Why Natural Gas isn’t a Bridge Fuel to a Low Emissions Economy A research report by the Fossil Fuels Aotearoa Research Network Dr Terrence Loomis, Coordinator

Fossil fuels and climate change IEA predicts gas will still provide 40% of energy by mid-century CO2 emissions growing 33 Gt a year; 800 Gt of the CO2 budget is left In April, the monthly average CO2 emissions exceeded 410 ppm for the first time in 800,000 years (Scripps Institution of Oceanography) 90 of the largest FF companies are responsible for 71% of annual GHG emissions (Climate Accountability Institute) Growing climate science consensus: Now a 95% chance we’ll exceed 2C warming in 20 years or less 3/5 of known FF reserves will have to remain unburned (Prof Ralph Sims)

“Not only is any new exploration and production incompatible with limiting global warming to below 2C, but many existing projects will need to be phased-out faster than their planned end-date.” Anderson, Kevin and John Broderick, 2017. Natural Gas and Climate Change. Tyndall Centre for Climate Change Research, Manchester University, 17 October 2017.

What is meant by gas as a ‘bridge fuel’? When natural gas is substituted for carbon intensive coal in generating heat and electricity, it releases 50-60% less CO2 into the atmosphere. The industry claims that using more gas would help slow the rate of build-up in greenhouse gas (GHG) emissions.

Claims made about natural gas as a potential bridge fuel There is growing world energy demand for gas The negative environmental and climate impacts from unconventional shale gas production are overstated Replacing coal with gas combustion, supported by carbon dioxide capture and storage (CCS) reduces greenhouse gas (GHG) emissions Gas provides energy security since renewables are variable and costly Management of methane emissions is improving New technology will allow ‘decarbonisation’ of gas

The case against natural gas as a bridge fuel Replacing coal with gas will not reduce emissions sufficiently to stay below 2C warming The negative environmental and climate impacts of unconventional gas and oil are scientifically well documented Fugitive methane emissions from gas production and distribution are greater than initially reported, poorly managed and inadequately regulated. Long-term commitment to gas locks in fossil fuel emissions and inhibits the development of renewables Renewable energy technologies are becoming cheaper and more reliable faster than predicted Negative emissions technologies (NETs) such as bioenergy or afforestation linked with CCS are unproven, have environmental issues and most are currently not scalable ‘Decarbonising’ gas will not be feasible or scalable in time to make a difference

Is any of this relevant to NZ? Yes BIMs to Minister Woods from PEPANZ and GANZ repeat standard global industry claims for adopting gas as a bridge fuel, including reliance on CCS technology. 39% of New Zealand’s CO2 emissions in 2016 came from the Energy sector Methane emissions – Majority come from agriculture, but 6% are from oil and gas production & pipelines and are easier to stop. Onshore oil & gas extraction is reliant on high emissions unconventional operations (fracking). PEPANZ argues the industry’s GHG emissions are subject to emissions charges through the ETS, so why worry. (But there are significant reporting & monitoring issues cf PCE, 2014; Climate Justice Taranaki case studies)

NZ Government Support for the O&G Industry Subsidies ($77-88 million in 2016) Favourable tax provisions (e.g. decommissioning write-offs) Promotional activities and ‘factual’ information dissemination (MBIE) Free geosurvey data Legislative reforms (RMA, EEZ, Crown Minerals Act, LGA) Soft exploration permit extension processes; easy mining permit rules

There is general agreement that a balanced climate policy portfolio for transitioning to a low-emission economy is the most effective. NZ Productivity Commission’s 2018 draft report

NZ’s transition ‘plan’ away from O&G is weighted to the economy & avoiding disruption Minister Megan Woods, Interest.co 2 May 2018 No new offshore exploration permits. No change to existing exploration permits, no change to rules for obtaining a mining license, continued onshore Taranaki exploration (3 year review) Decades of further exploration and production (i.e. gas bridge) A priority on avoiding economic and social ‘shocks’ to businesses and communities Productivity Commission report: Change means disruption. It’s a question of how fast and how to manage the trade-offs (depends on your priorities)

Policy approaches to climate change Fergus Green and Richard Denniss, 2018 Supply side Demand side Restrictive Restrictive supply side climate policies Restrictive demand side climate policies Supportive Supportive supply side climate policies Supportive demand side climate policies

“To put it bluntly: Nobody, at least nobody in power, wants to restrict the supply of fossil fuels.” -- Economist & climate change analyst Dave Roberts, Vox, 29 April 2018

Supply-side policy recommendations assuming natural gas isn’t a long-term bridge fuel Fast-track government investment and private financing for innovative clean energy technologies, renewables and appropriate infrastructure Phase out subsidies, end government promotional activities, and review oil and gas industry tax provisions Tighten upstream and downstream oil and gas industry regulations, monitoring and enforcement (particularly around GHG emissions) End exploration permit extensions, require independent reviews of mining applications, and cancel future onshore Taranaki block offers.