Appropriation (2024/25 Confirmation and Validation) Bill

Committee of the whole House—Annual Review Debate Energy Dr PARMJEET PARMAR (Chairperson of the Economic Development, Science and Innovation Committee) (16:24): Thank you, Mr Chair. As the chair of the Economic Development, Science and Innovation Committee, I am very happy to open this debate and report to the committee that the select committee worked really hard and scrutinised the energy portfolio. The discussion and the scrutiny revolved around delivering energy security and value for resources. We discussed making energy more affordable; we discussed investment and renewable energy. The Ministry for Business, Innovation and Employment (MBIE) told us that on several key issues to drive energy costs down, they were working on many, many measures. They also talked about the electricity market performance review which happened earlier in 2025. We also talked about giving consumers more power, and MBIE in the select committee told us that to give consumers better ability to control their own costs, they were working on various measures. Examples included removing the need for consents for rooftop solar, developing a consumer data right for electricity, and working with the Electricity Authority so consumers are rewarded better when they feed energy back into the grid. We also talked about dry-year cover. MBIE told us that they were setting up a regulatory regime to ensure that the energy sector is able to cover a dry year. Along with these topics, we also discussed the efficacy of energy initiatives and funding. Thank you, Mr Chair, and I really look forward to this debate. Hon Dr MEGAN WOODS (Labour—Wigram) (16:26): Thank you, Mr Chair. The energy and the plans that we as a country have around energy sit at the heart of who we need to be as a nation. It drives our economy, it creates jobs, and it underlies industry. It also sits at the heart of our wellbeing as a country. Having well-heated, well-insulated homes means a healthier population, so examining this appropriation is critically important, not only for understanding our health and wellbeing but understanding our economic health and wellbeing. Our energy system exists to support both its citizens and its industry. There’s a number of questions that will cut across both the Minister and the Associate Minister, given the divide that sits in this portfolio. I will start with some questions around fuel and the fuel plan that the Government has in place. This afternoon, we heard from the Associate Minister for Energy that he hasn’t considered using the powers that sit within the Fuel Industry Act, as Labour amended it. He’s quite content to sit at the minimum powers that that piece of legislation offers. I’d like to know what plans and what would be the triggers for the Minister to start using both the additional minimum stockholding obligation powers that sit within the legislation, and also the regulatory backstop that was put in place in order for there to be more information for New Zealand businesses and New Zealand households around what the stockholdings would look like. SCOTT WILLIS (Green) (16:28): Thank you, Mr Chair. We’ve certainly realised just how vulnerable we are to dependence on fossil fuels, given the US and Israeli warmongering this year. We’ve also seen how hard people are doing it. There’s been a 12 percent annual increase in power prices, and the Ministry for Business, Innovation and Employment identified the lack of backup for dry years as a key issue, and that’s affecting energy affordability. We’ve also heard the previous Minister give a bold claim that importing liquefied natural gas (LNG) will provide dry-year cover and will lower household electricity bills from what they might be. That’s some impressive crystal-ball gazing. Why on earth did the Government not model the cost of an international price spike, and will the Government now reconsider spending over $1 billion of public funds on the LNG import terminal?—that’s one question. If the Government does not proceed with LNG, have there been any alternatives considered, and would those alternatives be the same as considered by Concept Consulting in their modelling that was released or are new alternatives being put forward? And I’ll follow up. Hon SIMEON BROWN (Minister for Energy) (16:29): Thank you, Mr Chair. I thank the members for their questions. It is good to be able to have a debate in this committee of the whole House stage on energy policy, which is foundational to our economy. Energy policy is the foundation of a strong economy, and this Government has had to clean up the mess left behind by the previous Government and the decisions that they made that led to a New Zealand energy market that was less secure, less affordable, and more reliant on international coal to fire up Huntly Power Station. Those are the decisions made by the previous Government that we have had to clean up. We’ve had to remove the 2030 100 percent renewable target, which, of course, was an absolute