by Kennedy Graham
On Tuesday the Government released the final version of its backwards-looking energy strategy.
Of passing note is the removal of any overt reference to lignite coal. Of course bioenergy could be code for it, or ‘alternative transport fuels’ (the Energy Outlook 2010 specifically cites lignite diesel as an alternative transport fuel with potential.)
But basically the strategy is clearly bent on increasing the exploitation of oil and gas.
There are so many aspects of this strategy that are plain wrong. First off, there is the obvious impossibility of simultaneously increasing fossil fuel production and responding effectively to the unprecedented threat of climate change.
But equally, there are the hollow claims of various immediate economic benefits the fossil strategy might bestow. So let’s examine these:
1. We need oil and gas exploration and drilling because it will create jobs.
Two reports (commissioned by Venture Taranaki over the past 5 years) seek to quantify the economic benefits (including job creation) of the oil and gas industry in that region.
The first (PDF) is a sober, cut-and-dried analysis by BERL (Sept. ’07). It states that there were 817 FTE employed by the entire sector in Taranaki in 2006. There are some multipliers that flow on from the industry but, overall, it was less than 2% of the workforce in the region. By comparison, over 2,000 were employed in manufacturing and well over 6,000 in dairy. There were fewer than 1,000 FTE employed in the industry throughout New Zealand that year.
Of those employed, many weren’t local. The report states:
A large portion of the oil and gas workforce are overseas experts, often with international experience.
The second report, The Wealth beneath Our Feet (2010), comes across as a PR piece extolling the virtues of the industry. It’s not clear who the authors are, or what their assumptions were, but they claim the oil and gas industry directly employed 3,730 FTEs in 2009. That’s a 400% increase in the number of people employed in the industry over just 3 years. This number keeps getting cited, and multiplied out further to be responsible for as many as 7,100 jobs in Taranaki.
However, according to Statistics NZ, the numbers haven’t changed all that muchsince 2006 (see table below).
So there are grounds to question the optimism of the second report. More importantly, we need to keep in mind the point made in the first report – many of the jobs associated with oil and gas go to overseas experts. There’s not sustainable job creation in it for New Zealanders, because once the resource is gone (or we have a catastrophic accident), there are no more jobs.
Investment in public transport, clean tech and renewable energy will also create jobs, and we have every reason to believe they will create more jobs than oil and gas.
2. We need to develop our resources so we have secure, affordable energy
Running through the Energy Strategy is the insinuation that Kiwis will benefit from affordable energy if we increase our domestic production of fossil fuels. We use a lot of oil, so we’ll be better off if we drill our own.
This is perplexing, because we don’t use any of the oil that is drilled here – we ship it offshore and import heavier crude from overseas. Even if we could refine and use the oil produced here, we would still pay the international market price for it.
There is the claim that the amount of oil we export offsets the oil we import. But New Zealand households and businesses are importing well over $6b of oil annually. Even though we’re exporting around $2b worth of oil, the Government only gets about $300-500m in royalties and taxes. So it’s not like consumers are going to get a huge reduction in their tax bill which will offset the extra they are paying to fill up their tank.
Source: The Treasury, Budget 2011. Revenue data.
The only way to future proof our economy against rising volatile oil prices and an increasing carbon price is to reduce our dependence on fossil fuels. That requires a serious plan of action, such as Denmark has developed. We need policy, regulatory and funding changes.
This Government clearly has no interest in setting ambitious targets, or even outlining how we might get to the unambitious targets they have set. For example, the EECS strategy has the target
By 2016: The efficiency of light vehicles entering the fleet has further improved from 2010 levels.
Doesn’t say how much better… just better. How’s that for a measurable and ambitious target? That way we don’t need to explain which Government policies will facilitate the outcome.
The Green Party knows we need a plan, and we are working on the outline of what we would do if we were in Government to create thousands of clean, green jobs, and transition our economy away from fossil fuels.
That’s the kind of energy strategy New Zealand needs.