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Vested interests should not dictate policy

27 March 2008


Petroleum industry vested interests should not dictate policy

Claims that electricity prices will rise as a result of the Government's 90 percent renewable electricity target are self-serving and based on inaccurate analysis the Green Party says.

The petroleum exploration industry is basing its claims on a report it commissioned and released today.

"It is not surprising that the petroleum exploration industry PEPANZ is attempting to lobby the Government to protect its financial interests - regardless of the cost to the public," Green Party Co-Leader Jeanette Fitzsimons says.

"PEPANZ is concerned that the 90 percent renewable electricity policy in legislation currently before the House will limit the market for gas and so deter exploration, so it is to be expected that the report's conclusions have come out in favour of the petroleum industry.

"It is astonishing, however, that the Centre for Advanced Engineering in Canterbury has let itself be captured by these commercial interests by not just undertaking the research for them, but publicly backing their attack on Government policy. "EECA, Ministry of Economic Development and the Electricity Commission conducted their own robust analysis before the policy was agreed to which showed the 90 percent renewable energy target will have positive effects for the country. "The PEPANZ report 'Analysis of the Effects of the Renewable Energy Targets on the Gas Industry' claims that electricity prices will rise by up to 50 percent as a result of this policy, though the analysis suggests only 15 percent. However even that is based on faulty assumptions, such as:

* Gas would have to be held in readiness to back up wind power when the wind was not blowing. In fact, back up for wind would be through holding back water in the hydro system and the Electricity Commission has just reported that there are no structural issues around accepting a much higher proportion of wind into the grid.

* The analysis is based on a $15/tonne carbon price which is way out of date. The Government's analysis puts the carbon price at $25/tonne, and this is now regarded as medium to low."

ENDS

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