What are the benefits?

June 6, 2018

The decision to ban future offshore petroleum exploration was a political one that didn’t go before Cabinet:

The Cabinet has made no decision on ending oil exploration, documents being released today will show, with April’s announcement made on the basis of a political agreement between the coalition parties.

On April 12, Prime Minister Jacinda Ardern led a group of ministerial colleagues into the Beehive theatrette to confirm news that the Government had decided it would offer no new offshore permits for oil and gas exploration, with onshore permits offered in Taranaki for as little as three years.

Although the news was delivered by ministers affected by the decision and in a forum usually used to discuss decisions made by the Cabinet, politicians made the decision in their roles as party leaders.

Today the Government will release a series of documents generated in the making of the oil and gas exploration decision, but it has already confirmed to Stuff that no Cabinet paper was created and that the Cabinet has not voted on the matter. . . 

We already knew this major decision with large and detrimental economic, environmental and social impacts was made without consultation with affected parties.

Now we know it was a political decision made without even consulting with Cabinet.

That is no way to run a government or a country.

But wait, there’s more and it’s worse – MBIE produced a paper that warned of the detrimental impacts of the ban  which include but aren’t limited to:

* Increased risk to security of future gas supply to major gas users, most notably Methanex at a time when New Zealand has its lowest reserve to production ratio since the Maui reserve re-determination of 2003. The lead time from exploration success to commercial production takes years, so it is not possible to simply turn on gas supplies once they become tight.

* Increased gas prices to consumers following an tightness in future gas supply.

* Increased uncertainty for major gas users in the industrial sector that rely on gas as an input to their processes.

* A negligible impact in reducing domestic greenhouse gas emissions but a likely increase in global gas emissions (from methanol produced from gas in New Zealand being displaced by methanol produced from coal in China). It also removes the opportunity, both domestically and internationally, of any future gas discovery being used to displace coal.

A negligible impact in reducing domestic greenhouse gases and a likely increase in global gas emissions?

This isn’t thinking globally, actIng locally. This isn’t thinking at all.

* Increase perceptions of sovereign risk as this would mark a Marjory policy shift.

* Potentially accelerating decommissioning timeframes, alongside the associated Crown liabilities (measured in the hundreds of millions of dollars) for a portion of these decommissioning costs that represent the amount of taxes and royalties that have effectively been overpaid over the life cycle of the field’s production. . . 

* A detrimental economic impact on the Taranaki region. Methane alone contributed 8 percent of the regional economy of Taranaki in 2017. Methane will be the first company affected by future tightness in gas supply. . . 

To sum up, the ban increases risk around security of supply, costs to consumers and global gas emissions and reduces Crown revenue from future royalties and decreases economic activity in Taranaki.

Added to the detrimental impacts MBIE lists, are decreasing trust in the government and increasing jitters over the Labour, NZ First, Green coalition which now looks more like an Ardern-Peters-Shaw dictatorship.

If it can do this to the energy business and Taranaki without warning or consultation what might it drop on other businesses and other areas?

And the benefits?

I can’t think of any that justify the economic, environmental and social sabotage of the ban and the way it was delivered by decree.


Doing something not doing good

April 30, 2018

The government isn’t alone in thinking it must do something, and it’s also not alone in thinking that something is  better than nothing.

But something isn’t better if it’s not doing good.

Take the government’s ban on oil and gas exploration that was done without a cost-benefit analysis, consultation and environmental assessment for example:

. . . “I am not aware of a cost-benefit analysis using the Treasury’s CBAx tool being undertaken in relation to the decision to grant no further offshore oil and gas exploration permits,” Megan Woods said. . . 

No formal consultation was undertaken with PEPANZ in relation to the decision to grant no further offshore oil and gas exploration permits. However, I have spoken publicly about the Government’s direction to transition away from fossil fuels and my office has had open dialogue with PEPANZ before this announcement.”

There’s also been no estimates on whether global greenhouse gas emissions will fall as a result of the decision.

“No specific estimate has been provided to me. I have been advised by officials that the effect on global emissions depends on the response of New Zealand’s large gas users.” . . 

The goal is to reduce carbon emissions but there is no plan for how that will be done.

Ending oil and gas exploration here will merely mean we are more reliant on imports and lose export income.

It’s putting the cart before the horse at Greg economic, environmental and social cost.

This is doing something  but it’s not doing good and not better than doing nothing.

This government has initiated more than 70 groups and committees to look at policy in its first six months. But as Rodney Hide points out that’s not all bad. At least while they are deliberating, the government isn’t doing something that will do no good or worse do bad.


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