What's wrong with gas?

Friday, 19th October 2007,

Media release by the Major Electricity Users' Group (MEUG)

What's wrong with gas?

"The concern raised today by the Petroleum Exploration and Production Association of New Zealand (PEPANZ) that the price of future gas assumed in the climate change policies announced 20th September may be too high is of concern to all end consumers," said Ralph Matthes, Executive Director of Major Electricity Users' Group (MEUG).

"The climate change policy proposals of 20th September assume that renewables are a low cost option because gas will become scarcer and therefore more expensive and gas fired power stations will also face a carbon charge.

"The PEPANZ comment that the continuing escalation of gas prices might be a flawed assumption adds to the case that renewables might not be economic in their own right. Perhaps this is the real reason why we have the proposal to ban all new base load thermal generation.

"There are other assumptions that underpin the announcements that have already come under question, such as the expected price of $15/t CO2-e we were told when the announcements were made; and which now is at least $30/t CO2-e. As government release more information, such as the Regulatory Impact Statement associated with any Bill to be tabled in the House, the business community will be checking if there are any other assumptions that need to be reviewed.

"Climate change is a complex risk management issue for the world, countries, businesses and individuals. We need to work collaboratively globally to manage that risk. We should also be working collaboratively within New Zealand to develop an enduring climate change response including having a dialogue on what are reasonable assumptions such as future gas and Carbon prices" concluded Mr Matthes.

Notes for editors:

MEUG has previously made the following media statements on the climate change policy announcements of 20th September 2007: "Doubts about robustness of Emissions Trading Scheme reinforced with Energy Strategy announcements," 11th October 2007.

ENDS

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