To Prime Minister Christopher Luxon, Energy Minister Simon Watts, and Cabinet Ministers,

We write to urge your government not to proceed with taxpayer subsidies for an LNG import terminal.
Investment in LNG would waste hundreds of millions of taxpayers’ money, lock customers into a more expensive energy future, increase exposure to international price shocks and make it increasingly challenging to meet carbon targets.

We believe there are more cost-effective, homegrown solutions than LNG to meet our dry year energy needs, provide reliable, affordable energy for industry needs, lower energy bills for all customers and improve national productivity while advancing our transition to decarbonisation. The Government should sufficiently explore these options to test if they will provide better outcomes for New Zealand.

An LNG Terminal will provide negative outcomes for New Zealand because:

• LNG will keep power prices high. LNG-generated electricity could cost around $300 per megawatt-hour, more than double the cost of new hedged renewables on our grid. The terminal costs alone are so high that energy companies looked at the numbers and decided it was too expensive and risky to build themselves.
• Subsidising a terminal to import overseas gas would not make our energy system more secure. It would tie New Zealand to volatile international markets and “take-or-pay” supply contracts, locking in high prices and exposure to global shocks.
• LNG also carries a heavy climate burden — roughly 60 per cent more emissions-intensive than conventional fossil gas according to the IEA, and will make it harder to meet our climate targets and international obligations.

We acknowledge the real need to fill a dry winter gap in the coming years, amidst rising energy costs, shrinking gas reserves, and industrial closures that threaten regional economies. As a broad range of stakeholders, we all agree that the lights need to stay on, that we don’t want to see jobs lost in our regions, and that power prices are too high for everyday Kiwis.

In the short term, some fossil fuels will be needed to get through dry winters. But we think there is a better way to provide a secure solution to dry winters than putting public funds towards importing Australian gas. Power companies have already increased winter backup with the recent agreements for a Huntly coal stockpile between generators, and an extra 200MW diesel generator is planned for Marsden point. Backup energy solutions like these avoid locking in huge upfront costs, providing a much better short-term solution while investment in renewable generation accelerates.

The good news is that solutions for industries currently reliant on gas benefit households too. These include:

• A mass heat pump and hot water heat pump rollout. This could free up remaining gas reserves for industrials while saving households $1.5 billion a year in power costs
• An accelerated programme of industrial decarbonisation for industrial gas users who EECA concludes have economic and technically feasible options to decarbonise today.
• Ongoing flexible demand response agreements from Tiwai Point smelter and Methanex
• Accelerate renewable generation and provide low-cost renewable electricity for industrials through government-backed power purchase agreements, and offer hedged renewable electricity supply contracts to industrials
• Support the country’s biggest battery of household solar and batteries that can keep our hydro dams from being drained, and is the cheapest form of power for households.

You have an opportunity to back winners, not revive stranded assets. Every dollar spent on an LNG terminal is a dollar not invested in lowering bills, decarbonising industry, or building the renewables that will power New Zealand’s future.

We ask you to use public funds for the public good – backing long-term competitiveness, and genuine energy security and affordability. Don’t subsidise an expensive sunset industry — invest instead in the affordable, clean, New Zealand-made energy solutions that can deliver for households, businesses, and the economy.

Say no to public funding for an LNG import terminal.
Respectfully,

Rewiring Aotearoa

350 Aotearoa

Public Service Association

Workers FIRST Union

Our Energy

Mindful Money

ECO – Environmental and Conservation Organisations of NZ

Te Kaunihera Hanganga Tautaiao I New Zealand Green Building Council

Forest & Bird

Common Grace Aotearoa

Auckland Action Against Poverty

OraTaiao: The Aotearoa New Zealand Climate and Health Council

Lightforce Solar

Sustainable Energy Forum

A2W – Hot Water Heat Pump Installer

Sustainable Energy Association New Zealand

Climate Justice Taranaki

Lawyers for Climate Action NZ

Think Solar

Taranaki Energy Watch

SUPA Community Energy

Bishop Justin Duckworth of Wellington