The Government's decision to end offshore oil and gas exploration could cost nearly $8 billion in lost tax over 23 years, the Ministry of Business, Innovation and Employment (MBIE) has warned.
Despite the warning, the Government is progressing the legislation. The advice has been released as part of the information provided with the announcement of the bill.
The loss of oil and gas tax and royalty returns to the Crown, which will come as a result of ending offshore oil and gas drilling, could cost between $1.2 billion and $23.5 billion, with a mid-point estimate of $7.9 billion, MBIE's modeling showed.
The Government takes issue with the modelling, saying the GNS report MBIE relied upon for its data cautioned that it was attempting to "quantify what is almost unquantifiable", and fails to take into account potential from existing exploration permits.
The Prime Minister announced in April she was banning all new offshore exploration for oil and gas.
Currently, there are 22 existing offshore exploration permits covering roughly 100,000 square kilometres.
This is the second time the Government has ignored an official's advice. It was revealed earlier this year the the Ministry advised the Government to allow offshore exploration to continue in Taranaki.
It said the ban would increase risks around security of supply, increase costs to consumers and decrease economic activity in Taranaki.
MBIE warned a ban would have a "negligible impact" on reducing domestic greenhouse gas emissions and would "likely increase" global emissions, as the methanol produced by Methanex using gas from New Zealand would be replaced by methanol produced using coal in China.
"The long-term picture is this: the world is changing. Climate change is happening and the world is racing to adapt and to stop its most damaging effects," Minister for Energy and Resources Megan Woods said on Monday.
"We can't expect to rely on fossil fuels for our jobs and prosperity forever. The world is moving away from them and we have to be ready. That's why we are planning for the transition now to ensure we are creating jobs in new industries and in new forms of energy."
Green Party energy spokesperson Gareth Hughes added: "This is a special day for the planet, and proof that this Government are now meaningfully acting to address climate change."