New Zealand to keep oil drilling ban, renewables push

New Zealand's ruling Labour party has won an outright victory in national elections, maintaining the country's ban on new offshore oil and gas exploration and setting the scene for a further expansion of renewable energy.

The Labour party will be able to form a majority government in its own right after winning 64 of 120 seats in the 17 October election. It had led a coalition government for the previous three-year term.

Labour introduced the oil exploration ban in 2018 as part of its effort to achieve a carbon-neutral economy by 2050. New Zealand is largely dependent on crude imports to meet its liquid fuels demand. The opposition conservative National party had promised to overturn the ban if it won the election.

The Labour party pledged to introduce more measures to achieve its zero-carbon target over the next three years, such as funding for a new energy development centre to help encourage development of a renewable energy industrial sector. It will also push for the faster adoption of electric vehicles.

The government also plans to bring forward a target to source 100pc of electricity from renewable sources by 2030 rather than 2035. More than 82pc of New Zealand's electricity came from renewable energy last year, mostly hydropower and geothermal. The 100pc target would force the closure of the country's sole coal-fired power plant, Genesis Energy's Huntly operations, which are currently scheduled to operate until 2025.

The government plans to extend the life of the Tiwai Point aluminium smelter by 3-5 years after its owner, UK-Australian resources firm Rio Tinto, said it plans to close the plant by August 2021.

The closure of Tiwai Point would hit New Zealand's gas demand, with local utility Contact Energy warning it could be forced to close the 377MW Taranaki combined-cycle gas-fired power plant as a result. The Tiwai Point smelter accounts for 13pc of New Zealand's power demand.

New Zealand also faces a structural change in its downstream minerals and energy sectors, with Australian steel producer BlueScope warning that it may close its steelmaking operations in the country.

And New Zealand's sole oil products refinery, the 135,000 b/d Marsden Point plant, may be converted into an import terminal.

Labour is considering maintaining its coalition with the New Zealand Green party, which won 10 seats in the new parliament. The Green party's policies include setting a 2030 target date for only zero-emission light vehicles to be imported into New Zealand and for all motor vehicles to be fuelled by renewable energy by 2050.

Source: argusmedia.com

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