fantasy—an absolute fantasy. We’ve stopped the last Government’s obsession with a lake at the bottom of the South Island that wouldn’t provide dry-year cover until the year 2037 at a cost of $16 billion at least, and, of course, we’ve had to reverse their ghastly ban on oil and gas exploration, which, as I said, has led to us not only being more dependent on international coal, but it has also led to the deindustrialisation of New Zealand businesses across the country. That means fewer jobs. I would have thought the Labour Party, where one of the things they like talking about is jobs—well, I saw a report just the other day that said their decision to ban oil and gas exploration led to the direct result of 2,000 fewer jobs in Taranaki; 2,000 fewer jobs. That is ultimately the result of the previous Government’s decision, which is to deindustrialise New Zealand and reduce and remove regional jobs. We’re now making the tough decisions to ensure we have secure and affordable energy here in New Zealand. We’re seeing good progress against all of those things, whether it’s making sure that we get the long-term agreements in place so that Tīwai smelter provides certainty to the electricity market—whether it’s making sure we have a strategic coal reserve so we can provide the dry-year cover that’s needed; whether it’s making sure we actually pass fast-track legislation which is seeing a renewables boom in this country. I just saw last week that the Waitaha run-of-river scheme in the South Island is being opposed by our Opposition—the very Opposition who think we need more renewables are opposing fast-track consent for that project. Our focus is very much on affordable, secure supplies so that Kiwi households and businesses have the affordable energy that we need. There have been a number of questions about dry-year cover, and, of course, that is a critical issue that we must face, and many of the decisions we’ve made have helped to address that. There, of course, have been a range of options that have been considered, and I encourage the member to go and read the Cabinet paper and the business case and all of the documentation, which looks at all of the options and all of their different costs. Ultimately, if the member is suggesting that the option he would prefer is more coal—which is ultimately one of the alternatives—it has twice the emissions of gas, and, ultimately, means more dependency on imported coal from Indonesia. Now, I didn’t think that was the Green Party policy, but that’s what it looks like. CHAIRPERSON (Greg O'Connor): Just before I take any further calls, obviously the scope of the debate has probably been increased somewhat by the range of the Minister’s answer, so be aware of that. Hon Dr MEGAN WOODS (Labour—Wigram) (16:33): If the Minister wanted to try and tie his answers back to Budget 2024 and 2025—of course we can see that that was the Budget where a range of initiatives to support New Zealand businesses to keep people employed and people in work were scrapped. That was one of the effects of the mini-Budget, and then through into Budget 2025, which is the one that is under scrutiny. The Minister had a range of issues that he talked about, so I have several questions, and then we’ll come back later in the debate—I’m sure the Associate Minister will welcome the Minister making him stay in the Chamber longer; the Minister in the chair will welcome the fact that he has to stay through to the latter part of this allocation. In terms of the Minister’s claim that the oil and gas ban is somehow responsible for what we are currently seeing, I would like to know specifically what advice the Minister has seen about how long it takes to bring something from exploration to production; what the average period of time in New Zealand has been from a permit for exploration being issued through to be actively producing well, and whether or not ever in New Zealand’s history we would have seen a well go from exploration to production in the period of time from 2018 to 2026. I’m specifically asking about the advice he has received on that. I’m also asking the Minister whether he received advice about the over $1 billion that was invested by the oil and gas industry into existing permits post 2018 to go looking for additional gas in the existing permits, but commercial finds were not found. I’d also like to ask the Minister, around the dry-year cover—he said that Scott Willis should go and read the documentation. Well, I can assure the Minister, I have read all the documentation, I’ve read the Cabinet paper, and what I know from the Cabinet paper is that is says that there wasn’t time to produce a regulatory impact statement to adequately assess all the alternatives that were in there and that were being considered when the Government made a rash decision around liquefied natural gas (LNG). That cost-benefit analysis was not done, Minister—but since you seem to have that knowledge, I’d like to know exactly what the other options were and how they stacked up against