Fuel crisis illustrates why we need energy independence - not LNG
Monday, 16 March 2026
Gary Taylor is the chief executive of the Environmental Defence Society.
OPINION: The Government’s proposal to import LNG is nonsensical. A rational consideration of global supply disruption and price hikes for LNG, particularly over the last week, reinforce the need for New Zealand to drive hard towards energy independence.
Unlike many countries in the world, we have the natural resources to achieve that. We just need a government that thinks straight and is not fixated on tired market solutions.
There are a number of reasons to avoid LNG imports. The most salient is that it makes no sense to export our own gas, as low value methanol, and import high-cost gas, as LNG, at the expense of electricity consumers. Doing it through the same port brings this idiocy into even starker relief.
Methanex should be shut down completely via a negotiated process. The gas it would have used should be added to the country’s diminishing reserves and used to help manage the transition.
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The LNG price is set on the world market, a world increasingly roiled by geopolitical instability. Price spikes happen and make us especially vulnerable to paying through the proverbial nose. Remember the huge economic damage the 1973 and 1979 oil price shocks wrought on New Zealand?
If LNG is the insurance against the occasional dry year, the premium will be less affordable and secure than other options. New Zealand will only ever be a small player in the global LNG market and suppliers will have us over a barrel in dry years and price accordingly.
Many Western countries, including those in Europe, are prioritising energy security and self-sufficiency, partly because of the consequences of the Ukraine war. Importing LNG moves us further away from that future. We would be much better placed to achieve energy sovereignty by deployment of our abundant natural energy resources: hydro, wind, solar, geothermal and natural gas.
To do so, the market barriers to more rapid deployment of solar and wind need removing.
We need to incentivise all investors keen to build renewables (not just our big four gentailers) and include scaled-up battery storage, a technology that is in rapid evolution. By building more solar and wind we can reconfigure carefully planned hydro as a massive national battery to further support intermittency.
Hydro needs revisiting. It already plays a big role in intermittency insurance but as solar and wind expand, hydro needs contingency planning to manage the one in 10 years when overall energy supply is constrained, while continuing to use it normally in the other nine years. Some enhancement of existing hydro storage and the development of pumped hydro may make sense, subject to environmental assessment.
Gas is an important transition fuel and should be actively managed, but with Methanex out of the picture. As a last resource, there’s always domestic coal to draw on at Huntly if we haven’t developed wood chip alternatives.
Further context is the massive shift needed from fossil fuels to renewables over the next 24 years to net zero in 2050.
Electrifying the transport fleet and decarbonising industrial use needs the Government to revisit cancelled subsidies. That would need a mindset shift because at present the only subsidies on offer are for fossil fuels to the tune of at least $200m. And spending another $1b on an LNG facility to implicitly subsidise methanol export? That’s nuts. Better directed subsidies, combined with a meaningful demand management strategy, makes more sense.
In short, we lack a coherent energy strategy but need one urgently so that decisions are made in a strategic, joined-up way. Market reform that incentivises new entrants, speeding up deployment of renewables at grid and rooftop scales, rethinking hydro, careful rationing of our gas reserves during the interregnum, and driving hard and fast towards energy sovereignty is the way ahead.
LNG is another ad hoc intervention costing at least $1 billion (and that’s before we pay for the gas itself) that will inevitably lead to higher electricity prices and lock us into fossil fuels for longer.
With New Zealand fully electrified and generating that energy from domestic sources, we can insulate our country from supply disruptions in what is an increasingly unstable global context. That will be cheaper and achieve critical climate change objectives.
We may be just weeks away from petrol and diesel rationing which will bring home in an uncomfortable fashion the benefits of controlling our own energy destiny.