While this government seemingly ignores independent experts, instead allowing those with vested interests to write policy and put their hands into the public purse, we still don’t have a coherent energy strategy.

We keep talking of ‘the dry year problem’ then ignoring most of the available ways of dealing with it:

For example, now that Manapouri has been properly connected to the grid, that hydro lake can be used as a battery, preserving water in January through March for winter electricity generation rather than using it exclusively for base-load for Tiwai.

Secondly: Solar is the cheapest form of electricity generation and behind the meter generation for own use does not require tax payer subsidies, reduces demand on lines company infrastructure and has payback periods well below 8 years. Solar fundamentally changes the economics of centrally generated and distributed electricity.

Thirdly: If gentailers were made liable for the costs and losses of a failure to supply electricity, they would make rational not political decisions on how to address dry year issues to protect shareholder value.

Fourthly: Biomass (black pellets) are cost competitive with coal so long as coal faces an emissions price consistent with the cost of carbon capture and permanent sequestration. We have the biomass, a lot of the infrastructure, and value would be retained in New Zealand rather than transferred overseas. Black pellets can be stored outside for up to four years.

Fifthly: What did we not learn from European vulnerability to Russian fossil gas supplies? Gas is expensive to store so we would rely on ‘just in time’ delivery, probably from Australia, and pay global prices over which we have no influence.

Sixthly: Now the focus is on electricity storage from intermittent generation, stationary battery technology is advancing rapidly. On the face of it this does not address the ‘dry year problem’ but by managing within day and between day electricity generation and electricity supply, the economics of fossil gas peaker plants on standby for one-in-ten-year use changes dramatically. The full cost of the foreign fossil gas solution is not just the cost of the regassification plant ($2-$4 / MWhr) but needs to include the standby generation plant, the fossil gas itself and an emissions price.

The real issue is that this government seems unwilling to seek and unwilling to follow independent expert advice, instead allowing stakeholders with vested interests to write public policy and benefit from public funding.

There is no coherent energy strategy that addresses the question of how to sustainably use our resources to decarbonise society through electrification.

There is no consistent approach to think about markets for energy in New Zealand - how to reflect risk in energy supply and price volatility, how to reflect the value of natural capital, how to price optionality, how to address economic rents accruing to incumbent generators, how to address energy price induced poverty in households.

There is a naive belief in ‘market prices’ which do not reflect whole of life or full social costs of energy generation and use and are indifferent to either keeping Kiwi children warm or making aluminium for I-phone cases.

I have not read the case for foreign LNG and do not know how it addresses alternatives such as hydro as battery not base load, biomass, buying out Methanex fossil gas use or Tiwai electricity use.

However the surrounding debate has been characterised by misinformation and disinformation:

The ban on exploring for new offshore fossil gas was blamed (by the fossil gas industry) for electricity price spikes (not true).

The investigation of pumped hydro was asserted (by gentailers) to have undermined investment in renewables (not true).

The RMA was blamed by current Ministers for slowing wind farm development (not true, consents held were not developed).

Closure of the oil refinery at Marsden Point was blamed for increasing vulnerability to supply shocks and price volatility by the same Ministers now advocating for foreign fossil gas.

Has anyone done the comparison of the price New Zealand households and businesses will pay for importing LNG compared to the price New Zealand receives from Methanex?

The Climate Change Commission estimated that if Manapouri power was made available to New Zealand households and businesses rather than Tiwai, it was probable that wholesale electricity prices would be 20% lower for a decade than they would otherwise be. Tiwai was re-signed. Has anyone compared the likely cost of imported foreign LNG generated electricity with the price New Zealand gets for power supplied to the smelter?

New Zealand has a near five decade history of politically motivated, short term, energy decisions that have resulted in energy poverty among an abundance of opportunity. It appears little has changed in politicians’ involvement in energy since Rob Muldoon’s government of the late 1970s. Much of the economic benefit of ‘Think Big’ energy projects was expropriated by foreign interests.

The LNG proposal is another, and probably not the last, time our politicians will be outmanoeuvred by the wealthiest, most powerful sector in the global economy.

Conflict of interest statement:

I am a shareholder in our family business, COG Power Ltd, that provides roof top solar electricity generation for behind the meter use by capital constrained entities such as schools and local government. We are probably New Zealand’s smallest and fastest growing gentailer. By increasing the cost of electricity generation by imposing a foreign fossil gas tax on all electricity users, the profitability of our family business will increase.

Rod Carr was the inaugural chair of the Climate Change Commission from 2019 until his term ended in late 2024.