Photo by Wilson Vitorino from Pexels
Photo by Wilson Vitorino from Pexels

Simon Court: New Zealand is staring down the barrel of an energy crisis

Opinion 04/06/2021

OPINION: After the downpours we saw this week in Canterbury, it might seem a bit odd to say that an energy crisis is looming, but all rain followed a very dry year. New Zealanders should be prepared that this winter, the lights might just go out. We have a 25 year low in lake levels for hydroelectricity and very low natural gas production. 

Major electricity users, South Auckland’s Glenbrook steel mill and Southlands Tiwai aluminium smelter have both agreed to cut production, freeing up electricity to stave off shortages. These production cuts will hit Kiwi families who work there in their back pockets through reduced hours and wages.

This is the first step in energy conservation. If that’s still not enough there will be a conservation campaign to prevent a catastrophe. That would see the elderly and our most vulnerable being told to turn heaters off right in the middle of winter. According to community advocates, 25 per cent of our New Zealand population is considered "energy poor” where households struggle with their bills and are unable to invest in improving their homes. It’s even harder when you lose a shift or lose your job altogether.

So why has the prospect of energy shortages reared its head now? 

Energy sector leaders point to the past four years of chaotic Government energy and climate policy announcements as the main driver of current shortages and price shocks.

First, we had the oil and gas ban. Then we’ve had the Government signalling major interventions in the energy markets through their Just Transitions and New Zealand Battery project planning, projects that pose a significant threat of disruption to businesses today. Finally, we’ve seen a more general anti-business and pro-regulation agenda being rolled out where businesses face higher costs and more regulatory burdens. This approach from the Government has left its mark. 

We’ve already seen examples of these policies starting to bite into the industry, Methanex laid off 75 staff in March. It produces some of the world’s most environmentally friendly methanol in Taranaki, used here and worldwide in everything from paints to plastics. 

Permits for oil and gas exploration have been surrendered to the Government, closing off opportunities for a future where we may have been able to source locally produced natural gas to replace our reliance on foreign coal. 

All of this means that we are now seeing the prospect of energy supply disruptions now and very well may keep seeing them in the future. 

The good news is that there is a better way. 

New Zealand desperately needs a cheap and plentiful supply of clean energy to sustain our economy, and the industries that generate the wealth to pay for health, education and infrastructure. Current estimates are that we will run out natural gas reserves in about seven to 10 years.

That is why ACT would repeal the ban on new offshore oil and gas exploration permits.

Repealing this would give industry the confidence to reinvest in plant and equipment to support manufacturing for the next 15 to 20 years. 

We can have this without undermining progress towards a more efficient, low emission future. The policies are largely already in place and do not require the Government to regulate and bluster over the top of business in order to score political points. In fact, that approach is often counter-productive. 

While most residential consumers are insulated from energy prices right now, when predicted energy shortages combine with new climate charges, household prices will rise, and highly paid jobs will be lost as businesses make difficult trade-offs.

ACT believes that as a country, we deserve access to affordable and secure energy, so we can live our best and most fulfilling lives, in well paid jobs and healthy communities, with the lights turned on.

Written by ACT MP Simon Court. He is a Civil and Environmental Engineer with 23 years’ experience in roles for the private sector and local government. This includes ten years leading engineering, planning, tendering, and construction teams primarily in Auckland, Wellington, and Fiji.

Simon has three boys at high school. They share a love of loud music, fast cars, biking, fitness, good science, and good ideas.

ACT MP Simon Court