Gas (Market Transparency) Amendment Bill

Gas (Market Transparency) Amendment Bill Second Reading Debate resumed. ASSISTANT SPEAKER (Teanau Tuiono): Members, the House is resumed on the second reading of the Gas (Market Transparency) Amendment Bill, and we’re at call No. 4. SIMON COURT (ACT) (09:00): Thank you, Mr Speaker. We continue to progress the bill to improve gas market transparency because there is nothing more important, when a nation faces scarcity in one of its vital energy resources, than that we have the information that policy makers, decision makers, and industry participants need to work out, firstly, how much gas there is and where we are going to get more gas from—whether it’s liquefied natural gas, a vital lifeline and link to the world’s energy network that allows New Zealand industrial gas users and electricity generators to have confidence that, even if there are domestic interruptions or domestic challenges, we will always be connected to this very important source of energy; not just energy but molecules that get turned into products that we use and consume every day, like the plastic in this pen. That is why it is important that we progress this legislation, the Gas (Market Transparency) Amendment Bill, and despite the histrionics and the bizarre pseudo-objections from Labour and Green MPs speaking in the House last night, we understand they will support the legislation, because they understand that if we have more information, we can make better decisions. Thank you, Mr Speaker. ANDY FOSTER (NZ First) (09:01): I rise on behalf of New Zealand First to speak in this second reading. I think we learnt last night what violent agreement looks like. We all agree with this bill, but this is what noise and thunder looks like. We all acknowledge that we require good, timely, and complete information. That’s going to help, especially in a time when gas supply is declining at the moment, and that’s going to help everybody, whether you’re a supplier or a consumer of gas. It helps the electricity sector, and it helps the Government, in terms of how we do things. I just wanted to mention this excellent regulatory impact statement that we have here. There has been quite a bit talked about by the Opposition about the decline in gas production since 2000, but if people actually look at the graph, there was a big drop right about 2000, but then it was pretty stable for a very long time, about 15 years, and then it started declining around 2019. Of course, that was the time of the oil and gas ban. The Opposition would say, well, they basically cut the knees from under oil and gas exploration, and that’s the area where we disagree. They are, basically, relying on nobody going and looking for anything more, because if you don’t look, you’re not going to find it. If you do look, and if you’d started looking in 2019, you might have found some things, and you might actually have been bringing them into production now. I know the Greens are defending Labour, but Labour has never looked in the mirror on this score. That has had a major impact on this country. It has lost us jobs; it has lost us businesses. Sometimes, the Opposition complain about that loss of jobs, but they have been part of the cause of that situation. I am just to finishing off with a few quotes that we had in front of the Transport and Infrastructure Committee during this week. Members of the Opposition were there. This is from Meridian, who, of course, do not produce gas—they might use it, but they don’t produce it—“Material transition driven by the collapse in gas supply had pricing impacts that will take years to overcome. There are no silver bullets.” They acknowledge the pain, they want more affordable electricity, and they’re doing all they can to mitigate. The best way is to continue to invest in new generation, which, I think, we can get agreement on. But I did want to say this: they also said they are going as fast as they can to build new generation, they’re slowed down by consenting, but fast track has made a hell of a difference. I thought that would be a good place to finish. We’re doing everything that we can to provide good information and also to get things built in this country, so that we can power our country. I commend the bill to the House. STEVE ABEL (Green) (09:04): Thank you, Mr Speaker. I’m just wanting to look at the regulatory impact statement, where it outlines the problem, the reason we need transparency in the gas industry. It points out that there is incomplete information: “Our primary objective is to get accurate and complete information on the gas market,”. It points out that there are forecasts of overestimating production on the part of the gas industry, and it points out that “decisions are currently made on incomplete, inaccurate and asymmetric information.”—inaccurate information. You can read between the lines on that. “The lack of good quality information”—repeated reference, in the regulatory impact statement, to what is well known around the world. I just want to elucidate for members, before they freak out and jump out of their seats, that here I will quote from the Parliamentary Library’s search on information on industry overbooking, overestimating, or overproving its reserves: the National Whistleblower Center in 2020, “Fraudulent reserves reporting could hide stranded oil and gas assets.”; “Companies overhyping” in The Columbus Dispatch; the Royal Dutch Shell petroleum company paying $120 million to settle a Securities and Exchange Commission fraud case involving massive overstatement of proved hydrocarbon reserves. Shell admits it misled investors. “The industry has systematically misreported the size of discovery for good commercial reasons.”