New Zealand cannot ignore the importance of fossil fuels and the potential economic benefits that continued global oil demand could bring to the local economy, Minister for Energy and Resources Hekia Parata says.
Releasing the New Zealand Energy Strategy, Parata said the government remained committed to a policy for 90% of New Zealand's energy to come from renewable resources by 2025. However fossil fuels would continue to play an important role both domestically and abroad.
“We can’t just turn off the tap in our journey to a lower carbon economy. We also can’t ignore the major economic opportunity that continuing global oil demand could provide New Zealand. Petroleum was our fourth biggest export earner in 2010," Parata said in a media release announcing the energy strategy.
A report prepared by Woodward Partners on potential royalty income for the government from New Zealand's petroleum estate estimated the State could be in line for NZ$12.7 billion in royalties if current exploration rates were to double. Parata said this money would go towards paying for government expenses, although there had been no consideration of a Norwegian-style sovereign wealth fund.
“The specific areas that we’re putting it into are improving our education system, providing for our health system, building roads of national significance, rolling out ultra-fast broadband across the country. All of the revenue that we derive from this source is put into funding the kinds of amenities and services that New Zealanders expect,” Parata said.
However there was no plan for a specific sovereign wealth fund that resource revenues would be placed in for the funding of those amenities and services.
“We haven’t been considering that at the moment.”
Meanwhile, despite being asked three times, the Minister said she had no comment to make on the concept of peak oil.
See the release from Parata below.
The New Zealand Energy Strategy and the New Zealand Energy Efficiency and Conservation Strategy released today by the Acting Minister of Energy and Resources, Hekia Parata, show an energy future that delivers for all New Zealanders.
“New Zealand is blessed with an abundance of energy resources,” says Ms Parata.
“Our Government’s goal is to make the most of all the assets we have – hydro, wind, geothermal, oil, gas and minerals.
“We want to use those resources responsibly to secure our energy future and to lift our standard of living. That is why the Government is taking a balanced approach to building a sustainable energy and resources future."
On the renewables side of the energy and resources portfolio, New Zealand’s renewable energy levels are the second highest in the OECD, behind Iceland.
“Renewables and energy efficiency are a big part of our energy picture,’’ says Ms Parata.
”Renewables made up 79 per cent of our total electricity generation in the March 2011 quarter. New Zealand has a target of 90 per cent of electricity generation to be from renewable sources by 2025, and we are well on our way to achieving that.’’
Like the rest of the world, New Zealand needs a range of renewable and non-renewable energy sources to meet its energy needs in the immediate future.
“Fossil fuels will continue to play an important role in the global economy. Around half of the energy we currently consume is from petroleum,’’ says Ms Parata.
“We can’t just turn off the tap in our journey to a lower carbon economy. We also can’t ignore the major economic opportunity that continuing global oil demand could provide New Zealand. Petroleum was our fourth biggest export earner in 2010.’’
In addition to the energy strategies, the Minister today released an independent report assessing New Zealand’s oil and gas potential.
The Woodward report shows that New Zealand is set to earn more than $3 billion in royalties from oil and gas fields already in production.
That could increase to $12.7 billion with future discoveries, which would help pay for schools, hospitals, broadband and roads.
“People want to be sure that the environment is protected and they also want jobs and growth,’’ says Ms Parata.
“We have seen the difference the oil and gas industry has made in Taranaki, employing over 5,000 people (in 2009) and contributing $2 billion to our country’s GDP.’’
Environment Minister Nick Smith last week introduced legislation to manage the environmental effects of activities in New Zealand's Exclusive Economic Zone and Extended Continental Shelf and announced interim measures to manage the environmental effects of activities before the new law is passed.
Labour Minister, Kate Wilkinson, has also announced the establishment of a High Hazards Unit of eight inspectors specifically dedicated to the petroleum and mining industry.
The Minister of Transport is also reviewing the liability insurance requirements for the industry and is looking to raise it above the current level of NZ$30 million.
“Together these measures provide assurances that the industry operates within a sound regulatory and operational framework.’’
Ms Parata also announced today proposed changes to the way permits are issued for oil and gas exploration. Currently companies can apply to explore any area in New Zealand, the proposed approach would see the Government open up a limited range of specific areas for tender.
“The proposed approach would allow us to focus on areas of greatest potential, and will be more transparent for the public, who would know which areas are available for permitting and which are not. Communities and iwi would have an opportunity to comment on the proposed areas to be opened up,” says Ms Parata.
There is a 40-day working period for which people can make submissions on the proposed change to the permitting system.
Ms Parata also announced the Government is reviewing the Crown Minerals Act (1991) and that a Discussion Document will be put out for consultation before the end of the year, with revised legislation in 2012. This follows on from the earlier round of consultation in August 2010.
“The Act is 20 years old and the review will focus on updating and aligning it with the Government's economic agenda,’’ says Ms Parata.
For more information on the following reports go to:
Energy strategies – www.med.govt.nz/energy-strategies
Woodward Report – www.med.govt.nz/royalties
Proposed permitting changes – www.nzpam.govt.nz