Source: Radio New Zealand
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Business New Zealand is making what it says is a rare plea for business supports – in the form of below-market rate loans to help businesses shift away from gas.
The pitch comes on the back of a report by the group’s Energy Council, which has found up to 8 percent of GDP and about 264,000 jobs directly rely on businesses using gas, expanding out to up to $36 billion in GDP and up to 400,000 jobs indirectly.
The group’s director of advocacy Catherine Beard told RNZ that because gas fields had declined faster than expected, gas costs were going up.
“The reason it’s getting expensive is because there’s not enough of it. So if we actually free up a bit for those that you know can’t move for maybe 10 years, then we think the transition will go a lot better.
“It’s all sorts. It’s dairy, meat, food and beverage, product manufacturing, wood product manufacturing, textile, leather, clothing, footwear, cropping agriculture, but it’s also small businesses, from bakeries to breweries to dry cleaners, hot houses.
“It’s more of a central North Island problem because the South Island tends to be on bottled gas, and they’re not having the same cost increase. But, yeah, it’s right through the whole economy.”
The situation was created by the political decision to ban oil and gas while moving towards net zero, she said.
“The oil and gas ban certainly didn’t give anyone confidence to go out looking for more gas – so … a whole lot of businesses that are facing increased costs for gas which are pretty much threatening their survival.
“It’s not something that Business NZ would normally advocate for, you know – we’re not into calling for subsidies, but … we feel like this is a politically created problem and it’s not a normal market situation that you would kind of cut off access to a lower cost energy source before you had to.”
She said businesses faced a cost barrier in switching from gas to other energy sources, so interest-free or concessionary loans from the government could help.
“We need to have some sort of plan. Other countries do this, it’s very common. We seem to have just ended up in a very high cost energy situation, and it’s not really sustainable.
The $200 million the government set aside for co-investment in oil and gas exploration was unlikely to be used, she said, and could help fund the loans.
“We talked to the oil and gas companies as well and if there’s a case for them to invest, it normally stacks up on its own. And I’m not sure that it has removed the sovereign risk when you still have the opposition saying that they would continue with a ban of oil and gas if they get back in.
“That’s potentially money that is going to be sitting on the table and not used. So we would like them to do a pretty good, thorough investigation of what support is needed on the demand side.
“If I had a political legacy, I wouldn’t be happy to have have boosted energy supply and forgotten about the demand side – and there’s no point in having this energy in the future if there’s no one left to use it.”
RNZ has sought comment from Energy Minister Simeon Brown.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand