LNG terminal is a billion-dollar bet against the future

Wednesday, 4 March 2026

Simon Coley is an entrepreneur who co-founded Powershop, the online electricity retailer.

OPINION: Despite every effort to stop it, the clean energy transition is winning.

In the United States, the Trump administration has spent hundreds of millions of dollars to keep coal-burning power stations open. Emergency orders, reopened mines, and a reinstated National Coal Council under a coal CEO. None of it is working. US coal generation is falling by 6% this year. The country will have closed half its coal capacity by the end of 2026. Coal-fired plants can’t compete.

In China — the world’s largest energy consumer and biggest coal burner — wind and solar capacity overtook coal for the first time in 2025. Last year alone, China installed 434 gigawatts of wind and solar power, roughly the electricity capacity of Britain, France and Germany combined.

In the first half of 2025, clean energy growth outstripped demand growth, and fossil fuel generation fell. The world’s factory is proving that a modern industrial economy can be powered by renewables.

Spain doubled its solar and wind capacity since 2019 and cut wholesale electricity prices to 32% below the European average. Renewables are now so cheap they’re lowering prices wherever they’re built.

This is the context in which our Government has decided to spend upwards of a billion dollars of consumers’ money building an LNG import terminal. A fossil fuel facility that will suppress the price signals that would drive clean energy investment in New Zealand.

The Government says this is pragmatic insurance against dry years. Perhaps. But if you’re going to levy every household in the country, you should choose the option that costs them the least. Their own modelling shows they didn’t.

Dr Christina Hood, head of climate policy consultancy Compass Climate, has analysed the Concept Consulting modelling commissioned by MBIE to support the LNG decision. One of the scenarios MBIE tested was an existing gas storage project at Tariki in Taranaki, where Genesis Energy is partnering with private developers to create underground storage in a depleted gas field. It is a market-driven project that requires no consumer levy. In every comparable scenario, Tariki outperforms the subsidised LNG terminal on price.

And when households and businesses are given incentives to shift usage away from peak times, the modelling shows prices fall more than twice as much as with LNG.

Yet when MBIE stress-tested its case for the terminal, it didn’t model what would happen with Tariki under those conditions. Ministers were told the terminal would lower prices. They weren’t shown that cheaper alternatives would further lower their costs.

Follow the money, and the picture gets worse. The levy on every electricity consumer doesn’t fund New Zealand-owned assets. It flows to offshore LNG suppliers and private infrastructure operators.

Every dollar spent importing gas is a dollar that could have been invested in New Zealand-owned generation: wind, solar, batteries, demand response. Assets that create local jobs and permanently lower prices well beyond the duration of a supply contract. This isn’t energy security. It’s a wealth transfer from New Zealand households to international gas markets.

This past weekend proved the point. The US and Israel struck Iran on Saturday. Within hours, the Strait of Hormuz — through which a fifth of the world’s LNG flows — was effectively shut. Tankers stopped. Prices surged. It doesn’t matter that New Zealand would likely buy its gas from Australia. LNG is traded on global markets. When Asian buyers panic, Australian prices rise too. An import terminal doesn’t shelter us from the world. It plugs us into it.

And it prevents what comes next. High electricity prices during dry years aren’t a failure: they’re a signal. They tell the market that storage, demand response and green hydrogen are profitable. By promising subsidised gas backup, the Government caps the very price signals that would make clean energy investment viable. Why would you invest in batteries when guaranteed cheap gas will undercut you?

The solutions aren’t hypothetical. Grid-scale batteries are already being deployed here: Meridian’s Ruakākā battery came online last year, with more planned for Huntly and Glenbrook this year.

For the longer term, a private consortium is pursuing the Lake Onslow pumped hydro scheme through fast-track consenting, a storage solution capable of covering dry periods for decades. The market is building the future. The Government is spending a billion dollars to hold it back.

New Zealand has the wind, the sun, geothermal energy, and hydro capacity to build one of the cleanest, cheapest electricity systems on earth. What we need are market conditions that reward innovation. Not a billion-dollar bet against it.

The contracts haven’t been signed. There is still time to choose differently.