This Bill won’t solve the problems it claims to address. At best it might postpone them.
It is likely to leave greatly exacerbated problems for future governments and generations to deal with. Global research has demonstrated that the later these inevitable changes are made, the costlier and more difficult they will become.
In the process it will hand most of the profits to the wealthy overseas at the expense of Aotearoa, which may gain some short-lived jobs in a dwindling industry. We will unnecessarily face the increasing certainty of environmental disaster on a global scale, as well as increased risks of a national ecological catastrophe off our shores.
As such, its outcome will be directly opposite to the stated intention. It will make us less resilient, with an energy system more reliant on offshore interests.
It will postpone, and so make more difficult and costly, the inevitably required 'just transition' of the Taranaki regional economy away from reliance on the increasingly volatile fossil fuel industry. Attempting to restart a high risk inherently unsustainable ‘sunset industry’ of this kind is likely to leave people relying on jobs that will be inevitably insecure and short term. That will mean a more difficult and disruptive transition pathway for people’s lives and livelihoods.
Pursuing these policies towards these unsustainable dead ends is distracting us from the well-defined and necessary work of transitioning New Zealand to a low carbon, sustainable circular economy.
Our concerns, detailed below, include:
- The Bill is out of step with reality.
- The Bill is not part of a credible climate action plan and is at odds with such a plan’s intentions.
- Commercial realities undermine the logic of this Bill.
- The Bill unnecessarily creates national reputational risk.
- The Bill unnecessarily increases the risk of environmental disaster.
Key points:
1. The Bill is out of step with reality.
We’re now well into a global climate and biodiversity breakdown. It presents an unprecedented existential threat to humanity in our near future.
Perhaps the most powerful illustration of this is that there’s no need to explain this further. A glance at the news or the output of the scientific community will suffice for most, let alone for government ministers with direct access to the nation’s finest minds on the subject.
Knowing this, this government is proposing to attempt to restart petroleum exploration without a robust and rapid greenhouse gas reduction plan. That risks complicity in the displacement and/or death of millions of people in poorer nations across the globe, most directly our Pacific neighbours.
This Bill makes a breach of the agreed international commitments on greenhouse gas emissions more likely. That could contribute to the unravelling of those agreements. That would constitute a national disgrace of historic proportions.
Here at home, postponing climate change action ensures extreme weather events like Cyclone Gabrielle will continue to ravage these islands. The seas will continue to rise. Many billions of dollars’ worth of additional damage to property, industry and infrastructure will be done, with the loss of more priceless lives and livelihoods.
Failing to address this properly as a matter of urgency is planning for it to continue, and worsen.
2. The Bill is not part of a credible plan and is at odds with such a plan’s intentions.
In the run up to this Bill supporters of it argued the gas production associated with petroleum exploration is required as a ‘transition’ fuel to a low carbon economy.
This is patently absurd. The proposed exploration and production envisaged is stated as “petroleum” i.e. oil and gas, not just gas. So, we’re talking about the production of fossil fuels to reduce the use of fossil fuels, which is an oxymoron.
A radical plan for rapid greenhouse gas emissions reductions is not in place. The current government shows no signs of developing one. Indeed, the government’s current Emissions Reduction Plan is, by their own admission, designed to risk failing to meet our internationally agreed targets. And much of the progress that had been made is being reversed. Since taking office, this government has:
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- accelerated road building
- proposed increasing speeds on the roads
- removed the Clean Car Discount and the associated attempt to disincentivise the pointless (tax deductible) purchase of high emissions vehicles, such as 4x4 utility and Sports Utility Vehicles for commercial use on ordinary urban roads.
These changes can only drive increased demand for liquid fossil fuels for transport.
Meanwhile, policies are not being advanced to create the radical reduction in energy demand required to stabilise sustainable energy systems. This would emphasise things like high efficiency buildings, rail freight, integrated public transport and the localised provision of goods and services.
New Zealand is perhaps better placed than almost any other nation to have already made the transition away from fossil fuels. This includes abundant sources of renewable energy and a relatively small population living in relative peace and harmony. That it has not already done so is a purely political/ideological decision, not a pragmatic one.
In re-opening petroleum exploration, the government is making an ideological choice to continue down this unsustainable path.
3. Commercial realities undermine the logic of this Bill.
Another argument put forward by supporters of this Bill is that it will help to ‘keep the lights on’ and stabilise fuel prices in this country.
