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Ending Our Reliance on the Oil and Gas Industry

Article – Fossil Fuels Aotearoa Research Network

Its got to happen sooner or later – the end of the coal and petroleum industries. The sooner the better according to climate scientists. Unthinkable for decades say industry representatives.Ending Our Reliance on the Oil and Gas Industry
By Dr Terrence Loomis, Fossil Fuels Aotearoa Research Network

It’s got to happen sooner or later – the end of the coal and petroleum industries. The sooner the better according to climate scientists. Unthinkable for decades say industry representatives.

After all, we’re dependent on the stuff and affordable alternatives won’t be available for a long time.

PEPANZ’S Cameron Madgwick, speaking for the industry in New Zealand, maintains1 that demand for oil and gas will continue to increase in coming decades, natural gas is a ‘transition fuel’ which we should produce more of for energy security, New Zealand fields like the Barque off the South Island present untold opportunities for jobs and GDP growth, and deep sea seismic exploration and drilling present minimal risks to marine life and the environment.

Predicting petroleum demand is tricky. It depends on how you interpret the trend lines. The International Energy Agency actually expects demand for oil and gas to slow over the next two decades and peak in 2040. 2 The agency candidly acknowledges that if this turned out to be the case, it would mean a disastrous failure of our efforts to avoid the worst impacts of global warming.

The good news is that renewable energy technologies are becoming cheaper and being adopted by consumers at a much faster rate than even the IEA expected.

The bad news is that, according to a recent report by the Climate Accountability Institute, the 100 largest fossil fuel companies are contributing 71% to GHG emissions.3 Industry representatives and some policy-makers claim natural gas is a ‘transition fuel.’ But according to Manchester University climatologist Professor Kevin Anderson, “They simply don’t understand the maths and the science of climate change. They are patently wrong”. If we produce more gas we’ll never stay below 2C warming.

It certainly raises doubts about ‘game changing’ opportunities like the Barque field off the South Island. Doubts not simply from an ethical point of view, but hard-headed economics. The global financial sector is pushing the alarm button over rising petroleum sector debt, declining EROI and risks to investors from ‘stranded assets’ as governments take action on Paris climate commitments. The central bank of Norway has joined the central bank of England in recommending the government divest its sovereign wealth fund of all fossil fuel investments.4 Manchester University’s Professor Anderson is not alone in calling for the urgent phasing out of oil and gas exploration and production as soon as possible.

The New Zealand government has recognised that the country’s future lies in transitioning as soon as possible to a clean energy economy. On 17 October 2017, Prime Minister Ardern told TV3’s The Nation that “fossil fuels were not New Zealand’s future, and future block offers would be reviewed.”

The block offer process is a start. Government subsidies are another obvious target. In 2016 the taxpayer forked out $87.6 million to support and promote the oil and gas industry. Other steps could include banning deep sea seismic testing, ending drilling permits, reviewing the functions of NZPaM, and rescinding the 2013 amendment to the Crown Minerals Act that requires regulators to also promote the industry they regulate.

The sooner the new government sets out a clear policy agenda for phasing out support for the petroleum industry, the sooner funds can be released for investing in the urgent transition away from dependency on fossil fuels.
Notes

1. Voxy News, ‘Global demand for natural gas a big opportunity for NZ – PEPANZ,’ 15 November 2017.

2. The 2017 World Energy Outlook can be found at: http://www.iea.org/weo2017/

3. The Guardian, July 10, 2017. “Just 100 companies responsible for 71% of global emissions, study says”. https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-
global-emissions-cdp-study-climate-change.

4. https://www.theguardian.com/business/2017/nov/19/norway-fund-sells-out-of-oil-fossil-fuels-starting-to-lookrisky-
norges-bank?CMP=twt_gu
ENDS
Dr Terrence Loomis is an economic anthropologist and coordinator of the Fossil Fuels Aotearoa Research Network. While a visiting research scholar at VUW’s Institute for Governance and Policy Studies, he published his latest book ‘Petroleum Development and Environmental Conflict in Aotearoa/New Zealand: Texas of the South Pacific’.

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