Appropriation (2024/25 Confirmation and Validation) Bill — Committee of the whole House—Annual Review Debate
· Full day report
Committee of the whole House—Annual Review Debate Energy CHAIRPERSON (Teanau Tuiono): The Minister for Energy will be here for 20 minutes to respond to members’ questions. Hon Dr MEGAN WOODS (Labour—Wigram) (21:00): Thank you, Mr Chair. There’s a number of questions outstanding from where we left off last time, and I wonder if Ministers have had a chance. In particular, I’m very interested to know what the balance of the petroleum or engine fuel monitoring levy memorandum account is as of today. That would be something that it would be useful to find out. One of the things we spent quite a bit of time on before we had a hiatus in this debate was talking about the liquefied natural gas (LNG) facility and asking the Minister questions about the proposed LNG facility. Now, in the last couple of weeks, the new Minister and, indeed, the Prime Minister have made comments to the effect—in light of everything that’s happened in the world—that there will be strong scrutiny and the business case will need to stack up. Now, one of the things that the previous Minister for Energy said, and is on record as saying, is, “There is no plan B. There is only LNG. We don’t have a plan B.” What I want…
Read full Hansard debate
Committee of the whole House—Annual Review Debate
Energy
CHAIRPERSON (Teanau Tuiono): The Minister for Energy will be here for 20 minutes to respond to members’ questions.
Hon Dr MEGAN WOODS (Labour—Wigram) (21:00): Thank you, Mr Chair. There’s a number of questions outstanding from where we left off last time, and I wonder if Ministers have had a chance. In particular, I’m very interested to know what the balance of the petroleum or engine fuel monitoring levy memorandum account is as of today. That would be something that it would be useful to find out.
One of the things we spent quite a bit of time on before we had a hiatus in this debate was talking about the liquefied natural gas (LNG) facility and asking the Minister questions about the proposed LNG facility. Now, in the last couple of weeks, the new Minister and, indeed, the Prime Minister have made comments to the effect—in light of everything that’s happened in the world—that there will be strong scrutiny and the business case will need to stack up.
Now, one of the things that the previous Minister for Energy said, and is on record as saying, is, “There is no plan B. There is only LNG. We don’t have a plan B.” What I want to know from the Minister is what work he has put into place to ensure that there is a plan B, given that the previous Minister explicitly said there was no plan B, and given that that analysis wasn’t completed in the documentation that was released around the LNG facility material, in terms of the thorough consideration of that.
It would be useful to the committee if the Minister were to elucidate on what the plan B was, because I think everyone can see the skyrocketing cost of LNG around the world. We and many other people at the time of the Government’s announcement of an LNG import facility said that this made New Zealand susceptible to any spikes in global pricing. Then, only a few weeks later, we have seen what is happening with LNG supply tightening around the globe.
I’d also be interested to know from the Minister whether it is still his intention that there be a signed contract by July 2026, in terms of this. One of the things that the Minister addressed but certainly didn’t answer is whether it is still his intention that the final decision on the commercial decision will lie with Ministers—that it won’t be officials who make that call but that there will be Ministers with powers to act who will make that final decision. That certainly was the process that was spelt out in the previous Minister’s Cabinet paper, so we’d be keen to know what that is.
I’d also be keen to know from the Minister whether any further work has been done since questions were asked of the previous Minister on what we could do to ensure that any cost savings would be passed through to consumers. The previous Minister claimed that would be the work and the Electricity Authority had the powers in order to do that, but one of the things when we had the annual review of the Electricity Authority, when they came to select committee, was that they did say that, while they monitor prices closely and can influence outcomes through market design and competition, they cannot directly dictate retail electricity prices. Therefore, in terms of the mechanisms to ensure that any cost savings would be passed through to consumers, what the authority came to the select committee and said certainly didn’t stack up with the claims that the previous Minister had been making. I would like to know what work the current Minister has under way, and if this is to go ahead and, indeed, if there are savings to be had, how we will ensure that these get passed on to consumers, because this is by no means anything that would be guaranteed and that you would expect in terms of that.
One of the things I’d also be keen to know from the Minister is whether or not he is actively considering funding for solar—we know that the previous Minister had tried to get funding for various solar initiatives—and whether or not he has had advice around whether or not it is the cost of capital that is the biggest impediment. I know the Minister has pointed to other things they’ve done around consenting, and all these kinds of things, but addressing the capital constraint that people have in terms of solar roll-out and whether that is something the Government is actively considering there. I would also like to know if the Minister—[Time expired]
SCOTT WILLIS (Green) (21:05): Thank you, Mr Chair, and I appreciate that the Minister may have some responses to my colleague Megan Woods, because I think they were very important questions.
I also understand that we have real issues with energy hardship at the moment, so I’m interested in the Minister explaining where the $178 million funding cut from the Energy Efficiency and Conservation Authority, which provided funding for hot water heating, low-cost energy efficient measures, an LED lighting scheme, and community-focused outreach programmes to target hard-to-reach households—how has that affected those hard-to-reach households and those whānau in energy hardship, and what evaluation of impact the Government is doing. That’s one lot of questions I’d really like an answer to.