LNG. Certainly, the documentation that the Government released did not show that—neither the Cabinet paper nor any of the supporting information that sat around it. I wait with bated breath to hear from the Minister. Fundamentally, we have a Government that cancelled work that was under way for the most important part of New Zealand’s energy system, and that is how it is that we adequately store energy for dry-year risk. The Minister will say, “Lake Onslow, Lake Onslow”—the Minister killed the New Zealand battery project. The Minister killed a programme of work that was not just looking at pumped hydro and Lake Onslow, it was looking at a range of options of how to store energy for a dry year. This was thrown out by this Minister in his first time as Minister for Energy. The Government then had to scurry and has come up with an unaffordable plan in LNG that is going to put the price of electricity up in New Zealand. In terms of the plan that this Government has for giving affordability and security to New Zealanders, we still haven’t seen an energy strategy; the Government has been in Government for nearly three years, and it is still yet to emerge. Businesses are continually asking for it, and in terms of helping businesses in the transition, I’d like to know what the Minister thinks of Business New Zealand’s plea last week for the Government to assist businesses to transition away from gas so that they can keep operating and keep people in employment after the Government slashed all the funding that Labour had put in place to assist businesses with that transition. Hon SIMEON BROWN (Minister for Energy) (16:38): It’s lovely to be back as the Minister for Energy, isn’t it? It’s great to be back, and it’s great to talk about some of the decisions I made last time, such as stopping her boondoggle of a project, Lake Onslow, in the middle of the mountains, which, of course, wasn’t going to produce a single kilowatt of electricity until 2037 at the earliest, at a cost of $16 billion at a minimum. That was the solution. The Government has worked very hard, very fast, and put other options on the table, which we’re now working through a process to make decision on. I’d point out to the member that making a decision this decade and implementing a solution this decade is far more important than waiting for 2037, because the impact of higher prices is having a real impact on our economy today—today. The advice I’ve seen is that by 2025, higher energy prices, caused by many of the decisions made by her Government, are estimated to have worsened New Zealand’s trade balance by $275 million, reduced our GDP by $5.2 billion, and cut household spending by 1.65 percent. Of course, we saw the impact of what that looked like in 2024, when the sun wasn’t shining, the rain wasn’t falling, the wind wasn’t blowing, and they killed the oil and gas industry. That is absolutely shameful—shameful for our economy, shameful for Taranaki. She has the audacity to stand up and say, well, how long would it take to find some gas? Well, I can tell you what: if she hadn’t banned oil and gas exploration eight years ago, I’m pretty sure there would have been “Drill, baby, drill” happening right now up and down New Zealand so we can have our own indigenous gas here in New Zealand, which, of course, she killed, making us more dependent. Of course, we saw the Leader of the Opposition, the wannabe PM, in question time and, of course, Chlöe Swarbrick talking about how we want to be more resilient, more independent, more of these things—they are the very people who have destroyed the very industry that would make us independent. That’s why we reversed the ban on oil and gas exploration. That’s why we have got rid of the chilling impact of the Lake Onslow project on the energy sector. We’re now seeing our renewables boom here in New Zealand, with solar, with wind, with geothermal projects. We are seeing fast track getting more projects delivered faster than ever. That is good news. We will keep delivering; Megan Woods will keep moaning. SCOTT WILLIS (Green) (16:41): Thank you, Mr Chair. Given that the Minister for Energy has been unable to answer the question previously about why the Government did not model the cost of international spike price on liquefied natural gas, I’m assuming that they don’t care about the price, because consumers will pay for it. We also heard in the 2024-25 annual review of the Ministry of Business, Innovation and Employment (MBIE) that MBIE is working to give consumers a better ability to control their own costs—examples include removing the need for consents for rooftop solar, and working with the Electricity Authority so consumers are rewarded better when they feed energy back into the grid. But the Government rejected advice to provide financial mechanisms like a ratepayer assistance scheme and hasn’t legislated for a feed-in tariff. Given the energy crisis we’re in and given the pain that households are feeling at the moment, will the Government look again at financial mechanisms to