Coalition split on energy policy widens, minister rejects fears LNG is a long-term solution

Thursday, 18 June 2026

Energy Minister Simeon Brown has reiterated the Government sees LNG imports as only a “medium term” way to plug a gap in the country’s energy supply, after a consultant suggested they could extend the use of gas in New Zealand by another 20 years.

However, Brown would not disclose how long the Government expected the country's four major gentailers would be required to fund the operation of an import terminal, explaining the negotiations it was having with them were confidential.

NZ First deputy leader Shane Jones has meanwhile separated his party from another initiative announced by Brown that would throw decisions on how best to avoid energy shortages in the longer term back on the power sector.

Jones made clear that NZ First believed that responsibility lay clearly with the Government.

Read more:

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Brown announced last week that the Government had shortlisted two proposals for an LNG import terminal at the Port of Taranaki in the expectation it would sign a contract for the facility before the November election.

The Government would recoup the cost of the investment directly from the big four gentailers ‒ Contact, Genesis, Mercury and Meridian.

Without LNG imports, the rapid decline of domestic natural gas would be “incredibly destructive for the economy”, Brown said.

Labour energy spokesperson Megan Woods, who has opposed LNG imports, seized on a report produced by Concept Consulting that suggested the country might end up relying on gas as a fuel for about the next 40 years if the investment went ahead.

Concept Consulting director Simon Coates said its modelling suggested that an LNG terminal that was subsidised by the electricity sector would end up displacing some investments in renewables and “lock in” the use of gas for an additional 20 years, until 2065, at an extra cost of $6 billion to the economy.

Coates confirmed the nub of the report — which the company produced off its own bat rather than as part of a commission — was that once LNG imports were in place, they could be hard to get rid of.

Brown told The Post he had yet to be briefed on the consultant’s report but understood it contained questionable assumptions.

There would be other solutions to the problem LNG was designed to address that would become economic, he said.

“The cost of generating electricity from renewables will always be cheaper than producing electricity from LNG.”

But the issue was that the country did not have the luxury of waiting, he said.

There has been speculation an LNG import facility could largely take the form of a leased, mobile regasification facility that would be moored at Port of Taranaki — perhaps for only a few months each year — for a period of 15 to 20 years, thereby avoiding any longer-term fixed commitment to importing the fossil fuel.

The Ministry of Business, Innovation and Employment is separately consulting on the creation of a Winter Energy Resilience Obligation that is designed to put the onus on the big four power firms to ensure there is an abundant supply of power further out into the future.

A discussion document published by the Ministry of Business, Innovation and Employment envisages the Electricity Authority would be charged with attempting to spot any risk of a power crunch up to five years out.

If it assessed there might be an electricity-supply shortfall, it would apportion that between Contact, Genesis, Mercury, Meridian Energy and the New Zealand Aluminium Smelter and order them to secure enough energy to cover the gap, penalising them up to 10% of their annual revenues if they failed.

The discussion document made clear that the proposed obligation would be to not only ensure they had enough power for their own use, but to also apportion them each with a share of “the overall system-level risk” if a shortfall had been identified.

Jones — making clear he was speaking in his party capacity — said NZ First would advocate for a different approach that would see the Government take a more direct role in decision-making.

“The fundamental difference between our party approach is that we believe it’s the role of the Crown to be the decisive influence and the clear ultimate decision-maker for energy security and energy resilience,” he said, adding that the so-called Bradford reforms that underpin the current market system had run their course.

“The gentailers, the other investors, exist for the purpose of boosting net profit after tax,” he said.

“None of them have ever convinced me that their raison d’être is energy affordability, electricity resilience, or economic security and I accept — despite us being majority owners of a majority of those entities — that’s not why they exist.”

The public would always look to the Crown to deliver those outcomes, he said.

“If we have the option of gaining the energy portfolio, the coalition agreement will leave no ambiguity what will be the future shape of the sector and where ultimate power and authority will reside — it will be with the Crown,” he said.

NZ First had previously departed from its coalition partners on energy policy by announcing it would campaign for the structural separation of the four gentailers into separate generation and retail businesses at the next election.

ACT Party leader David Seymour declined to comment on whether requiring the aluminium smelter, which is owned by mining giant Rio Tinto, to plug a wider gap in the power market might represent a “sovereign risk” that could undermine the country’s investment reputation, saying that was a good question for the energy minister.

Brown did not confirm that would be the policy’s intention.

A spokesperson for the smelter declined to comment.