—that’s an academic paper from France in 2011. Let me read a quote for you from the Shell company. This is from an executive in 2003, Walter van de Vijver, a senior executive of Royal Dutch Shell: “I am becoming sick and tired about lying.” The oil and gas industry faced its most embarrassing scandal after whistleblowers reported concerns about the size of the Royal Dutch Shell reserves. They surprised investors by slashing those reserve estimates because, in the words of that executive, they had been “lying” about them. Of 19 of the largest shale companies reviewed in The New York Times, at least seven increased their estimates of their reserves by more than 200 percent. Investors cheered the rule change that made them declare more openly, because, of course, it stuffs up the industry more broadly and the users of gas if there is incorrect information on the forecasting. The Anadarko Petroleum Corporation, according to a 2016 whistleblower complaint in a securities class action: Anadarko inflated the value of its reserves by millions or even billions of dollars before it was purchased by Occidental Petroleum in 2019 for $38 billion, a delay that allowed executives to receive million-dollar bonuses for the sale. The former National Government passed a thing called the “Anadarko amendment” to stop people from protesting the drilling off the Raglan coast by that corporation, who, by the way, when they drilled, found nothing, because there is no new oil and gas in this country. We will be supporting this legislation because we support greater transparency for the good of the country, and we agree with the statement in the regulatory impact statement that points out that the impact of there being misreporting or incorrect information is that there is a lack of visibility of the sector more broadly. Gas users without upstream production facilities—they come in several categories: electricity generators, industrial gas users, and some retailers—are all impacted by the tradition, not just in this country but across the world, of the gas industry overstating its reserves. If you would understand the real cause of the energy crisis right now, apart from the war in Hormuz, it is that the industry has been overstating their reserves in this country, and that is why we need transparency in the statement of how much gas we actually have left. RYAN HAMILTON (National—Hamilton East) (09:09): Good news, Mr Speaker. I think just about everyone wants to support this bill, so I too shall commend it. Hon Dr DEBORAH RUSSELL (Labour) (09:09): As has been reasonably well canvassed already, we are supporting this bill in the interests of transparency. It’s a sensible bill. We’ll have some questions to ask during the committee of the whole House, but we do think this is a bill that needs to go through. Even more so, it’s a bill that is probably worthy of Budget urgency, unlike aspects of the tax bill that went through earlier. It’s also a bill where there is no great difficult issue to discuss, unlike the social security bill, where there is an extraordinary move to use artificial intelligence in assessing whether or not people are eligible for various benefits. Now, that should had have gone to a select committee. It would be good to discuss some of these issues in a select committee, but sometimes there is stuff that the House needs to do fairly quickly, and we do know that we need this information from the gas industry fairly quickly, so it’s a reasonably sensible bill that we are reasonably happy to support. However, I do want to take up some of the comments that have been made by earlier speakers on this bill and some of the issues that have been canvassed—very, very briefly—by members of the Government. Let’s start with the comments made by Simon Court. He opened with a statement that I agree with; “A stopped clock is correct twice a day.” He made some comments around scarcity—that we have a scarcity in our energy supply—and in order to manage that scarcity, we need better information. That’s something we can agree with. It’s where he went to next that I find puzzling. His question was, “Where are we going to get more gas from?” Now, the thing is, we have a problem of scarcity in our energy supply, and we have a problem of scarcity in our gas supply, but those two are not synonymous. There is more than one place from which to get energy. We do want to use our remaining, already permitted, gas resources sensibly as we transition through—away—from fossil fuels. The sentiment on that side of the House seems to be that any energy source is a good energy source. But there are huge externalities associated with the use of fossil fuels and, in particular, the whole world is bearing the cost of the energy that is supplied by fossil fuels. The whole world is experiencing the increase in temperatures. The whole world is experiencing climate change. This is not a matter of going out to find