enable greater solar and battery uptake to help households with high electricity bills and/or legislate for a solar feed-in tariff? I’d like to hear from the Minister. Hon Dr MEGAN WOODS (Labour—Wigram) (16:42): Thank you, Mr Chair. Just to remind the Minister for Energy of some of the questions that are still outstanding: how does he respond to Business New Zealand’s call for the Government to step up and partner with industry to help businesses that are suffering and where we’re seeing businesses close down and people lose their jobs? Business New Zealand put out a very clear plan last week, and I’d be very keen to understand whether the Minister has asked for advice on that and whether the Minister is planning to step up and do something to support our businesses who are struggling, or whether he’s going to ignore that plea. I also would like to ask the Minister—he hasn’t addressed the issue that Scott Willis raised about the advice they may have had about international liquefied natural gas (LNG) prices, but given in the Cabinet paper it was laid bare that a group of Ministers were going to be making the commercial decision, rather than officials—a delegated group of Ministers—and given the Prime Minister’s call to see whether or not this stacks up, whether the Minister still intends, as per his predecessor’s plan that was laid out in the Cabinet paper, that, at a time of such global uncertainty, it will be politicians making a commercial decision about who should be the final procurer of the LNG scheme. Hon SIMEON BROWN (Minister for Energy) (16:44): Look, I thank the members for their questions. In regards to the questions around solar, my understanding is that the Electricity Authority has made decisions in regards to feed-in tariffs, with that implementation later this year, and that, of course, is alongside the reduction in consent requirements for rooftop solar. We are seeing a significant increase in people putting rooftop solar on their houses, which does make a big difference. We’ll continue to look at what other initiatives may be needed to support increases in rooftop solar and the role that that can play for households across the country. In terms of the question around the war in the Middle East and the impact that has, of course that has an impact on spot prices, but, of course, as Genesis has mentioned in relation to this issue, there is what’s called “hedging” and managing contracts, and a whole range of other financial and commercial tools which can be used to manage price. To answer the member who’s just sat down’s question, we’re going through a procurement process. We’ll be taking into account a range of factors for making a final decision. The last question was in relation to Business New Zealand’s call for subsidies and, I think, a reimagination of the Government Investment in Decarbonising Industry Fund, which, of course, was the previous Minister’s— Simon Court: Boondoggle. Hon SIMEON BROWN: —boondoggle. We are not in the business here of just simply subsidising businesses, but we are in the business of lowering energy prices so that we can ensure New Zealand businesses and households have access to affordable energy. That requires all of the initiatives that we’ve done as a Government and more, because we need to make sure that we have an energy market which works and which is driving investment forward. I am pleased to let the member know that we have a renewables boom currently under way in this country, which is doing a fantastic job. There, of course, is much more work to do. DEBBIE NGAREWA-PACKER (Co-Leader—Te Pāti Māori) (16:46): Thank you, Mr Chair. There’s a couple of questions. I just want to start with the first one. Of the 30 permits that existed in the oil and minerals sector, how many were forfeited and how many were actually producing? Then I’d like to go into the questions about renewable energy. On paper, it looks like we’re 80 to 85 percent renewable, except electricity, except that when you go into those reports more, that excludes our reliance on the transport industry, which is still extremely fossil heavy. I’m going to push through these questions, if it’s OK with the Minister for Energy, because I’m aware that we have limited time as a party. How I’d like the line-up of questions is: does the Minister accept the quoting of 80 percent renewable electricity masks the reality that less than half of our total energy use is actually renewable, and why is the Government relying on statistics that exclude industries such as transport? That’s our biggest risk to resilience, as a country. The other thing is the cost of living contradiction. There are 140,000 homes that have taken up the loan opportunity. Is the Government happy with the fact that there are many that haven’t? If we’re having a renewable boom, how is it going to be accessible and how are you claiming that transition is working? Also, I’d like to understand from the Minister what percentage of Aotearoa’s renewable infrastructure is owned offshore, rather than by