2. Question No. 2—EnergyHon Dr MEGAN WOODS (Labour—Wigram) to the Minister for EnergyQuestion No. 2—Energy2. Hon Dr MEGAN WOODS (Labour—Wigram) to the Minister for Energy: Has he received advice on the cost of purchasing liquefied natural gas from overseas markets; if so what is the estimated price range provided in that advice?DEPUTY SPEAKER: Before I call the Minister I have been advised that the answer to this question is likely to be a longer response than usual.Hon SIMEON BROWN (Minister for Energy): Thank you Madam Speaker. New Zealand needs more energy and this Government is currently receiving a range of advice on how to stabilise energy prices and achieve affordable secure energy. Importing liquefied natural gas (LNG) is one of the options currently being explored to support the electricity market during times when peaking or firming is needed. Advice I have received is that the estimated price range for importing LNG to New Zealand using the spot market is between $17 a gigajoule and $24 a gigajoule. The price range is well below the New Zealand gas spot price which traded at an average of $55.27 a gigajoule on Wednesday 14 August 2024—an all-time high. If we use a potential price of $25 a gigajoule for importing LNG this equates to an electricity wholesale price of about $260 a megawatt hour which is well below the $808 a megawatt hour average wholesale electricity spot price for the week ending 11 August and the $457 a megawatt hour average wholesale spot price for the week ending 18 August. One of the advantages of importing LNG is that it puts a cap on peak prices. LNG prices are currently cheaper than current natural gas prices which adds competition in the fuel supply for electricity peaking ensuring that New Zealand can have more competitive electricity prices and critical supply of generation when the wind isn't blowing the sun isn't shining and we're facing a dry hydrological year. The Government's role is to reduce barriers to the supply of secure and affordable energy so that New Zealand can have competitive electricity prices and this is important particularly in the situation we have right now which is facing the driest hydrological year since 1992 with less wind generation than forecast and a 25.8 percent downgrade in gas production this year following a 12 percent downgrade last year. We need more energy and the Government is focused on ensuring the security of supply in New Zealand. Hon Dr Megan Woods: What advice has he received on the cost of building the infrastructure required for New Zealand to be able to import LNG?Hon SIMEON BROWN: Well there's been a range of estimates. Ultimately this Government is focused on what the barriers are to this issue. We are seeking advice around what those potential barriers are. Ultimately the market is responsible for ensuring the security alongside the Electricity Authority and we want to ensure that the Government is removing barriers so we can have the energy that is critically important so that we can have competitive prices for electricity in New Zealand to keep our businesses and our households avoiding the significant prices that are currently flowing through the spot market. Hon Dr Megan Woods: What other solutions or technologies other than LNG has he sought advice on to plug the current energy shortage?Hon SIMEON BROWN: Well there is a range of different options. Some of the things that are already taking place are playing a role. For example Transpower this morning announced they are bringing forward contingent supply of water in the lakes which is going to play a role. There is potentially more that needs to be done around some of those rules.Hon Shane Jones: Coal—coal. Hon SIMEON BROWN: Coal is playing a role in terms of the coal-fired power station at Genesis but I would make the point: up until Methanex shutting down last week we had 450 megawatts of gas-powered generation which was available but not able to operate because there was not enough gas in the system. We need enough fuel to be able to supply the energy system so we can have the security of supply that New Zealand businesses and households need. Hon Dr Megan Woods: Has he sought advice on how the cost and time line of building LNG facilities compares with the rapid deployment of solar batteries and flexibility products to plug our current energy shortage.Hon SIMEON BROWN: Well we're receiving a range of advice on a number of things that can be done. Ultimately what we need is enough energy to be able to support our economy with competitively priced electricity for our business and our households and this Government is agnostic around what the fuel is whether it's sun wind geothermal hydro—Hon Shane Jones: Coal.Hon SIMEON BROWN: —gas and—if it needs to be—coal. We would prefer gas because it has half the emissions but if we don't have enough gas it will be coal and that's the legacy that we've had left behind by the last Government. So on this side of the House we want to ensure the security of supply and are getting rid of the roadblocks which are currently in the place of building the generation capacity New Zealand needs.Hon Dr Megan Woods: Point of order Madam Speaker. I am asking very straight and specific questions. The Minister gave a long answer but what I'd specifically asked was had he sought advice on the rapid deployment of solar batteries and flexibility products and he did not answer whether that was the case.DEPUTY SPEAKER: I believe the Minister said that he was looking at a range of products across the board so we would hope that those would be included in that. If the Minister wants to clarify that yes those things are included in the range of things he's looking at—Hon SIMEON BROWN: No I didn't. DEPUTY SPEAKER: No? OK. Hon Dr Megan Woods: Has he sought advice on the flow-on industrial impacts of the estimate that at