The New Zealand Government has decided to move forward with the procurement of a liquefied natural gas import facility as part of its strategy to strengthen energy security and support economic growth.
LNG imports and energy security
Based on the authorities’ analysis, the country faces a complex scenario. The strong development of renewable renewable electricity coexists with an accelerated drop in domestic gas supply, which exposes the electricity system during periods of low hydrology.
As a consequence, he explained that this vulnerability has increased the use of coal and diesel for power generation, putting pressure on electricity prices and affecting both households and business competitiveness.
According to independent economic assessments, I detail that higher energy prices have had a direct impact on economic activity, affecting employment, wages and the pace of recovery from years of high inflation and high interest rates.
He also pointed out that the Executive Branch has promoted measures aimed at improving the availability and affordability of energy. Among them are greater regulatory requirements for the energy sector and the promotion of the development of renewable and non-renewable natural resources.
In this regard, he considered that the LNG import facility represents a relevant technical support. In addition, it will reduce exposure to climate risks, stabilize electricity costs and add resilience in the event of unexpected drops in the national gas supply.
From an economic perspective, I indicate that the mere existence of this back-up could moderate price peaks and reduce the risk premium built into energy tariffs, generating sustained savings for consumers.
If the trend of declining domestic gas continues, access to LNG would have a long-term positive impact on the economy, protecting jobs and providing greater predictability for gas-intensive industries.
Finally, the Taranaki location enhances the region’s historic role in the country’s energy system, generating employment during construction and skilled labor once the facility is operational.
Source and photo: New Zealand Government