communities or the public? Enjoy the conversation of indigenous oil—do we have indigenous solar? The other aspect is that we talked about dry-year risk, and we have a heavy reliance on hydro. What is the Government’s plan to guarantee supply during those dry years, without reverting to coal and gas? And just a couple more—bear with me. What investment is being made in regional grids to enable local generation, particularly in rural communities? Are we building a system, in your mind, from a renewables perspective, where energy is generated locally but controlled and priced centrally; if so, what’s the difference between the issues that we have now? Thank you. Hon SIMEON BROWN (Minister for Energy) (16:49): I thank the member for the questions. Of course, when it comes to what percentage of our electricity comes from renewable sources, those statistics are very clearly stated. That is around the percentage of our electricity and its generation from renewable sources, and it’s around 85 percent as a country. That is something we should be incredibly proud of. There is a significant pipeline in, in particular, indigenous solar—that is a big part of the pipeline. I’m advised that the total forward pipeline of indigenous solar is 1,867 megawatts, which equates to 2,697 gigawatt hours of indigenous solar in the pipeline, 2026-29. I can also confirm to the committee that that indigenous solar does not need to go through the Strait of Hormuz; it comes straight from the sun to New Zealand, and there is a huge amount of it getting built under this Government. Isn’t that a good thing? I hope the member would be welcoming it and celebrating it, because that’s what happens when you have fast track, and it’s what happens when you have a National Government focused on making sure we get rid of the roadblocks, and getting things done. There’s a lot happening in the energy space and lots more to do. Hon MARK PATTERSON (Associate Minister for Regional Development) (16:50): Thank you, Mr Chair. Look, there’s so much going on under this Government in terms of energy generation and resources. It’s really hard to keep up but just this very morning, the public notification— Hon Shane Jones: Breathtaking. Hon MARK PATTERSON: —and I’m interested in the Minister for Resources’ knowledge of this, and perhaps you could illuminate, because a major announcement was publicised this morning in turning Southland’s lignite reserve, I believe it’s something like 9 billion tonnes, into urea, and also electricity generation from the hydrogen. On top of that, my understanding and perhaps the Minister could illuminate, the impact that fast track has had on drawing that investment—that we’re actually competing with Victoria in Australia. If the Minister could answer those questions, please. Hon SHANE JONES (Associate Minister for Energy) (16:51): Somewhat unusually, I’m going to stand to address, because the portfolio is split, the questions from the honourable shadow Minister for energy, first. A question has been raised: why do we not increase the obligations upon the fuel importers, very quickly, so that they go straight up to 28 days, and that creates a problem as to where this additional fuel would be stored—not only that; the costs associated with demurrage if this additional fuel was brought to New Zealand and left in a vessel bobbing on the coastline. Now, of course, none of this would have happened had the situation been handled differently with the closure of the refinery, and I’m not going to tempt an admonition from you, other than to say the fact: had the 700 million - odd litres of storage capacity not been terminated in 2021-22, we may very well have had tanks fit for use. However, I inherited a situation where there were a lot of aspirational paragraphs; no budget, no plan of execution. Within eight weeks, New Zealand—eight weeks—I’ve achieved, on behalf of the Government, what the last regime could not do for 1,000 weeks; simply dedicated a small amount of money, relatively speaking, to upgrade 100 million litres’ worth of storage; recommissioned a crude tank, to the best of my knowledge, for the purposes of holding additional diesel. The acid is on the fuel import companies because, yes, as the honourable member knows, we’ve given them a period of time to create additional storage capacity and, from time to time, a number of their tanks are not full, but no one’s car, day by day, in New Zealand, when they drive it around, is full of fuel. The capacity of the tanks ebbs and flows. That’s my response in that regard. In respect of what additional steps the Government might be making to build an additional sovereign buffer, all I would say is: until such time all Ministers have addressed that issue, as the Prime Minister has adverted to, then we’ll make an announcement as to what level of additional buffer should be created. The other point that was made is: what confidence do we have as to what’s happening on the other side of the refinery businesses, given the disruptiveness and the massive