Source: RNZ Checkpoint
Resources Minister Shane Jones is seeking advice on where the electricity system can use more coal as businesses grapple with a gas shortage.
Big industrial gas users met with Jones, who is also the Associate Minster for Energy, in Auckland on Friday to discuss the problems with securing an affordable supply.
“From their perspective, the Crown needs to contemplate a triage system so that the gentailers don’t drive businesses and manufacturers out of existence,” Jones told Checkpoint.
“The gentailers, due to the profiteering, always have more money to out bid everyone else.”
Ministry of Business, Innovation and Employment (MBIE) figures show natural gas reserves are down 27 percent compared to last year.
Jones said he has sought advice on where the electricity system can use more coal to reduce reliance on gas.
“I am a politician that is pro-coal, I’m a politician that’s pro-fossil fuels because I don’t believe in these indulgences and luxury beliefs any longer,” Jones said.
“… Unless we pace ourselves on the decarbonisation journey, we are going to hallow out the manufacturing sector and no one is going to thank me, as a politician, for mass unemployment. There is so much fiction associated with the costs and period of time it is going to take for decarbonisation.”
It comes after a Taranaki fertiliser manufacturer revealed it was looking to shutdown production for up to four months because it cant get a guaranteed gas supply.
The manufacturer, Ballance Agri-Nutrients, uses the gas to power its production and as a raw ingredient for fertilisers.
It lost its supply to Contact Energy, which essentially outbid Ballance to secure the gas for electricity consumption.
Ballance said it cant find a reliable replacement supply and prices quoted are up to 100 percent more than what the co-op is currently paying.
It will keep its 120 plant workers on during the hiatus while it hunts for a solution.
Jones believes there is good news on the way for short term supply of gas, after meeting with various gas extraction companies on Friday morning. He said they told him they were confident they could continue to excelerate the delivery of gas over the next nine to 12 months and beyond.
“But lets not pretend that this isn’t a very gruelling time for a lot of gas users,” Jones said.
The Business NZ Energy Council has long been warning a gas shortage could lead to business closures.
Business NZ Energy Council executive director Tina Schirr said the biggest concern for gas-using businesses over the last couple of years was securing long-term contracts and the rise in gas prices.
Schirr said as a result some companies could consider swapping to “dirtier substitutes” or otherwise shut down, which would result in job losses.
“The long term problem is we need more energy in the system, and in this case, more gas. There were a few users in the room today that could switch to electricity for example, or bio-gas, but obviously the short term problem is the same – you’ve got to build infrastructure around it,” Schirr said.
She said the idea of prioritising certain businesses in the queue for gas contracts was floated, but that would only be an emergency short time solution.
“It wouldn’t be healthy or sustainable long term in the market.”
Schirr said programmes are being rolled out to potentially support businesses that can switch energy sources and there is talk about the government providing cheaper or interest free loans.
She said there will be follow-up conversations on how to solve energy shortages long-term.