The conversation on climate change and decarbonisation has been heating up in New Zealand and around the world. Some are wondering if there is a future for gas in New Zealand. We say yes.
100% renewable energy is an aspirational goal. When you look at the big picture, we believe a balanced approach to our energy mix is needed.
Ultimately, we want Kiwis to feel confident in choosing gas for their home and confident they are contributing to a cleaner, greener New Zealand.
Read on to see how gas has an important role supporting New Zealand’s energy future.
See our vision for a future gas home here.
Kiwis love natural gas
Today over 425,000 New Zealand homes use gas energy for heating, hot water and cooking, and that doesn’t even count those of us using gas bottles to fire up the BBQ. In some new build subdivisions, over 90% of homes choose to connect to natural gas. These Kiwis are all enjoying the comfort, control, and cost savings natural gas offers.
For most families, especially active ones, continuous hot water is a big factor in choosing natural gas. What’s not to love about affordable, always hot water, that never runs out? Many also like the control and unmatchable comfort offered by modern gas central heating or flame fires. If you ask those who’ve experienced the ease and control of cooking with natural gas, they wouldn’t have it any other way. The common thing we hear all the time from gas users is that, when you’ve had gas at home, you’ll never go back.
NZ has plenty of natural gas
There’s plenty of natural gas available to power Kiwi homes and businesses well into the future. With around 15 producing gas fields and 31 active exploration permits across New Zealand, we’re confident that the gas you use to power your heating, hot water and cooking appliances isn’t running out anytime soon.
Residential homes directly use only a very small amount of all the natural gas produced in New Zealand – less than 3.6%. The rest is used by business and industry, and you may be surprised to learn around one-third of natural gas is used to generate electricity – some of which you’ll use in your home. Many businesses and industry are transitioning away from fossil fuels including natural gas where it is practical to do so. This leaves even more gas energy available to supply our residential homes with the natural gas they use, for some time yet.
Gas is part of a sustainable NZ
Collectively Kiwis using natural gas to power their homes produce less than 1% of New Zealand’s total greenhouse gas emissions. Natural gas and new transformational energy technologies have an important role in ensuring New Zealand has a reliable, affordable and resilient energy sector as we transition to a low-emissions economy.
Natural gas is, by far, the cleanest burning fossil fuel, with CO2 emissions at less than half those of coal, for the same amount of energy delivered. Exciting new technologies are helping us move to even cleaner gas energy alternatives, with lower, or possibly even no carbon emissions, reducing the overall use of natural gas in the future.
We are exploring zero carbon emission options like hydrogen gas; which may be delivered through our existing natural gas pipelines with potentially minimal need for additional infrastructure. Biogas, another potentially transformational development, takes decomposing organic material including landfill, and agricultural and forestry waste, and converts it to biogas. Carbon capture and storage (CCS) captures CO2 emissions from gas and other fossil fuels and prevents them from entering the atmosphere. Used alongside natural gas, hydrogen, and biogas, CCS could reduce net carbon emissions to near zero levels.
These innovative technologies are all part of New Zealand’s transition to a lower carbon future and a sustainable energy sector. While it’s not yet clear what combination of these will work best, we’re watching closely, and we’ll keep you informed too.
Kiwi homes use only 3.6% of NZ's natural gas
Almost all the natural gas produced in New Zealand is used by business and industry - like the petrochemicals industry to make methanol and urea fertiliser, industrial heat processing including paper and pulp mills, and food and processing plants, including dairy – and to generate the electricity we need. Just 3.6% of New Zealand’s natural gas is used directly to power appliances in our homes.
Many of these industries deliver significant economic benefits to New Zealand, and they either need a reliable energy supply or to use natural gas in its raw form for processing. Many businesses and industry are transitioning away from fossil fuels including natural gas where it is practical to do so. This leaves even more gas energy available to supply our residential homes with the natural gas they use, for some time yet. And by using natural gas directly in your home - not indirectly through electricity generated using natural gas - you’re helping to ease some of the increasing demand on electricity and contributing to a more sustainable New Zealand.
One-third of our natural gas is used to generate electricity
It might be surprising, but when we don’t have enough renewably produced electricity to meet demand in New Zealand, we need to use natural gas or coal to generate extra electricity to meet the shortfall.
Everyone agrees that renewable energies are great for New Zealand and the planet. Today, on average around 80% of New Zealand’s electricity is generated from renewable resources – mostly water and geothermal. But at peak times of demand, like winter, or when lake or wind levels are low, we can’t generate enough renewable electricity to keep up with demand. Renewable electricity can’t easily be stored, so when it’s generated, there is a ‘use it or lose it’ situation, which creates energy wastage.
The case for 100% renewable energy isn’t clear-cut. The infrastructure and investment needed to provide enough renewable electricity to meet peak demand is significant, and at times of regular demand, it will either sit idle or produce electricity that goes wasted. Research calculated that, if New Zealand stopped using gas, coal, petrol and diesel, the amount of new renewable energy generation required would be massive - we would double the demand for electricity. A further report calculated that the cost impact for households if New Zealand was to achieve 100% renewable energy could be an additional $2,700 per household a year – that’s an additional $225 each month. With just under a third of New Zealanders suffering energy hardship by struggling to pay power bills or heat their homes properly, this would have big impact for a lot of Kiwi households.
The sensible option seems to be a balanced approach, switching to greener energy options where it is practical and affordable, while using natural gas directly in households. This helps take the pressure off our electricity supply and generate extra electricity when it’s needed.
1% of NZ's total greenhouse gas emissions
Collectively Kiwis use of natural gas to directly power the heating, hot water and cooking in their homes produces less than 1% of New Zealand’s total greenhouse gas emissions.There are around 270,000 households and businesses enjoying the benefits of natural gas piped directly into their homes. Piped directly into their homes, collectively, the natural gas used by these households contributes to less than 1% of New Zealand’s total greenhouse gas emissions. In other parts of the world, less advanced in their journey to using renewable energies, natural gas is also helping to reduce emissions by replacing coal in the generation of electricity or as a direct energy source. With the potential for emerging technologies like hydrogen, and biofuels to decarbonise gas, the level of emissions could reduce even more on New Zealand’s path to a net zero carbon emission future.
Balancing affordability, reliability, and sustainability
Energy in New Zealand is a delicate balance between affordability, reliability and environmental sustainability. Like many things in life, when it comes to our energy system, a balanced approach makes good sense. Too much focus on any one of the three key things means over compromising on the others. Retaining options allows for better outcomes.
For instance, if we made our energy system 100% sustainable, we would likely see a big increase in household energy costs. A report calculated that the cost impact for households if New Zealand was to achieve 100% renewable energy could be an additional $2,700 per household a year. That’s an additional $225 each month! The reason for the cost increase is the need to overbuild solar and wind generation to ensure enough electricity to power the country at peak demand times. This will likely also result in a lot of energy wastage, as we aren’t able to cost-effectively store excess solar and wind generation yet. Generating 100% renewable energy requires a huge investment and would significantly increase energy costs to consumers. To be fully renewable, while also being affordable, risks not having enough electricity to meet demand at peak times.
The key is balance, and natural gas has an important role to play in helping reduce overall demand for electricity and keeping energy affordable for everyday Kiwis. Emerging energy technologies will also reduce, or even eliminate, net carbon emissions and provide alternative clean energy gas sources.