Following on from that, in the face of that significantly increasing energy hardship, I’ve got a graph here that was just presented at the energy hardship hui in Auckland today by Ian McChesney, who had to use his own funds to dig through the stats to dig it out. We can see that there are now 200,000 homes, households, and whānau who cannot afford to keep their dwelling adequately warm. My question here is: did the Minister consider funding the establishment of an energy wellbeing network, as proposed by those working on the front line delivering energy services to households and communities across the country, and, if not, why not? Now that we know people are really suffering, people are having to choose between heating and eating, will he reconsider it now?
HANA-RAWHITI MAIPI-CLARKE (Te Pāti Māori—Hauraki-Waikato) (21:07): Tēnā rā koe e te Pīka. My question is involving energy poverty. The Climate Change Commission says renewable energy is a cheaper form of electricity generation in the long term, so my question is: if renewable energy is cheaper, why are whānau still paying the price for delayed investment and continued dependence on fossil fuels?
Tētehi atu o āku pātai—another question that I have is: will this Government invest in solar farms such as the new solar farm in Ngāti Naho that has an ongoing relationship with Maurea Marae within Hauraki-Waikato?
SIMON COURT (ACT) (21:07): Thank you, Mr Chair. Minister, given the amount of attention that the Government’s announced investment in an LNG import terminal in Taranaki has got from business, from the electricity sector, and from major energy users, I’m wondering—given that the Hon Megan Woods, a former energy Minister, was one of the people who came up with the idea to ban oil and gas exploration—firstly, Minister, do you think it would have been helpful to have planned and budgeted for an LNG terminal at the time that banning New Zealand indigenous gas exploration was announced, so we had a back-up transition fuel? Do you think it might have been helpful to maybe, I don’t know, cover your bases?
Secondly, Minister, given the challenges that this Government faced and you as Minister faced around options for a dry year when you took on the role as energy Minister, what plan B was there? Isn’t it the case that the LNG import terminal is actually the worst of a very long list of poor options that are a gift from the previous Government to the people of New Zealand by banning oil and gas exploration, providing absolutely nothing but some taxpayer handouts to big business for energy transition, and leaving all of those hard-to-abate industries like bread-making—bread-making in ovens the size of this Chamber—
Hon Dr Megan Woods: Unlike the handouts to the oil and gas industry from this Government.
SIMON COURT: —exclusively dependent on natural gas with no transition plan. Here’s the Hon Megan Woods chirping in from the sidelines as if she doesn’t have the black ash of the arsonist all over her hands. Minister, I’m interested: was there any alternative, or is this the only solution that can possibly solve the dry-year risk and help us secure New Zealand’s energy future right now?
Hon SIMEON BROWN (Minister for Energy) (21:10): Mr Chair, I thank the members for their questions, and I’ll take the member Simon Court’s and the Hon Megan Woods’ questions in relation to liquefied natural gas (LNG) together.
The reality is that the last Government made that decision simply to get a bumper sticker on a car and to get a headline in Paris, so they could look like they were doing something about climate change, but ultimately they’ve left New Zealand high and dry, and the way I’ve described their plan is “Hope it will rain, hope it will rain.” The energy policy of the previous Minister was to hope it would rain. The reality is that the year we became Government, it didn’t rain, and we saw the consequences.
David MacLeod: $800 a megawatt.
Hon SIMEON BROWN: Eight hundred dollars a megawatt hour because the lakes were dry, the wind wasn’t blowing, and it was the middle of winter. That is the consequence of not having enough gas—the gas that they banned the exploration of. The consequences of their decisions are before our very eyes, yet they still refuse to change their approach and actually see gas as a transition fuel and see the opportunity that comes through it. Now, we’re working through a procurement process with LNG, and we will be making decisions once that procurement process has been through. Ultimately, the answers to the members’ questions will of course be dealt with as part of that process.
In relation to the member Scott Willis’ questions about energy hardship, we have a Community Renewable Energy Fund to support energy education and communities. There are funds there which do provide support, but ultimately what we need to see is a competitive market which provides affordable energy for all New Zealanders and which drives down prices through the abundance of energy in this country. Whether that is wind, solar, geothermal, hydro, gas, coal, we need all of those types of energy to make sure we have a market which provides lower wholesale energy prices for consumers and for businesses. I’m pleased to note that the Australian Securities Exchange calendar year future prices have shown that, for 2027, since February, there’s been a $27 reduction in megawatt hour cost; 2028, down by $24; 2029, it’s down by $22. We are seeing, because of the policies of the Government, a reduction in those forward prices, which is positive. Of course, there’s more work to do.
