Megan Woods dismisses ACT's 'utterly false' claim ban on oil and gas exploration led to rise in coal imports

The Government is being urged to "reverse" its ban on new oil and gas exploration as coal imports rise, but Energy Minister Megan Woods says it has nothing to do with the ban. 

New data from the Ministry of Business, Innovation and Employment (MBIE) shows coal imports were up 41 percent in the December 2020 quarter as compared with the same time 12 months earlier. New Zealand imported more coal in 2020 than in 2017 and 2018 combined.

ACT's climate change spokesperson Simon Court blames the increase in coal use on the Government's 2018 ban on new oil and gas exploration permits. He says the ban should be reversed because it has "no environmental benefit". 

"The environmental case for allowing natural gas exploration is now overwhelming - our trading partners have reduced emissions by using natural gas and turning off old coal-fired power stations and industrial heating," Court said. 

"But no one is interested in finding new gas reserves here due to the Government's ban on new exploration."

Energy Minister Megan Woods says the increase in coal use is attributed to tight supply of gas production at the Pohokura gas field and the current dry weather conditions, which have an impact on hydro lake inflows. 

She says these two factors have led to a decrease in the share of electricity generated from renewable sources, with the electricity market responding by utilising thermal generation - including coal - to help conserve water in hydro lakes and manage supply ahead of winter.

Genesis Energy has responded by making an additional coal-fired generation unit available for use this winter if required. 

"It's utterly false to try and suggest that the current stockpiling of coal by electricity companies to manage the country's dry year storage problem and production decline of an existing gas field, has anything to do with the ban on future exploration of oil and gas," Dr Woods told Newshub. 

"This idea was debunked at the election campaign when the National Party suggested it, and it's still false. It is a market response to current conditions."

Energy Minister Megan Woods.
Energy Minister Megan Woods. Photo credit: Getty

National leader Judith Collins said during the Newshub Leaders Debate last year that the oil and gas exploration ban led to more coal use instead of natural gas, but it was fact-checked by AAP as "mostly false".  

The Parliamentary Commissioner for the Environment looked into the impact of the Government's ban and noted that the increase in coal-powered generation was "not because of the ban". 

National's former energy spokesperson Jonathan Young made similar claims last year that the ban on new offshore oil and gas exploration led to higher electricity prices, and he later admitted it was "completely wrong". 

The Parliamentary Commissioner for the Environment's report says coal is "unlikely to play a role in New Zealand's electricity sector for much longer", due to the Emissions Trading Scheme and coal being phased out by major generators. 

Genesis Energy has set a timeline of 2025 for the removal of coal from its electricity generation at the Huntly power station, and intends to remove coal completely by 2030.

The 2018 ban on new exploration permits is also still yet to have a full impact. There were still more than 20 active petroleum exploration permits in New Zealand as at March 12, 2021. 

Dr Woods says the current market conditions highlight the importance of tackling 'dry year' energy storage issues, particularly as the Government seeks to meet its goal of 100 percent renewable electricity by 2030.  

MBIE's NZ Battery Project has been set up to tackle the 'dry year problem', with $30 million to investigate a pumped hydro scheme at Lake Onslow - a man-made lake in Otago, which could be capable of storing the same amount of all of New Zealand's existing hydro schemes combined. 

Depending on the findings of the feasibility study, the Government has committed up to $70 million for engineering design and further field work. It could help fill the gaps to create power grid stability in dry seasons.  

MBIE predicts construction could begin in 2024.