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Shell's exit from exploration welcomed!

Shell's exit from exploration welcomed!

"Shell's exit from the New Zealand gas exploration scene will inevitably give a new impetus to the development of renewable energy. The greatest risk to renewable energy businesses is that a new gas find will swamp the New Zealand energy market, making their own myriads of small contributions uneconomic" said Mrs Molly Melhuish, for the Sustainable Energy Forum.

Explorers will now be calling for even more government subsidy and more generous tax concessions, to fund them into the market niche abandoned by Shell. This would be a waste of taxpayers’ money as Shell quit because of the exceptionally high cost of finding gas in New Zealand.

Government should instead redirect the massive tax concessions for gas exploration, for use by small-scale energy businesses who can deliver results. All that is needed is a tax policy that gives equal treatment to large-scale and small-scale enterprises.

New Zealand can do without new giant gas fields. The Maui field will produce an average of 130 PJ per year over its contract lifetime. Wood wastes alone will make available up to 50 PJ per year within four years, and up to 80 PJ thereafter. Wind farms and solar water heat will readily make up any primary energy shortage in the medium term. Sensible use of existing gas resources will provide a bridge to these and other fully renewable energy options.

The present gas exploration subsidies emphasise offshore concessions, in the hunt for new giant oil/gas fields. These would be so costly to develop that any commercial exploitation would be based on new Think Big energy export schemes. Government does not seem to have learned from the past Think Big disasters.

Government appears to be running with the TINA principle - "There Is No Alternative". Big industry sources responded to Shell's anouncement saying "We need more gas!"

There ARE alternatives - we do not need to subsidise more gas. Government needs to implement policies that give small-scale energy options an equal place in energy markets, and in the 'market' for tax concessions. These options are invariably cheaper than the failed gas exploration programme. They give added benefits in reducing CO2 emissions from the energy sector, and providing jobs throughout New Zealand - especially in the embattled rural districts.

Pre-eminent amongst these options is the improvement of household energy use - to reduce heat and electricity losses and to use solar energy and firewood (re-invented as a convenience fuel, manufactured from waste wood) to reduce both energy and peak demand for electricity. This could defer much of the planned investment of $4 billion dollars by State owned enterprises over the next four years. These issues are highlighted on .

Major savings on the demand side are also possible, with most homes and businesses able to profitably save 20-30% of their energy use. Solar hot water, wood stoves and home insulation are major options for domestic use. "More work is needed to make sure these savings can be made," said Dr Blakeley. "Historically, New Zealand's cheap energy has led to over-use, and we now need to kick the habit.

"Any tax concessions or government investment in a scheme to improve household energy use would have a faster pay back rather than public investment in gas or coal supply, while improving the energy sector's environmental performance and improving security of supply. Transport especially, is going to be very hard hit in only a few years, when oil scarcities develop and the price goes much higher" concluded Mrs Melhuish.

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