new gas. This is a matter of using the remaining gas sensibly as we transition away from fossil fuels. Now, for that reason, we do need the information about the remaining gas supply in this country that this bill will give us. The thing is, with more information, as Simon Court said, we can make better decisions. Simon Court is right; with more information, we can make better decisions. The trouble is that Simon Court ignores a whole lot of new information we have found in the last decades. The new information about climate change—the new information about the way our whole world is being affected. And there’s another whole set of new information that Mr Court has been ignoring, and that is the much better access to renewable energy. This is where the casual equation of “gas” with “energy” is a mistake. “Energy” is much, much wider than just gas. “Energy” also contains the renewable energies. If we want an example of what a country can do when it’s starved of hydrocarbons, sadly, let’s look at what’s happening in Cuba at the moment. That country is being starved of hydrocarbons, and it is leading to the most rapid transition to solar in any country that has ever been seen. There is a great source of energy available to us that is not fossil fuels, and that source of energy is the sun and solar power. That energy is also the wind, and energy from wind. David MacLeod: Where’s the firming come from? Hon Dr DEBORAH RUSSELL: Now, the cry on the other side is that those energy sources are intermittent. But even in Germany, they can use solar power. Even in countries that don’t have great resources of sun and wind— David MacLeod: Even Australia has firming—non-solar. Hon Dr DEBORAH RUSSELL: —those renewable sources are available. In terms of getting, as the bleaters over there are talking about, the firming, that firming capacity is available to us from geothermal. There are a whole set of resources available to us which, if used wisely and well, are available to us. We have our enormous hydro lakes in the South Island, which could be our long-term battery if we move to lots more renewable power. But so far, this is not happening. So yes, let’s make a sensible plan for using the remaining gas—let’s plan around it—but we do need to make this urgent transition to renewable power. Now, the cry from the other side has been, “Well, what about the jobs?” Apparently, there are no jobs if we don’t have fossil fuels. What about the enormous source of jobs that is available to us—high-skilled, technical jobs, well-paid jobs, that could be available in places like Taranaki, like Northland, if we made the move to renewable power. The jobs for electricians, for installers, for people maintaining those sites. There are huge sources of jobs available—and jobs where the profits remain in New Zealand. That would be an excellent source of jobs. David MacLeod: Tell Heinz Wattie’s. Hon Dr DEBORAH RUSSELL: Let’s have a think about—well, let’s have a solar farm over in Hawke’s Bay as well. There are ways of doing this. We can do this. We can and we must do this. We must do it, because otherwise we simply refuel and reinforce climate warming. Now, I do want to talk to some of the issues they’ve raised, because what happened to the transition plan? Under the Labour Government, work was beginning and was under way on a transition plan to transition away from fossil fuels, to keep the jobs going, to ensure that we had the right energy sources—gone. They just stopped the work on that, and now they have been caught out, because it is becoming urgent. One of the reasons it’s becoming urgent is that there have been no new sources of fossil fuels in this country for the last quarter of a century. Over there, they say that the reason that we have no oil and gas is because in 2018-19, the previous Government stopped issuing permits for new areas of offshore exploration. Onshore exploration could still carry on, exploration in existing permits could still carry on, but nothing has been found in those areas. It’s not economic to go searching for them. The bleating and the crying over there ignores the reality of the world—that nothing has been found at a commercial level. It’s not just that there is no gas available now, it’s that the gas has not been found. As my colleague Megan Woods said yesterday, they can chatter away all they like, bleat away all the like, whinge away all they like; the hard, cold facts of geology and of science says that there is no resource there available. Let’s get realistic. We need a transition plan to move away from fossil fuels. We need to ensure that we move rapidly to renewable energy. In order to that effectively, sure, we do need to use those remaining gasfields—well, in particular, we need to look after our domestic users. This bill will help with that, and for that reason, we are supporting this bill. Dan Bidois: Mr Speaker— Hon Dr DEBORAH RUSSELL: If you’d sit down, I’ve still got two seconds left, Dan Bidois. Point of order, Mr Speaker. I know the speaker is keen to have his 10 minutes’ worth, but I did think it was actually at least a little rude that he was up and on his feet before my allocated time had expired. ASSISTANT SPEAKER (Teanau Tuiono): The point is taken. Please wait until the clock is run down before you jump up. DAN BIDOIS (National—Northcote) (09:20): This