Thursday 27 May 2021

Keeping the lights on

The Gas Industry Company is looking into gas supply. 

BusinessDesk reports risk:

In the worst-case scenario, New Zealand will not have gas available to ensure electricity security of supply by 2026, the sector regulator has warned.

The Gas Industry Company said if there was more investment in existing fields to eke out reserves, then the system should be able to get through to 2035.

...The paper did not refer to the government’s decision to ban new gas and oil exploration permits but said regulatory uncertainty was a key hindrance to the investment needed to get more gas out of the current fields.

“There was universal acknowledgement that the current supply situation meant that some users did not have sufficient certainty about gas supply for their operations, and that tight market situations may well occur into the future given the transition,” GIC said.

The consultation document notes problems around regime uncertainty. 

The problem isn't net zero by 2050, the problem rather is that the government isn't relying on the ETS. Investors can plan on the ETS. They can see the path of allowed emissions (gas is in the covered sector), make some punts about prices, hedge if they want, and make decisions. 

But when random draw BS like bans on new gas connections get touted by the Climate Commission and gawd only knows what foolishness Rod Carr will suggest next time, investment gets riskier. 

And especially where the government already banned new exploration. 

The consultation document puts it a bit more politely, in its suggestions from stakeholders for feedback:

  • enabling and encouraging wider use of the Emissions Trading Scheme (ETS) tools, including the use of the ETS as the main mechanism to encourage increasingly lower emissions activities. This would provide clarity about how abatement of emissions will be treated (e.g. if CO2 is used, or captured and stored), provide economic predictability to investment decision makers, and credits would incentivise gas users to transition away from the lowest value use of carbon first
  • providing clarity about the boundaries of the ETS to enable industry decision makers to better assess the viability of existing assets or proposed investments. This could include clarifying where policy outcomes are not expected to be achieved by the ETS and how alternative policy will be assessed

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