Comment

Comment: A symbolic beheading of the oil and gas industry

Fifteen years after New Zealand first proposed a carbon tax to address climate change, the country’s policy-makers have apparently learned nothing.

Rather than build community support for the massive changes needed to achieve a net-zero emissions economy by 2050, the coalition Government last week - for no apparent reason - decided instead to symbolically behead the oil and gas industry.

It was distasteful - and dishonest - tribal politics at its worst.

Not one emission was reduced. Whales and dolphins, unharmed by exploration as the Department of Conservation and the Environmental Protection Authority know, continue to be unharmed by oil and gas activities in the Taranaki Bight.

“We’ve stopped the rigs,” Green Party energy spokesperson Gareth Hughes said to his supporters. Existing activities will continue for at least the next 30 years and expect at least one rig in local waters early next year.

Prime Minister Jacinda Ardern said nothing would change tomorrow, but that the ban on new offshore exploration would provide important “certainty” of direction long-term.

It is all part of a bigger plan, she told students at Victoria University.

“We have been a world leader on critical issues to humanity by being nuclear-free, the first to support women’s vote and now we could be world-leading in becoming carbon neutral,” she said.

“We owe this to future generations - but ultimately, we owe it to you.”

Play the crowd

Sigh.

Fifteen years on our elected leaders continue to play to the crowd on climate change - eschewing real action in favour of silly partisan positions.

Voters must never be told that it is we who are the polluters and only we can reduce emissions by changing the car/s we drive, buying less useless throw-away junk, and being more energy-efficient.

Governments of all hues are guilty. Labour’s 2002 carbon tax was going to "make the polluter pay" but would have really only applied to power generators and heavy industry. That was despite the already obvious emissions growth still being driven by transport today.

The emissions trading scheme was better, but still flawed. Nick Smith could have taken a genuinely cross-party approach in 2008 to fix it, but instead chose to halve the obligations and squander another decade in never-ending reviews.

To be fair to the new Government, it is acting on the ETS. It has committed to afforestation and is setting up the Climate Change Commission. In two weeks we will hear from the Productivity Commission on how it believes the country can start stripping emissions from the economy in the most cost-effective way long-term.

So why the big circus last week?

Does the Government expect nothing useful from the commission?

Were it genuinely concerned about the block offer process the Government could have simply not offered offshore acreage this year while it reviewed the system.

Why not instead commit to stop imports of light petrol and diesel vehicles by 2040 as the UK has done? Or it could have ramped up vehicle emissions standards, or acted on Drive Electric’s fringe benefit tax proposal for EVs.

Those measures would at least have had an impact on actual emissions.

Agenda

I’m left to conclude that last week’s performance was less about climate change and more a choreographed demonstration of the anti-oil and gas agenda within parts of the Government.

Why remains a mystery, but at least we now know where Green Party Co-leader James Shaw really stands on the issue. Symbolic heads on pikes are more important than actual policy, apparently.

Depressingly, we also now know that members of Cabinet - probably including the Prime Minister - don’t understand this country’s energy system, nor the changing role of hydrocarbons in the world economy and its climate.

They emphasised that existing offshore permit acreage covers 100,000 square kilometres – almost the size of the North Island.

But they failed to mention, or simply did not appreciate the importance of the fact that, less than a fifth of that acreage is in Taranaki, which is where all the country’s natural gas infrastructure extends from. And that does matter when current gas reserves are down to about 11 years’ supply.

Almost 47,000 square-kilometres of that acreage cited is off the south-eastern South Island where there is no gas pipeline infrastructure. The rest lies off the Wairarapa Coast, and is still in the very earliest phases of exploration.

Their confidence in the Barque prospect - a potentially large gas-condensate play off the Oamaru coast - and near-term exploration generally, was also remarkable.

Barque lies about 60 kilometres off the coast, has not been drilled, and would likely take a decade to develop if there is a discovery.

And nothing is certain in exploration. During the last big offshore campaign in 2013 and 2014 the industry drilled seven dry wells in a row.

Targets

Most worryingly though was the lack of understanding the ministerial trio showed of their own climate targets.

Ardern confusingly described the 2035 renewable target for the power sector - which explicitly recognises the need for gas-fired generation in dry years - as an “interim step” toward the pan-economy net-zero emissions target in 2050.

What? We’re not worried about the rest of the economy until after 2035? Or does she think dry-year risk miraculously disappears from that date?

Has she simply conflated two distinct policy targets - not appreciating that renewables and gas are not alternatives but necessary complements in a hydro-dominated power system?

Or does she really believe net-zero emissions means the country can be hydrocarbon-free by 2050?

It’s a ridiculous notion, but was it woolly thinking on her part, mis-speaking or dog-whistle politics at play here? Why else the big smoke-and-mirrors show on Thursday for such little change on the ground?

Fossil free

When Shaw spoke last week of moving to a “fossil fuel-free future” by 2050 I suspect he really believed just that.

No one in the world is predicting the end of hydrocarbon use – not the Intergovernmental Panel on Climate Change nor the International Energy Agency. We will use less for transport, but we will continue to need coal for making steel and oil and gas for all those handy products we use in our computers, aircraft, buses, trains, solar panels and wind turbines.

The IEA continues to call for increased exploration and production investment to meet rising transport demand and to displace coal currently used for power generation and making chemicals and fabrics.

With the global population forecast to increase by a third by 2050, the agency is concerned that supplies of all lower-emitting options are not increasing fast enough.

But Shaw and the Labour Cabinet don’t seem to care. Nor do they understand the role New Zealand - already an oil and methanol exporter - could play supplying those lower emitting products.

Worse than that, the Government appears actively determined that there should be no expansion of the industry here.

Why else would you ban onshore exploration except in Taranaki? Surely we should be looking for gas and geothermal resources on the South Island so that coal-dependent industry there has lower-emission options alongside wood and electrification?

Ardern dismissed the notion of gas exports as something Australia had “tried”, scornfully noting the USD $54 billion Chevron had spent developing its Gorgon LNG project.

Australia has exported LNG for more than 30 years in a trade that last year brought in AUD $20.5 billion.

Complex interventions 

Achieving real emission reductions is going to be complex. It will likely require industry- and regionally-specific interventions, some of which may be counter-intuitive.

Incoherent policy rambling, grandstanding and cherry-picked anecdotes won’t cut it.

So is the Government going to work with the oil and gas industry to utilise its skills to help reduce emissions?

Not yet apparently.

Were it actually focused on emissions reduction it might have allocated a bit more than the $150,000 it allocated for new energy initiatives among the $19.7 million it doled out in Taranaki earlier this month.

It seems odd that a cathedral restoration warranted a $5 million investment but carbon capture and storage got nothing, despite the region’s obvious expertise, infrastructure and reservoir-base for such a project.

Ardern approvingly cited Statoil’s expanding offshore wind business as an example of a progressive oil business adjusting to the new reality. But we heard no mention of that firm’s partnership with Shell and Total to develop an international, industrial-scale CO2 storage facility off Norway’s west coast.

And that’s a shame because the world is going to need every low-carbon trick in the book to contain global warming. The IEA has warned of the need to considerably increase investment in CCS to reduce emissions, and CO2-rich gas is something Taranaki has a lot of expertise in.

But perhaps fossil fuel emission reduction is not our future either.

*This column was adapted from one published on Energy News.

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