The reality is that nearly all the companies likely to lead deep-sea petroleum exploration in New Zealand waters are offshore corporations. They will be distributing the majority of any profits made to their shareholders, not the New Zealand public. Any oil they produce will be shipped overseas, since New Zealand closed its only oil refinery. None of the liquid fuel eventually produced would flow directly into the New Zealand economy unless and until a refinery were back in operation.
Commercial interest in deep water petroleum exploration in New Zealand will also be subject to a number of limiting factors.
New Zealand has seen fluctuating interest in offshore exploration over recent decades. Efforts to exploit oil and gas prior to the ban were considerable, but success was limited. Companies like Anardarko Petroleum abandoned licenses after failing to find oil deposits they deemed commercially viable. New Zealand's current deepest production well is only 125 metres below sea level. Deeper exploration and drilling becomes exponentially more difficult, expensive and potentially hazardous. These conditions are only likely to worsen with extreme weather events driven by accelerating climate change.
Investments of this scale and duration require a relatively stable regulatory environment. The current government’s term of office ends around the end of 2026, in just over two years’ time. After that, the political parties that instituted the ban may well reinstate it. It’s likely they will recognise the need to close the gap in the nation’s greenhouse gas emissions reductions, which the current government looks set to leave as its most lasting legacy.
This, coupled with Aotearoa’s long and successful history of anti-oil-drilling protest and civil actions, present oil companies with a very high degree of uncertainty and risk. Depending on fluctuating oil prices, this may make the whole proposition commercially as well as ecologically unsustainable.
4. The Bill unnecessarily creates national reputational risk.
New Zealand continues to trade on and benefit from a ‘clean, green’ image.
According to a recent report by Chapman Tripp for Aotearoa Circle, roughly 80% of our exports by value go to markets that have existing or proposed mandatory climate related disclosures. Forty percent goes to countries with carbon border adjustment mechanisms in place or being considered.
Aotearoa New Zealand currently benefits from a free trade agreement with the European Union. This includes enforceable commitments to environmental standards. Failing to meet our Paris Agreement commitments, which this Bill makes more likely, could risk the loss of such trade preferences. The EU is our 4th largest trading partner, with NZ$20.7 billion in two-way trade in goods and services in 2023. The free trade agreement has been projected to increase real GDP by between NZ$1 billion to NZ$2 billion dollars a year by 2035.
Recent years have also seen major corporate buyers like Tesco and Unilever requiring producers to meet and raise environmental standards.
The proposal to re-open deep-sea oil drilling, combined with the government’s other regressive policies, creates further risk of disappointing these trading partners and customers.
5. The Bill unnecessarily increases the risk of environmental disaster
Potentially catastrophic oil spills are entirely possible during oil and gas operations in New Zealand’s deep and turbulent waters. These risks are only increasing with the increasing frequency and ferocity of climate change-driven extreme weather events, like Cyclone Gabrielle. The resulting damage to our fisheries and coastlines could be enormous. As a small nation, New Zealand is dangerously underprepared for any such eventuality.
The benefits of courage
Courageously addressing our global predicament could be a source of unprecedented wealth. It could lead to a pathway of long term, sustainable success and well-being for our people.
All governments must ensure that, as a minimum, they're sticking to policies projected to meet their national and international commitments. On that pathway, we need to create an equitable, stable and supportive environment for all businesses to radically reduce their greenhouse gas emissions.
The Climate Change Commission was established to support that. Its guidance and approach must be adhered to. We must also understand and respond to the warnings and advice from the world’s scientific community. Both the Intergovernmental Panel on Climate Change and Climate Change Commission have highlighted the importance of a rapid shift away from fossil fuel use.
Passing this Bill would mean flying directly in the face of that expert advice. We do so at our peril, and at the peril of many of the most disadvantaged people on Earth.
We need to protect and restore this nation’s reputation for environmental care and moral leadership. This can only be achieved in today’s context by a national focus on regenerative agriculture and nature regeneration, alongside rapid gross greenhouse gas emissions reduction.
There is already significant and wide-reaching support for this, especially in the business community. This should be a major focus of the government’s plans, not further investment in unsustainable economic models. We need infrastructure, enabling policies and appropriate market development for the post carbon economy.
We don’t need to restart deep sea oil drilling in the teeth of a worsening climate crisis.