bill is all part of the Government’s plan to fix the basics and build the future. Let’s get it done. I commend this bill to the House. REUBEN DAVIDSON (Labour—Christchurch East) (09:20): Thank you, Mr Speaker. I’m very pleased to be able to take some time to make a contribution to this important debate. The member who just finished used more time of the previous member’s speaking slot than of his own to not make his point, but I’m not here to talk about that; I’m here to talk about the Gas (Market Transparency) Amendment Bill because energy security matters in New Zealand, and so that’s what we need to be giving the appropriate time to, to debate and examine in Budget urgency this morning, because it really is a very important issue. Now, I want to start by looking at the regulatory impact statement and just remarking on how good it is that we have one but also that it goes into detail here about the changes that are happening in the gas market. It talks very specifically about New Zealand’s gas reserves steadily declining and reducing faster than previously forecast. I think that’s a really important point, and it’s something that a number of speakers from the other side of the House seem to be in some sort of denial about. I think that that’s a frustrating situation if that’s the case or if that’s the opinion. The regulatory impact statement goes on to talk about the impacts of that, and it talks about closures of the Winstone Pulp International sawmill, the Oji Fibre paper mill, Oji also ceasing paper production at Kinleith, and Carter Holt Harvey closing its Eves Valley sawmill. Since this regulatory impact statement was written, we’ve also seen closures at McCain and Wattie’s in the North Island as well. So we know that this is a big issue. But we also know that this has been an issue that Labour was working on the last time we were in Government, and since then it seems that work has, if not slowed down, potentially completely stopped, from this Government. And I thought, “This reminds me of something.”, and I thought, “What does this remind me of?” Then I remembered that a couple of weeks ago I got on a plane in Christchurch to fly to Wellington—something I do most weeks. I sat in my seat—I was in row six—and the person sitting in the aisle opposite me put on their headphones, as many of us do on a flight, and the plane took off and we flew towards Wellington. Now, we got about halfway into the flight, and it was an unusual flight. The plane was performing differently to what you would come to expect. The cabin crew and the pilot very calmly explained to us that there were some engineering issues with the plane and that they were going to turn us around and they were going to fly us back to Christchurch and safely land. We all thought—or I thought—that was a good plan and a good idea and we were comfortable with that—and, sure enough, the plane turned around and we flew back to Christchurch and we safely landed in Christchurch and we got off the plane and we walked into the airport. Now, that person who had been sitting opposite me with their noise-cancelling headphones on arrived at Christchurch Airport, walked off the plane, walked into Christchurch Airport, and said, “Where am I?”, because the duration of that flight was the equivalent of if you’d made an end-to-end flight from Christchurch to Wellington. But instead, because that person had been existing in another world for the period of that flight, they had no idea where they were. And I thought, “That’s what this reminds me of.” This Government reminds me of a passenger with noise-cancelling headphones who thinks they’re heading in one direction but, because they’re not paying any attention to the many signals—the many signals—that they are receiving from the pilot, from the cabin crew, and from their fellow passengers, they arrive somewhere and don’t know where they are. That’s what this looks like. So, 2½ years into Government, having not been paying attention, they now need to urgently, in Budget urgency, move to introduce this. The current transition plan simply seems to be that there isn’t one. We will support this bill, and our speeches have been, as you will have heard, supportive of the intent of this bill. But I think what we’re also saying is that on its own it’s not the plan that we need. It looks a lot like someone who’s been wearing noise-cancelling headphones thinking that they’re heading to one place, only to discover, when they put their feet on the ground and get the reality check that they need, they are actually, in fact, potentially back where they started. We will support the bill, but it is not the energy plan that New Zealand need and that New Zealand deserves. TOM RUTHERFORD (National—Bay of Plenty) (09:25): I wish I had my noise-cancelling headphones for that last five minutes! This is all about our plan to fix the basics and build the future. I commend it to the House. Hon RACHEL BROOKING (Labour—Dunedin) (09:25): Thank you, Mr Speaker. Here we are in the second reading of the Gas (Market Transparency) Amendment Bill. We have heard a number of second reading speeches that were very brief, but the Minister did add something. After we have another couple of speeches, we will be in committee of the whole House, so I might raise some issues here in the second