Letter to Minister Watts on the importation of LNG

The Commissioner wrote to Hon Simon Watts, Minister for Energy, outlining his concerns about the Government’s proposal to support the construction of a liquefied natural gas (LNG) import facility. He noted that decisions of this scale must articulate clear objectives and be supported by evidence. The central question he raises is: how can New Zealand improve domestic energy security without building a new fossil fuel path dependency that undermines our emissions objectives?

While the Commissioner acknowledged the need for secure energy supply, he highlighted significant economic and environmental risks associated with long term LNG importation. These risks vary depending on the Government's objectives:

• If the objective is truly to reduce dry year risk, how can the use of LNG be restricted only to this purpose, without spilling over and raising prices in the wider gas and electricity market? 
• If the objective is to pursue the wider "spillover benefits" of an LNG terminal, should gas users pay for the insurance policy? Making electricity users pay risks unnecessarily slowing decarbonisation.

Read the letter.