Source: Energy Resources Aotearoa
Electrifying everything doesn’t make sense for consumers. That’s the clear message from a Castalia report, commissioned by the Gas Industry Company (GIC), on the impact of decommissioning the gas distribution network to achieve a rapid shift to electrification.
Energy Resources Aotearoa Chief Executive John Carnegie says the report reinforces what many in the energy sector have been saying for years: a forced gas network switch-off would result in higher bills for families, higher costs for businesses, and eye-wateringly expensive environmental benefits.
The report outlines that electricity and LPG prices would have to decrease by 60 per cent or gas prices rise by 70 per cent to make disconnecting the gas network and electrifying economically feasible.
“Castalia’s report proves our long-held view that disconnection would be more expensive than the status quo and that consumers would bear the brunt of dismantling access to the natural gas used by thousands of Kiwis.
Network disconnection is 45 per cent more than the status quo – a total of $1 billion over 25 years. Almost all of this would be paid directly by households and businesses through higher energy bills and the cost of replacing appliances.”
Castalia estimates that turning off gas and meeting the additional electricity demand, mainly through new onshore wind, could reduce emissions by approximately 36 million tonnes of CO₂ between 2029 and 2050.
Carnegie says the cost of those reductions is exorbitant – around $900 per tonne – and far above the price New Zealanders already pay through the ETS, which is now around $55 per tonne.
We’d be spending a lot more than we need, and if wind power doesn’t come online as quickly as assumed, generation like coal would likely fill the gap, making the environmental case even weaker.
In plain terms, these reductions would harm families and businesses at a time when they are already struggling with the cost-of-living crisis.
Having a functioning gas network is the best option for consumers now and into the future. It not only positions us for the possibility of new natural gas but also the progressive scaling up of biomethane and hydrogen.
What’s worse is that today’s forced expensive emission reductions would foreclose the promise of cheaper options tomorrow – an economic and environmental lose-lose.”
Carnegie says the Government and energy sector agree that our system works best when it is underpinned by natural gas, and there is now, with its energy package released last week, a real possibility of further investment in exploration.
New Zealanders want lower emissions, but we also want to keep the lights on and our homes warm without breaking the bank. There are smarter, cheaper ways to reduce emissions than forcing people to switch from gas to electricity. “
