New study warns of major energy costs in trying to replace natural gas

A new report today warns there will be major costs to New Zealanders in trying to replace the role of natural gas, according to the Petroleum Exploration and Production Association of New Zealand (PEPANZ).

“Natural gas provides 20% of New Zealand’s primary energy, and this report shows there is no proper plan or research on what could replace that. We think it shows the need for a serious rethink on new exploration permits,” says PEPANZ CEO Cameron Madgwick.

The report by Vivid Economics “Gas infrastructure futures in a net zero New Zealand” was commissioned by First Gas and Powerco and released today.

“It outlines the major difficulties in trying to replace the role of natural gas in providing electricity to cover shortfalls in winter, and for heavy vehicles and industrial heat. It shows the problems with not keeping our options open.

“It warns there could be substantial power price increases for New Zealand homes and businesses as a result with a cost of up to $2,700 per household per year. This works out to nearly $52 per week extra in increased costs.

“There is wide support for lowering New Zealand’s net emissions but there has to be careful thought around the best way to do this at least cost.

“We strongly support the call for further research into carbon capture and storage, hydrogen and tree-planting to offset emissions. These allow natural gas to be used with much lower net emissions.

“A pragmatic way forward would be for the Government to ask the Interim Climate Change Committee to consider the role of natural gas as part of its work on New Zealand’s energy system.”

Note to editors

*Vivid Economics also supported the Productivity Commission’s low emissions economy inquiry, and the cross-party Parliamentary working group report “Net zero in New Zealand.”