The report – released by 350 Aotearoa, Common Grace Aotearoa and the Centre for International Corporate Tax Accountability and Research (CICTAR) – argues that tightening gas supplies and declining production margins are increasingly shifting Methanex’s business model from methanol production to on-selling gas, at a significant mark-up.

“Methanex’s revenue is down 58 percent in the last decade, it’s generated losses in four of the past five years. We believe Methanex will exit the market at or before the 2029 conclusion of its current gas contracts”, said report author Edward Miller.

“In the meantime as supply contracts, we are concerned the company’s large gas contracts could enable it to influence gas and electricity prices, contributing to another wave of closures and redundancies across the manufacturing sector. Existing analyses suggest that Methanex may have achieved a 400 percent markup on gas sales to electricity generators during the 2024 dry winter,” said Miller.

The report argues that subsidies from our climate and tax rules may have helped sustain the company in this position.

“In the last decade Methanex has received an estimated $301 million in free carbon credits, at the same time that firm profitability has declined. If Methanex has stockpiled units, they could be worth substantially more. Current reporting requirements around company stockpiles are inadequate”, said Miller.

“In addition, interest payments on related party loans also appear to have reduced the company’s taxable earnings by $257.4 million over the decade, which could have in turn reduced income tax expense by $46.3 million.”

“MBIE has told us that the main plank of this government’s energy security strategy – reversing the offshore ban – will take more than a decade to bear fruit. Increasing renewable generating and storage capacity is a cheaper and more reliable option, but that will still take years. In the short-term, the government may need to rely on demand-side measures, particularly around largest gas user Methanex, to safeguard energy security and prevent price hikes.” 

Miller said the government must carefully consider how it is subsidising Methanex, and engage directly with the company to ensure it doesn't use its market power to influence prices.

Alex Johnston, Common Grace Aotearoa Co-Director, and coordinator for the "Don’t Subsidise Pollution" campaign said the report revealed that Methanex’s New Zealand operations were 34% more emissions-intensive than the company’s global average. 

“We’re concerned that the outdated industrial allocation system could be propping an inefficient, emissions-intensive company that may have to rely on gas price speculation and profit-shifting to deliver future returns to shareholders,” said Johnston. 

“The Minister has levers available under the Climate Change Response Act to remove Methanex’s free carbon credits, or otherwise bring them to the table about a fairer use of their remaining gas for the public interest, in a way that won't line shareholder pockets at taxpayers’ expense.”

Lisa McLaren, Co-Director of 350 Aotearoa, said “This Methanexit report follows our "Generating Scarcity" reports, which argued that gentailers are incentivised to keep fossil fuels in the grid to hike power prices and generate windfall dividends, all while slowing the development of renewable energy infrastructure, delaying action to lower carbon emissions, and increasing electricity bills for households.”

“It is outrageous that our government has given over $300 million to Methanex to continue their polluting industry, when many New Zealanders are struggling to keep the lights on. With the right leadership, we could be powering our homes and industries on 100% renewable energy. We’re well overdue a rapid and just transition for our workers, communities, and the planet.”

Media release: 350 Aotearoa, Common Grace Aotearoa and the Centre for International Corporate Tax Accountability and Research (CICTAR)