will respond to immediately, not some time in the future. All plans, current and future, will now be reconsidered in light of this decision, especially when combined by the prospect of a higher future carbon price.
“The likely result will be no further investment or job growth in that part of the industry.
“The ban could curtail oil and gas production even from existing fields and increase gas prices - unfortunate outcomes, since gas is the logical fuel to use for transitioning to higher renewable energy levels.
“If contingent gas reserves are never commercially proven, we face a serious risk to our future energy security in about a decade.
“Recent weather has proven how invaluable our low cost gas-fired sources of electricity are when needed.
“We strongly support climate change action, but ultimately the cost and efficiency of new energy solutions and therefore the pace of the transition will be dictated by global, not domestic action. Acting sooner will add costs.
“In the absence of commercially viable and reliable alternative fuels the ban will also impact on the competitiveness of our major gas users and while supply to commercial and residential customers will not be jeopardised in the near term, it will hit already hard-pressed consumers in the hip pocket when they heat their homes. Commercial heating of schools and hospitals will also be affected.
“We believe that market mechanisms are better than bans. We trust the instincts of consumers and the choices they make ahead of bureaucratic ones.
“The ban undermines the focus of the New Zealand’s Emissions Trading Scheme on pricing externalities in business and consumer decision-making.
“We also wonder why this decision was not given to the about-to-be-established Interim Climate Commission, especially in light of the work it will do on the 100% renewable electricity target. Its options have been foreclosed and this potentially puts the political long term durability that has been signaled as so important – and which business seeks –at risk.”
Contact: John Carnegie