Episode Details

Thirty years ago, I was the station manager and breakfast announcer at a very small experimental talk station in Auckland called ‘The Point’ on 1476 AM. It lasted for about three years. It was a lot of fun. Now I mention this because I clearly remember 30 years ago a morning when we discussed what happens to New Zealand when the Maui and Kapuni gas runs out, because even then scientists were warning that supplies were limited and they were dwindling. That was 30 years ago, and the alarm bells were already ringing.  

Our failing gas is not some new problem and yet you have to say in the 30 years that have passed, as a country we have done little to pre-empt the impact. In the years since then we have become more efficient at using the gas we've got, we've become more efficient at extracting the gas we've got and so the deadline has been extended, but now it appears we're coming to the pointy end. The end of gas in New Zealand. In the past 30 years we've not found more and we have, you could argue, used our remaining stocks willy nilly. Industries have become more dependent not less.  

Now the last Labour Government was part of the problem. Yes, they curtailed gas exploration, but at the same time nobody found gas for the last 30-50 years and we've been looking. But what the Labour Government did do was suggest a gas transition scheme, and if you've forgotten about it, it was called the Government Investment in Decarbonising Industry fund, GIDI, otherwise known as Giddy. It directly subsidised large businesses using fossil fuels like natural gas and coal to help them switch to renewable electricity or biomass.  

But when the latest government came in two years ago, they scrapped that. They didn't like the way it was sheeted home to the emission reduction plans because that was far too green for them, and they didn't like the way the taxpayer was directly funding industry so they cancelled it. And they banked $640 million that had been set aside for it. But they didn't have anything to replace Giddy with two years ago. Now they do and it's called the Gas Transition Loan Guarantee Scheme. It's worth about $1.2 billion. It will only directly cost the Government about $48 million. They guarantee the loans, right? Well, I'll tell you how it works. They underwrite 80% of each loan which allows banks to offer lower interest rates. The loans can be up to $50 million, must be new lending, it'll run for 10 years, and the budget has set aside $48 million to cover potential costs and losses. So it's much cheaper than the Labour scheme. It depends on the commercial banks to loan to businesses. 

My question to you is will they, would they, can they? The goal of course is to help firms switch to alternative fuels, to protect jobs, and to leave remaining gas —because there is some there— to help the industries that are absolutely dependent on it. The scheme sits within the Government's broader budget focus. They've got four pillars of national security: international security, energy independence, social cohesion, and financial security. And the Prime Minister when announcing all this yesterday said New Zealand cannot compete globally without abundant affordable energy, obviously. To qualify a business must use natural gas and consume at least 1,000 gigajoules a year. That's about 40 times the usage of a typical household. That would be a commercial kitchen in a restaurant, wouldn't it? That'd basically be everybody except those people using gas at home to cook and to heat their water. Eligible sectors include food processors, brewers, hotels, aged care facilities, greenhouse growers. Some of the country's largest gas users they use 300,000 gigajoules annually. The Energy Minister is Simeon Brown and he says the loans will help businesses switch to electricity or bioenergy or other efficient technologies. 

“We are running out of gas very quickly. We have had a 23% reduction i