reading that will be relevant to that committee of the whole House stage, for the Minister. Stuart Smith: No headphones? Hon RACHEL BROOKING: Hopefully he’s not wearing headphones and is listening so that we can be as efficient as possible in this—because apparently this is somewhat about efficiency. What I want to start out with is just going back to basics—the actual basics of what we’re talking about here—because there seems to be quite a lot of muddled sentiment about what this bill is about and some magical thinking that it’s going to resolve all sorts of different problems and that there’s all these problems caused by the previous Labour Party, which is absolutely not true. We know in New Zealand that we use a good number of different energy sources. We heard Megan Woods talk, in her second reading speech, about that difference between electrons and molecules. In New Zealand, about 50 percent of our energy use comes from, or is still derived from, fossil fuels at some stage. Gas—most of the gas that we are talking about in the Gas Act—comes from fossil fuels; that is, that they are the molecules. Now, some of those fossil fuels are converted into electricity—that is, they turn into the electrons. Much of that energy could jump the molecule step and just be electrons, and that is what Deborah Russell was talking about in her speech before: that when we are thinking about the whole energy system in New Zealand, there is much opportunity to skip the molecules and go straight to electrons, and that, of course, should be our focus if we are trying to decarbonise our economy. We often hear the term electricity being used interchangeably with energy, and there is a lot of energy—as I have noted before—used in New Zealand that is not coming from electricity. Now, of course, when we are talking about fossil fuels, we are not just talking about gas; there are other fossil fuels as well. There are liquid fossil fuels, in terms of petroleum, and there are thermal fossil fuels. There is coal as well. This legislation is clearly not about those other fossil fuels, but it is about gas. And it’s not just about the gas that we might find and obtain from Taranaki; it is also about the gas that comes into New Zealand. That is my understanding. I’m very happy for the Minister to say that somehow this is different and it’s only about New Zealand’s reserves. But from listening to the Minister’s speech before, this bill is not just about New Zealand’s gas reserves. It is about all gas that comes into New Zealand, whether it originates from New Zealand or is imported in. And then, of course, we know that some gas is exported out of New Zealand as well. Point being, these are all fossil fuels that we’re talking about, and we want, desperately, for New Zealand to change its economy to decarbonise. Now, that takes time. We’ve heard Megan Woods, again, speak about the importance of a just transition when you’re transitioning, and to plan for it, which is why you need an energy plan—something that we’ve heard debated in this House, in this sitting block. There have been questions to the Prime Minister about this, and it seems like this Government is not interested in a plan to do that. What, in fact, this Government wants to do is to sit around, point some fingers, and totally continue their reliance on fossil fuels. That is very disappointing. What this bill is doing is saying, well, we have an issue in New Zealand with the actual amount of gas, the fossil fuel in New Zealand at the moment, because so many users of the gas are still dependent on having gas. They have not done a transition so that they can use electrons rather than those molecules. This decarbonisation can happen for difficult-to-decarbonise industries that rely on industrial heat. For example, in the great electorate of Dunedin, recently I’ve gone to visit two different electric boilers. So that is that they are using the electrons, and these are both boilers that were using gas. One was using natural gas, and that was at Lion’s, now the Speight’s factory—now 150 years old, and happy birthday to Speight’s. The other at Preens dry cleaners, which is a big laundry—it takes a whole lot of hotel laundry—and that had been using LPG. So thanks to the CERF—the Climate Emergency Respond Fund—and the Government Investment in Decarbonising Industry Fund (GIDI Fund), those companies were able to do the investigations and the seed funding. Both those companies told me they would not have converted from their fossil fuel molecules to renewable electrons had it not been for that seed funding. They put the majority of the money in, and both companies are now very pleased that they did that because, obviously, gas prices have gone up. But anyway, my point is that what this bill is doing is saying all of the gas that is in our economy, we want to know more about where it’s being distributed and who those commercial players are—not the domestic houses, but those commercial players. Who is using that gas, when do they need to use it? And, hopefully, although I don’t think it’s in here, what is their plan to get off that gas? What is their plan to move from molecule to electron? That’s the missing piece here, and it’s the missing piece from everything that we hear from those Government benches. Instead, we hear that, “Oh, we need to put