Ending oil and gas extraction - what scientists think

The Government has put New Zealand on the "right track" by signalling an end to the fossil fuel industry, scientists say.

But they're warning it won't be easy, and there could be knock-on effects that drive a future Government to turn back the clock.

Prime Minister Jacinda Ardern and Energy Minister Megan Woods revealed no more exploration permits for oil and gas would be issued, except in parts of onshore Taranaki.

The Opposition has fiercely opposed the move, saying it will cost jobs and do nothing to help curb climate change. National MP Judith Collins told The AM Show on Friday it would actually boost emissions by encouraging more burning of coal.

But experts interviewed by the Science Media Centre after the announcement praised the move.

"At last, NZ seems to be on track," said Prof James Renwick of Victoria University. "The Prime Minister's announcement today about stopping offshore exploration for fossil fuel deposits is exciting, and a real step in the right direction.

"We know that we can't afford to burn much more oil if we want to meet the Paris Agreement targets and avoid catastrophic climate change."

Prof Renwick was among an international panel of scientists that contributed to a 2013 Intergovernmental Panel on Climate Change report which said it was "extremely likely" our use of fossil fuels was to blame for global warming.

New Zealand's emissions are still rising, largely thanks to transport. Prof Renwick says this is why it's important the Government is also putting renewed emphasis on public transport, cycling and walking, as opposed to National's roading-focused strategy.

"This gets us away from the outdated mantra of more roads and more cars that we saw from the previous Government. Again, this will help New Zealand onto a low-carbon pathway."

Fossil fuels are behind the changing climate.
Fossil fuels are behind the changing climate. Photo credit: File

Ms Ardern wants New Zealand to be carbon-neutral by 2050, meaning any emissions we do have are offset by other measures. Prof Ralph Sims, director of the Centre for Energy Research at Massey University, says even less ambitious targets - such as being 11.2 percent below 1990 emissions levels by 2030 - will be a challenge.

"Planting more trees will help, and we could possibly purchase some credits from off-shore to offset emissions that occur in New Zealand…  [but] these options are only temporary solutions anyway, so inevitably we will need to reduce our domestic emissions.

Prof Sims points to a recent Westpac report which said the earlier New Zealand transitions away from fossil fuels, the cheaper it will be in the long run - potentially by as much as $30 billion over the next three decades, or $3 billion a year.

"As hard as it is to accept by the fossil fuel industry, we have little choice."

Prof Dave Frame, director of the New Zealand Climate Change Research Institute at Victoria University, says the Government has a "balancing act" to pull off if it doesn't want to wreck the regional economy.

"If today's announcement signals the beginning of a new New Zealand economy based on skills and high productivity, then that would be great. But without that support, the decision will remain vulnerable to being overturned by future Governments."

Which is exactly what National plans to do, Ms Collins told The AM Show. While her party and the industry has railed against the slow phase-out, Dr Katharina Ruckstuhl of the University of Otago's business school says it shouldn't have come as a surprise.

"The Government was careful to note that current permits will continue, with some not expiring until 2050. This is roughly in line with the previous Parliamentary Commissioner for the Environment's belief that gas - Taranaki's mainstay fuel - would still be needed for roughly 30 years until infrastructure and technology for renewables were in place."

But she says a fall in the share price for Ofer Global, the company that owns a controlling stake in NZ Oil & Gas (NZOG), suggests confidence in the industry is already starting to wobble.

"The announcement creates uncertainty for... any future development off the Otago coast, which is predicted to be a gas development larger than Taranaki's Kupe basin.

"With its share price falling on the news, it seems the market is not hopeful that NZOG will make good on its drill permit which is due to expire in April 2019."