In relation to the member from Te Pāti Māori, the question around a particular solar farm—I forget the particular location for that solar farm—we of course support solar. We support investment in solar via energy companies. As I said to her co-leader earlier today, we support indigenous solar. We want to see more solar being developed in New Zealand, and, in fact, the total forward pipeline from 2026 to 2029 has 1,867 megawatts of solar in the forward pipeline.
David MacLeod: Fast track!
Hon SIMEON BROWN: That is fantastic, and of course, fast track is a great way, another part, of how we’re making it speed up. There’s lots happening in solar, it’s great for our energy system, and we look forward to more projects being advanced.
Hon Dr MEGAN WOODS (Labour—Wigram) (21:14): Thank you, Mr Chair. I’ll just remind the Minister that I’m still waiting for an answer on what the current balance of the petroleum engine fuels monitoring levy memorandum account is at today. The Government seems to be avoiding this question; it’s many, many, many days overdue on answering written questions on it, and certainly this is the fourth time I’ve asked it in the Chamber. There’s been several hours hiatus where the Minister could have got their information.
I also would like to know whether the Minister is still saying that there will be a signed contract by July; whether that is the intention of the Government and whether that is the timeline he is working to. I’m also interested whether or not the Minister will guarantee that, if a liquefied natural gas terminal goes ahead, it will solely be for the purposes of dry-year risk—that it won’t be used more broadly than that, and that it won’t become a de facto way of supplying gas more fully in the New Zealand economy, because that is what the Cabinet paper, on the surface, purports to claim. Can the Minister confirm whether or not this is a project that is confined to dry-year risk?
SCOTT WILLIS (Green) (21:15): Thank you, Mr Chair, and I would make the point—and I think the Minister also has made this point—that hope is not a strategy and yet we have heard from the Electricity Retailers’ and Generators’ Association (ERGANZ) this morning, we’ve heard from downstream, we’ve heard from all the leaders in the energy sector, that we need a national energy strategy. There was one ready to go out the door at the end of the last Government. This Government’s been sitting on it for the whole term so far. My question to the Minister is: when are we going to see the Government’s release of a national energy strategy or, better yet, the Government opening the doors and bipartisanship? Let’s see what a national energy strategy would look like, to give some certainty to the sector about our decarbonisation efforts; to give some certainty to the sector about the direction of travel; to give some certainty about where we can go and make a difference.
I’ve also heard that the Minister is very keen to see that we need a competitive market, and on that we agree. To that point, there is a bill sitting in the biscuit tin that the Minister can adopt at any moment, and it is called the Electricity Industry (Separation of Generation and Retail Businesses) Amendment Bill. That will build a competitive market; that will make sure that we have a market that functions, that takes away the control, and the cross-subsidisation. Now, that is an option that is open to the Minister right now, and we have heard members of the Government saying they want to do just this thing. Is the Government all talk, no action? That’s what I’m seeing from the Government: all talk, no action. There’s a lot you could do here and you just don’t seem to be wanting to do it. I’d like to hear from the Minister on those points. I’ve got a couple of other questions.
Hon SIMEON BROWN (Minister for Energy) (21:17): Mr Chair, I love it when members on the Opposition talk about wanting bipartisanship. Well, what they have failed to do is back the reversal of oil and gas—the ban on oil and gas exploration—which they put in place. They didn’t consult on it, they didn’t come and talk to the National Party, they didn’t try and seek a bipartisan approach to that; they simply went and announced it on the steps of Parliament, for the Prime Minister Jacinda Ardern to be able to then go to Paris and get a headline and be on the front page of a magazine. Shame on the Labour Party and the Green Party for their decisions on that. Where was the bipartisanship then? That is the epicentre of the challenges we are facing now in our energy sector, and it is on their shoulders. They should take that responsibility.
Hon Dr Megan Woods: Are you going to answer the question?
Hon SIMEON BROWN: Mr Chair, the question was: do we want a strategy? Well, we want to make sure we have lower prices and affordable energy and abundant energy for New Zealanders, and simply, on that side of the House, they want paperwork but won’t actually back the solutions which actually deliver value to people, value to households, value to consumers, and value to businesses and jobs.
The decision they made to ban oil and gas exploration has been detrimental on our energy sector and also on our industrial base and is leading to the de-industrialisation of New Zealand, and they have the audacity to stand up in this Parliament and complain about businesses closing but fail to back the solutions so that they have the energy to stay open. Shame on them.
SCOTT WILLIS (Green) (21:18): Thank you, Mr Chair. Certainly, it sounds as though the Government has no strategy, has no plan, just hopes the market will deliver. Given that there is only one remaining offshore wind developer still floating around, when will the Government finally deliver the Offshore Renewable Energy Bill? And is the Government considering any risk-sharing structures with Taranaki Offshore Partnership?
Hon SIMEON BROWN (Minister for Energy) (21:19): Thank you, Mr Chair. That bill, as the member will know, is making its way through Parliament as we speak.
CHAIRPERSON (Teanau Tuiono): Members, our time with the Minister for Energy has ended.