Is the Govt's ban on new oil and gas exploration brave or naive?

by The Listener / 19 April, 2018

Help us find and write the stories Kiwis need to read

Photo/Getty Images

Photo/Getty Images

RelatedArticlesModule - Oil and gas exploration ban

Prime Minister Jacinda Ardern's move to ban new oil and gas exploration permits is at once justifiable and yet arguably cavalier with a major industry.

Just transition or heart over head? In grabbing back the political agenda after a messy March, the Government has made a string of brave calls, all intended to prove that it will walk the talk on a “transformative” agenda.

Some were well-signalled. For example, shifting transport funding from highway construction in favour of urban public transport, rail and road safety should have come as no surprise. The same goes for the demise of Government backing for large-scale irrigation schemes, part of a wider agenda still being developed that aims to make intensive agriculture pay its way environmentally, as well as in export dollars.

However, the decision to stop issuing offshore oil and gas exploration permits was not pre-election policy. Although Prime Minister Jacinda Ardern was musing privately months ago about the politics of such a move, it is barely a month since she broke from her formal programme to accept a petition from Greenpeace on the forecourt of Parliament.

Always with an eye to powerful imagery, Greenpeace backed the moment with pictures of history-changing Labour leaders of the past: Savage, Kirk, Lange and Clark. Ardern could enter that pantheon with a huge symbolic gesture designed to make real her claim that climate change is “this generation’s nuclear-free moment”.

She has done so, in a move that is at once measured and justifiable yet also naive and arguably cavalier with a major industry. No other country with a significant oil and gas industry has made such a decision.

Signalling today that domestic supplies of natural gas will wind down over the next 30 years is a powerful incentive to industries dependent on gas to adapt or disappear.

The electricity industry has already proven that 10 years is plenty of time to make such a big adjustment. Just a decade ago, Contact and Genesis Energy were planning to import natural gas and talking up fears of a gas shortage.

Instead, rising electricity prices funded a switch to more wind and geothermal power plants and delivered 85% renewable electricity. Power companies have closed some gas-fired power stations and have been notably silent on the Government’s oil and gas decision.

They have moved on. For other major gas users, it is not so simple. Methanex, which exports more than a billion dollars’ worth of natural gas a year as methanol, will probably disappear. Its Think Big-era plants at Motunui and Waitara can be unbolted and moved to another country.

Fonterra, which uses gas for milk processing in the North Island and coal in the south, may use more coal, although in the longer term, the absence of gas will force it to switch to electricity for industrial heat.

However, the naivety of the Government’s new policy is that it will not, of itself, reduce global carbon emissions, but could increase New Zealand’s if it leads to more coal use in the meantime.

To head off that possibility, the soon-to-be-announced Interim Climate Change Committee will need to give the ineffectual emissions trading scheme teeth to drive the carbon price high enough to encourage industry to adopt cleaner fuels – just as electricity has already done.

To its support base, the Government’s oil and gas decisions are an overdue breath of future-focused fresh air. To those working and investing in affected industries, however, it is creating uncertainty over the country’s fourth-largest source of export receipts. That is a big call.

But by leaving in place existing production and exploration rights, there is no immediate Rogernomics-style shock reaction to a crisis. Ardern is making much of differentiating hers as a reforming Labour Government but not a brutal one.

And as recent reports make clear, decarbonising early is less costly than sudden change forced by slow progress on carbon reduction targets.

There are, of course, risks. It is disingenuous to claim that existing permits might sustain a healthy oil and gas sector until the 2040s. The fruitless hunt for major gas fields in the Great South Basin since the 1960s proves the point that exploration is expensive and usually unsuccessful.

But perhaps the biggest risk is the promise of a Government-led “transition” to new industries of the future. Airy ministerial talk of capital being redeployed to new activities is a carbon copy of Rogernomics-era rhetoric. Capital was redeployed, but not necessarily in New Zealand.

The Government is talking a big game on its ability to direct the emergence of such new industries, but its capacity to deliver this upside of transformative change is untested and the value of the industries it is disrupting is all too measurable.

This editorial was first published in the April 28, 2018 issue of the New Zealand Listener.

Latest

As a young reporter, I went undercover to expose the Ku Klux Klan
95069 2018-08-17 00:00:00Z History

As a young reporter, I went undercover to expose t…

by Dick Lehr

How a young reporter infiltrated the Ku Klux Klan - and discovered the truth about its conman leader David Duke.

Read more
The EV battery scare shows the urgent need to support green technology
95080 2018-08-17 00:00:00Z Environment

The EV battery scare shows the urgent need to supp…

by The Listener

With nearly half of New Zealanders considering buying an EV in the next two years, the results could be electrifying.

Read more
Limits don't apply to dancer Aloalii Tapu's work
93844 2018-08-17 00:00:00Z Arts

Limits don't apply to dancer Aloalii Tapu's work

by Kate Richards

Otara-raised Aloalii Tapu uses a myriad of dance influences to express his ideas about manhood, suicide and post-colonialism.

Read more
The artist and poet who refused to play by the narrow rules of NZ art
94118 2018-08-17 00:00:00Z Arts

The artist and poet who refused to play by the nar…

by Sally Blundell

Decades in France have made Douglas MacDiarmid an elusive figure in NZ art history. A new biography delivers a vital portrait of the 96-year-old.

Read more
12 of the best op shops in Auckland
95053 2018-08-17 00:00:00Z Where to go in Auckland

12 of the best op shops in Auckland

by Vomle Springford

With Auckland’s high cost of living, it can be hard to fork out for new clothes, or new anything really. But op shops are plentiful here.

Read more
How virtual reality can help us understand how we think
95019 2018-08-17 00:00:00Z Psychology

How virtual reality can help us understand how we …

by Marc Wilson

When you're flying through the air like superman in virtual reality, chances are you'll brace for impact at landing.

Read more
Where to eat this ski season
94882 2018-08-17 00:00:00Z Food

Where to eat this ski season

by Kate Richards

A trip to the snow doesn’t have to mean a diet of hot chips and sad hotdogs.

Read more
Simon Bridges' spending leak: Hunt for leaker begins
95064 2018-08-16 10:38:12Z Politics

Simon Bridges' spending leak: Hunt for leaker begi…

by Jo Moir

All eyes are on National Party MPs, the office of the Speaker and Parliamentary Service now the hunt for the leaker has begun.

Read more