- Government outlines steps to address New Zealand’s energy security and rising electricity costs.
- Actions include reversing oil and gas bans and removing barriers for LNG imports.
- Energy Minister highlights urgent need for abundant, affordable energy amid current shortages.
The coalition government has announced a series of measures designed to address New Zealand’s energy security and affordability challenges, including a review of the electricity market’s performance. The review, expected to be finalised in the coming weeks, aims to ensure the market is efficient, competitive, and prepared for the future.
Energy Minister Simeon Brown emphasised the country’s inadequate supply of natural gas, which is failing to meet demand. “New Zealand needs abundant, affordable energy. That’s why the coalition government is taking a series of immediate actions to restore confidence to our energy sector and remove regulatory barriers that have stopped firms generating electricity or bringing in the fuel that Kiwis need,” he said.
One of the key initiatives is the planned reversal of the oil and gas exploration ban by the end of the year. Additionally, the government intends to remove regulatory barriers to constructing facilities for importing Liquefied Natural Gas (LNG), which is widely used internationally to provide flexible and scalable energy supply. Cabinet has also agreed to legislate consents for an LNG terminal.
Additional decisions include easing restrictions on electricity lines companies owning generation, ensuring access for gentailers to hydro contingency, and improving electricity market regulation. The government is prioritising these actions, with Energy Minister Simeon Brown noting the urgency due to the “serious risk to New Zealand’s energy security and affordability.”
Brown pointed out that New Zealand’s energy shortage has led to the highest wholesale electricity prices among comparable countries, adversely affecting the manufacturing and export sectors. “The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand,” he said. This situation has forced electricity generators to rely more on coal and diesel, further exacerbating the issue.
In response, Resources Minister Shane Jones stressed the importance of harnessing New Zealand’s natural gas resources. He highlighted the role of natural gas in attracting new industries, creating jobs, and supporting key economic sectors. “It is critical for New Zealand that these keep going, but already some businesses are having to close their doors until energy prices come down; with hundreds of jobs at stake. That’s why we are taking urgent action to shore up our energy security,” Jones stated.
The Ministers will report back to Cabinet in October with options to mitigate sovereign risk in an LNG facility and domestic gas production. The Ministry of Business, Innovation and Employment (MBIE) estimates that around 50 countries globally use LNG to support their domestic energy production.