current international prices buying gas from overseas to make up the domestic supply shortfall would cost $11 billion to $14 billion by 2035?Hon SIMEON BROWN: Well as I said in my primary question if we use a potential price of $25 a gigajoule for imported LNG this equates to an electricity wholesale price of about $260 a megawatt hour which is well below the $808 megawatt hour average wholesale price for spot price for the week ending 11 August and $457 a megawatt average wholesale spot price for the week ending 18 August. So the point is that New Zealand needs security of supply and if we don't have enough gas well we're going to be burning coal. Gas has half the emissions. It's a cleaner fuel it can be used to peak and firm electricity supply from renewable sources. It is critically important and we are going to ensure the security of supply for New Zealand.Rt Hon Winston Peters: Can I ask the Minister given the multifaceted issue and energy crisis that he's dealing with does the failure to stop the closing of Marsden Point in any way help or otherwise look anything but irresponsible?Hon SIMEON BROWN: What New Zealand needs is a flexible supply of energy into the New Zealand market and we need to also make sure that we've got the domestic production of fuel as well and that's why the work that the Hon Shane Jones is working around actually making sure we can explore for fuels here in New Zealand is critically important to security of supply in New Zealand.Hon Dr Megan Woods: Does the Minister agree with Andrew Eagles who said New gas discoveries will not plug the shortfall. The existing fields are producing less than expected despite billions of dollars in investment. Offshore exploration prior to the ban was drying up due to lack of finds. If new exploration is undertaken and if new discoveries are made it will be at least a decade until they are producing at scale which likely still wouldn't be enough. Importing fossil gas would require billions in investment in infrastructure increase emissions and expose New Zealand to international price shocks."?Rt Hon Winston Peters: Point of order Madam Speaker. This is question time. That is a long diatribe from somebody else that's meant to be posing as a question. Surely that member could have truncated or abbreviated that question to keep the process of the House operating much more efficiently.DEPUTY SPEAKER: Thank you Mr Peters. Hon Dr Megan Woods: Speaking to the point of order Madam Speaker it was a direct quote. I wasn't going to truncate or rework someone else's words and given the very long answer we had to the primary question from the Minister—much of which was not necessary to answer the question—I think that was actually quite a short question.DEPUTY SPEAKER: Thank you and look when a member is quoting it is important that the context of the quote is in scope. So that question is OK in my ruling.Hon SIMEON BROWN: Well that was quite a confused question because on one hand it was saying that it's going to take a long time to get the gas that we need from indigenous sources and yet on the other side we shouldn't be importing it from offshore. Well I would just like to say that I agree with the Climate Change Commission which has a demonstration path which says that 0.9 terawatt hours of electricity generation coming from gas will be required in 2050. So we need the supply of natural gas. We'd prefer it came from indigenous sources and that's why we're going to be repealing the oil and gas exploration ban but because of what the last Government's policies did we're in a position where we are actively having to explore the option of importing LNG for the security of supply of energy and electricity in New Zealand.Hon Shane Jones: Given the Minister is now exploring the importation of liquefied natural gas what lessons are to be learnt through the period of time over the last five years where the domestic gas industry was vilified and destroyed by the member who is asking questions?DEPUTY SPEAKER: I don't want this to turn into an attack on the Opposition. So if the Minister has a constructive way of answering it the question about the last five years needs to be answered in a constructive way and not in an attack. Hon SIMEON BROWN: Well the answer to that question—[Interruption]DEPUTY SPEAKER: I can't hear the Minister.Hon SIMEON BROWN: The answer to that question is that we need a secure energy system in New Zealand and we need a bipartisan approach from the Opposition to support the exploration of natural gas so we can have a secure energy and electricity system in New Zealand and I encourage them to support this Government and that ambition.Hon Shane Jones: How does the importation of LNG or the option being pursued rhyme with the Just Transition?Hon SIMEON BROWN: Well as I said the Climate Change Commission has made it clear that 0.9 terawatt hours of electricity generation in 2050 will be needed from gas so we need the gas supply to ensure that we can firm our electricity sector. When the wind's not blowing the sun's not shining and we face a dry hydrological year we need the gas peaking and firming capacity to be able to do that. That last Government's approach was simply to have a lake built in a mountain. We have got far more practical solutions.Hon Shane Jones: In the exploration of this option what reports has he seen about the decrease of our sovereign reputation as a consequence of foolish decisions of the past?Hon SIMEON BROWN: The number one issue which is raised is the fact that since those decisions were made sovereign risk has increased and that has made it harder to attract the investment needed in the security of supply in New Zealand. So once again I invite the Opposition to join with this Government so that we can ensure secure and affordable energy prices for New Zealand households and businesses."