After Jacinda’s historic announcement that brought an end to new offshore oil and gas exploration, we’ve been hearing a lot from the industry about how the sky is about to fall in. Fun fact: it isn’t. But just in case you find yourself having a heated debate with someone around the dinner table, we’ve put together some debate points to help you.
Alt Fact: If we stop producing oil here we’ll just have to import more oil from overseas.
Truth: New Zealand’s vehicles already run almost entirely on imported oil. The fuel we use to fill our cars at the petrol pump is imported from overseas, so won’t be affected by this decision. Virtually all of our relatively small oil production is exported. Sounds weird, but that’s how the global oil market works. According to the Ministry of Business, Innovation and Employment (MBIE):New Zealand’s locally-produced oil is generally exported because of its high quality and therefore high value on the international market. Australia purchases most of this oil.
The Middle East tends to be our largest source of crude oil (over half generally comes from there). Russia and Asia are also significant trade sources.
The real alternative to importing oil is more electric trains, buses, cars, trucks, and bikes powered by renewable electricity and biofuels – not more oil drilling. By using more clean, locally-produced energy, we will also reduce our current multi-billion dollar oil deficit, which comes about because we import more oil than we export.
Alt Fact: Stopping oil and gas exploration will lead to more climate emissions.
Truth: Any oil and gas we keep in the ground is oil and gas that can’t be burnt and can’t increase global emissions.
In reality, saying that new fossil fuels are out of bounds creates certainty for investors to put their money behind the alternatives – clean technologies like solar, wind, geothermal and battery storage.
Alt Fact: When the gas runs out, industry will burn more coal.
Truth: Clean energy is both technologically available and cost-effective, so we don’t need to replace one fossil fuel with another.
Smarter combinations of renewables, demand management, battery storage and electric transport are transforming the way we use energy. It means we don’t actually need outdated, dirty fuels like oil, gas, and coal anymore. Professor Ralph Sims at Massey University has recently shown that there is no point exploring for more gas, because efficiency improvements and the switch to renewables mean we can cover most of our energy needs without fossil fuels. Using the gas we already have more efficiently also means we’ve got enough left over to power the things that take a bit more time to transition.
Alt Fact: Exporting New Zealand gas to developing countries will lower global emissions.
Truth: We’re far better off investing in clean energy and exporting our expertise in renewables.
The idea that New Zealand can export gas to developing countries to replace their use of coal really doesn’t have legs.New Zealand isn’t currently set up to process gas into LNG so that it can be exported. Doing that would require a several billion dollar investment in new gas-processing infrastructure, which will take years. Why spend all that money supporting outdated, carbon-intensive technology when we could be using it to deploy modern, carbon-free energy instead?
Alt Fact: Oil and gas is one of the backbones of our economy and employs 11,000 people, whose jobs are destroyed by the move to stop new offshore exploration.
Truth: Economies thrive with long term stability. Starting the clean energy transition now means no 80s-style economic shock, and long-term security for the clean energy industry.
Oil and gas employs around 4,300 people directly and it’s really important that these workers and the communities that depend on this industry are supported to find sustainable livelihoods in other industries. The people with the best gauge of whether a decision is good or bad for workers are the trade unions that represent them. Importantly, the NZ Council of Trade Unions has welcomed the Government’s decision, which provides a long-term signal to the oil industry that they must now wind down and prioritise a transition plan for their workers. They say:
“The whole point of a just transition is that actually, we know change is coming, it’s inevitable, and we are going to create high-paying sustainable jobs that match people’s skills. You’d almost think from the reaction from the oil and gas industry that the rug was being pulled out from under working people overnight. The Government and the union movement have been very clear that a transition plan, particularly for affected regions is the right way to go.”
Let’s not forget that the energy transition is also an enormous economic and job opportunity. Clean energy produces four times more jobs than the oil industry. In the US, solar jobs are growing as much as 12 times faster than the rest of the economy. In New Zealand, clean energy could provide 25,000 new jobs. A recent Westpac report found that taking steps to address climate change now will save the New Zealand economy $30 billion dollars, compared to delaying our response.
Alt Fact: The lights will go out and energy will cost more.
Truth: Oil and gas cost money – but sunshine and wind are free! Renewable energy is already cheap and has the potential to be much much cheaper.
Solar and wind power have dropped so dramatically in cost that they are already competing with fossil fuels and are poised to undercut new fossil energy in a couple of years.There are no input costs for wind and solar energy. This means that, while we need to buy the gas for a gas-fired power plant to generate electricity, the inputs for renewable energy – sunlight and wind – are free. As a result, they replace more expensive production in the electricity market, lowering wholesale electricity prices. This is good for consumers but, unsurprisingly, upsets the producers of dirty energy like gas.
In fact one of the biggest threats to energy security is climate change itself. Extreme weather destroys infrastructure and leads to power outages, such as the recent storms that have knocked out power for thousands of households across the country.
Alt Fact: We shouldn’t wind down oil and gas until we have clean energy to replace it.
Truth: Saying no to future gas is vital to getting more clean energy into the system.
The opportunities, technology, and supply of renewable energy already exist for New Zealand to start a direct transition away from all fossil fuels now. Studies from the U.S. show that increasing the availability of gas actually has the perverse effect of delaying renewable energy deployment. That’s because, new gas capacity directly competes with renewables. If there’s a chance that the market will be flooded with cheap gas, it makes building renewables a risky investment. Better to create certainty for investors that renewables are the way to go, by making new gas off-limits.
Alt Fact: Restricting oil and gas supply is a waste of time – we need to tackle at the demand side.
Truth: We need to address both supply and demand if we’re going to achieve the necessary cut in carbon emissions.
Market forces are driven by scarcity, which means that when there is an abundance of gas available, the price goes down, incentivising industry and the public to use more gas. When there is less gas available the price goes up, so industry and people use less gas and instead seek out alternatives. Supply does affect demand – and the oil and gas industry know this very well. They’re simply pointing the finger at people like you and me, in order to go on denying their role in reducing harmful climate emissions. As above, the promise of abundant gas supplies discourages investment in other forms of energy, like renewables. But, by signalling an end to new oil and gas exploration, we increase the need for clean energy replacements and stimulate development of those industries. Tackling climate change pollution at both the supply and demand side of energy is vital to success.