The Government's decision to ban new oil and gas exploration could cost the New Zealand economy nearly $30 billion by 2050 and see 3000 people lose their jobs, according to a new report.
The report from the New Zealand Institute of Economic Research (NZIER), commissioned by Petroleum Exploration and Production New Zealand (PEPANZ), found the policy would cost the national economy $28 billion by 2050.
- Oil industry says it had no warning of ban
- No more oil exploration permits
- Inside the oil and gas ban - which Cabinet is yet to sign off
PEPANZ chief executive Cameron Madgwick said the report was "sobering" and highlighted the policy's "enormous damage to New Zealanders' standard of living".
"Exports are likely to fall by between $3 billion and $10 billion, and the impacts will be particularly severe in Taranaki where the local economy could shrink by up to $40 billion," he said.
The $28 billion figure is a mid-point estimate between $15 billion and $38 billion.
With the report suggesting 3107 jobs could be lost, he is calling for an independent review of the policy from the Climate Change Commission and the Electricity Authority.
"Those are two independent bodies who you really should be asking for their advice in relation to such an important step for New Zealand," he said.
"Twenty-eight billion dollars in the context of that type of spending, that the economy is going to be worse off from, it just doesn't seem like this is the right way to go and it really is time for a rethink."
The report notes that export revenue would reduce by between $3 billion and $10 billion nationally.
But the report has been labelled as "fake news" by Greenpeace who emphasised that it was commissioned by the oil industry and used "fake assumptions and alternative facts" to come to its conclusions.
"This report is simply a rehash of old modelling that failed to take into account the cost of climate change or the value that new clean energy industries will have as we transition away from fossil fuels," said campaigner Amanda Larsson.
"It assumes we have a choice about whether or not we respond to climate change. We don't. We have just 10 years to cut our emissions in half if we want to avoid passing the 1.5degC warming threshold for human safety."
The report said NZIER had used a regional computable general equilibrium (CGE) methodology to carry out the modelling, which it said "is generally accepted as the most robust methodlogy for assessing the effect of economic shock".
Mr Madgwick said its data was based on scenarios from the Government's Regulatory Impact Statement, supplemented with figures from Statistics New Zealand.
Former ANZ chief economist Cameron Bagrie said the ban would leave a massive hole in the New Zealand economy.
"We got to find other sectors that are going to fill that void, and we got to find them pretty quickly," he said.
Mr Bagrie said the country would need to find a new industry "in excess of the tourism sector".
"Taranaki is like an aeroplane that has lost its two key engines, it has lost its oil exploration industry and it has lost its dairy," he said.
"We are dishing out the hits, we are not dishing out the opportunities on the other side."
Mr Madgwick said the policy made no sense when the Government's own advisors suggest global greenhouse gas emissions would still rise as more coal is burnt overseas and fuel is imported.
The Labour-led Government decided to not issue new block offers to combat climate change in 2018.
"We are protecting existing exploration and mining rights. No current jobs will be affected by this as we are honouring all agreements with current permit holders," said Prime Minister Jacinda Ardern.
Despite advice from Ministry of Business, Innovation and Employment (MBIE) that the ban would cost New Zealand $8 billion in lost tax over 23 years and that the Government should allow offshore exploration to continue in Taranaki, it continued progressing the legislation.
MBIE also 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.
But Minister for Energy and Resources Megan Woods said at the time New Zealand couldn't expect to rely on fossil fuels forever for jobs.
"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," she said.
"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."