changes that have happened in terms of where the feedstock is coming into the refineries? It gets converted into fuel, gets put on to ships, and eventually makes its way through to New Zealand predominantly, if not exclusively, through three companies. We’ve been advised that the refineries have been reorientated to cope with feedstock from Latin America, the United States of America, Africa, and alternative sources. Now, it is true that 20 million barrels per day were going through the Strait. However, there was always an additional amount of feedstock coming out of that part of the world, the Middle East; that is still flowing, but the disruptiveness has caused the refineries to reorient. No single fuel company has said that they are close or perilously heading towards violating their legal obligations, because punitive damages up to $700 million could be visited upon them. ANDY FOSTER (NZ First) (16:55): Thank you, Mr. Chair. I’m going to ask one question, but I also wanted to remind the Minister who’s just spoken about the question that my colleague the Hon Mark Patterson asked about the lignite urea plant in Southland, which has been proposed because that seems to be a massive opportunity. The question I wanted to ask about is that when talking to one of the energy companies recently, they said, “Well, look, we’ve got a range of different generation proposals.” They had a solar proposal, they had a battery proposal, they had a wind proposal, they had a geothermal proposal. What was interesting is that the, if you like, base plate number for the solar was very much the cheapest; the geothermal was the most expensive of them. But given that the solar plant would only operate less than 20 percent of the time, in effect because it’s not sunny all the time, it certainly doesn’t operate at night, by the time you set what level of energy it generated, the geothermal plant was actually the cheapest by the amount of energy that it generated, and, of course, it’s operating close to 100 percent of the time. My question that I wanted to ask, in addition to the question that the Hon Mark Patterson asked in terms of the lignite urea conversion is to ask about the progress that’s being made on super-critical geothermal exploration, how that’s going, and what difference that would make if we managed to get that to work to the New Zealand electricity system, in terms of delivering reliable and more cost-effective energy and what that does, of course, for industry. CHAIRPERSON (Greg O'Connor): The Hon Megan Woods. Just a reminder that the Minister will be leaving the chair at 5 but will be back here at 9 tonight. Hon Dr MEGAN WOODS (Labour—Wigram) (16:57): OK. I have several questions; one is for the Minister in the chair, the Hon Simeon Brown. What is the current balance, as of today, of the Petroleum or Engine Fuels Monitoring Levy memorandum account? The other question I have is for the Associate Minister for Energy. What advice did he receive when he cancelled the plan for a 70 million - litre storage facility for diesel that would have been at Marsden Point and would have been under construction right now? Did he get advice that, in fact, the previous Government had changed the law so that memorandum levy account was available to be used to fund it? When the Minister says that there was no plan, was he advised that, indeed, there had been a legislative change to provide the funding to allow for a 70 million - litre diesel storage facility at Marsden Point, but that Minister cancelled that in 2024? He told his Cabinet colleagues that he was doing it as part of the cost-saving measures of their Government. Does the Minister regret the fact that he’s out New Zealand’s energy security at risk? He’s now claiming that he’s fixed it in eight weeks. But does the Minister, now, accept that all he is doing is putting back in place the plan that he scrapped in 2024, which was to have a strategic reserve of diesel at Marsden Point? While that is around a week’s worth of diesel, he would have received advice that showed that, actually, if you were going to use that for essential services, that could be up to four months’ worth of diesel for New Zealand to keep things running. But he took a paper to Cabinet in 2024 and cancelled that project. Hon SIMEON BROWN (Minister for Energy) (16:59): I can only but answer the first part of her question, which was: what is it, as at today? I don’t have the number as at today. I’m very happy, if you put that in writing, to answer that. Secondly, I’m sick and tired of the scaremongering by the Opposition—the absolute scaremongering from the Opposition—when it comes to how much fuel is in our country at the moment. They’re scaremongering, rather than actually putting out the facts about the fact that we have supply in the country and supply on the way; instead, they’re reverting to scaremongering, which I think’s appalling. CHAIRPERSON (Greg O'Connor): That’s time, sorry. The time with the Minister for Energy has been suspended now until 9 p.m. this evening.