Government money, taxpayer money”—in terms of, we’re talking about subsidies; I just heard those words used before—“into an LNG terminal so that we can continue importing foreign fossil fuels into New Zealand and we can embed the use of that gas into our economy.” Rather than saying: “Here is an opportunity”—here is an opportunity to say to everyone it is worth it. It is worth making the long-term investment now to change your processes from the use of molecules, of fossil fuels, to renewables and to electrons. Of course, it will take more investment. Nobody is saying that firming is not a problem and that we need to do more investment in this space, but here is the opportunity to do it. Instead, this Government is turning away and talking about LNG terminals, and that is very sad. What is useful is that we are going to have some regulations—if the regulations are made under this—to be able to make good decisions and to do planning. So I implore that Government to actually do some planning so that we can move away from a reliance on fossil fuels, foreign or otherwise, and move to a more renewable New Zealand—a decarbonised New Zealand. NANCY LU (National) (09:36): Let us move into the committee stage for the Gas (Market Transparency) Amendment Bill and to fixing the basics and building the future for New Zealand. I commend the bill. Dr LAWRENCE XU-NAN (Green) (09:36): Thank you, Mr Speaker. I rise of behalf of Te Pāti Kākāriki. As we heard from my previous two speakers, Steve Abel and also Scott Willis, we do support this bill. But I think both Steve and Scott canvassed the broader issue of the gas market and what we’re seeing in terms of the transparency of information quite well. I think to start with, when we’re looking at the market transparency—or we’re just looking at transparency in general, whether it is to do with the gas industry or whether it is to do with public-private partnership or whether it is to do with anything that the public would be interested in or is of public interest—we should be striving for more transparency in all regards. There are a couple of things in this bill that I want to speak on. I think this is just to kind of indicate also some of the questions that potentially could come up later on in the committee stage. The main thing about this—and people talked about the purpose of this bill, like I said, quite well. The main substance of the bill is secondary legislation. We’re looking at a regulation-making power under the new section 56AA of the Gas Act. But one of the things that is in there—and it does list a number of things in terms of the disclosure of gas market information by industry participant or consumer, which does not include a domestic consumer. While that is there, I think we’ve heard previously from other speakers, as well, that it doesn’t quite go far enough as what we see in some other comparable jurisdictions, such as Australia. I think if you’re going to be doing something like this, we might as well do it all the way. Because, as we know, Australia is not really the shining example when it comes to their gas market. Yet they’re still doing it better than what we’re doing here, even with this particular bill. So I think there is room for us to consider and question what information could also be added or how we are able to strengthen this particular regulation under new section 56AA. What is also interesting around this area is that there is no real end date or real date that has been given on when that regulation must be made. So while we understand that secondary legislation is made by the Governor-General by Order in Council under the recommendation of the particular Minister, and we’re talking a big game about transparency and how good this is and how much we support it; commencement date the day the day after Royal assent—fabulous. But there is actually no real date given on when that regulation will kick into effect. I think that is something we do need to hear from the Minister on, just to be able to get a sense of, well, when is this going to happen? I think finally, in terms of the bill, before I move on to what I’ve now just discovered is the Minister’s own Amendment Paper, is around if the industry or industry participant or consumer failed to declare or have declared incorrectly, what are the repercussions when it comes to that kind of offence? I know that the Government parties all seem to be very keen on this idea of being tough on crime, yet we don’t see the same approach when it comes to white-collar crime, for example. When it comes to something like this where an industry failed to declare or declared incorrectly, based on what we see in this bill and based on what we see in the Gas Act, the maximum penalty is $200,000, right? But, as we heard from the previous speaker, petroleum companies earn millions and billions a year, so $200,000 is peanuts compared to that. Is that something that will actually deter potential offenders? I think that is also an important discussion to have. Overall, we do support this bill. We believe this bill can be strengthened, and we are keen to engage with the Minister in the committee stage. Motion agreed to. Bill read a second time. ASSISTANT SPEAKER (Teanau Tuiono): This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Gas (Market Transparency) Amendment Bill.