Products and climate change

Petroleum and mineral products are part of our daily lives.

Product

In addition to transport fuels, petroleum is used in the manufacture of thousands of numerous day to day items – including plastics, soapless detergents, cosmetics, antiseptics, carpet, clothing, dentures, shampoo and sports equipment.

Crude oil produced in New Zealand is very high quality and fetches a high price on the international market, which is one of the reasons why almost all domestically produced crude is exported, mainly to Australia. To meet domestic demand for fuel (and other petroleum by-products such as bitumen) lower-quality Arabian crude oil is imported into Northland’s Marsden Point refinery. Despite the strong growth in exports of crude over the last 10 years New Zealand still has a substantial trade deficit in the sector. We import and use nearly three times what we currently produce.

Minerals (including metals) are also prevalent in our society, being used in construction, wiring and plumbing, appliances, electronics – and in renewable technologies, such as wind turbines and solar panels. High-quality coking coal, often found on the West Coast, is an important element in steel production (adding carbon to the iron that results in steel).

Petroleum and minerals are important inputs to New Zealand industry. Ironsand is used in steel production, coal from the West Coast fuels dairy processing in the South Island, and numerous quarries produce aggregates used in construction and roading. Taranaki’s oil and gas fields supply all the natural gas in the North Island.

Energy

Almost 40% of all energy used in New Zealand (total primary energy supply – which includes transport) comes from renewable sources such as hydro, wind and geothermal. We rank third in the world, behind Iceland and Norway – countries which have long been considered world leaders on this important measure.

However, natural gas, which often comes with crude oil, and coal remain necessary sources of energy.

Natural gas, from 17 Taranaki gas fields, is an important energy source for industry; it's used for cooking, hot water and heating in more than 300,000 homes, schools, hospitals and businesses; and for electricity generation.

New Zealand has some of the highest levels of renewable electricity generation in the world. Currently about 80% of our electricity comes from renewable sources – and the Government aims to increase this to 90% by 2025.

Natural gas is crucial to the electricity system, because it provides backup cover for our renewable generation in times where demand exceeds supply. Gas-fired power plants in Taranaki and Huntly, and a coal fired-plant in Huntly, ensure our energy supply is reliable and that we don’t have electricity blackouts.

Particularly in the South Island, which lacks natural gas infrastructure, coal remains an important source of energy for heating and industrial processes.

Climate change

The Government has committed to a climate change target designed to reduce greenhouse gas emissions to 30 per cent below 2005 levels by 2030.

The target takes into account New Zealand’s particular circumstances - our already high levels of renewable electricity and the fact that around half of our emissions coming from agriculture.

While the world is transitioning to a low-carbon economy, this will take both time and significant investment. During the transition New Zealand needs to be in control of its energy supply and ensure our economy remains globally competitive.

To retain the standard of living New Zealanders expect, petroleum and coal will remain an important part of our energy mix in the short-to-medium term.

Natural gas is increasingly been seen as an important transition fuel and further gas discoveries in New Zealand could contribute to reducing global emissions. As the cleanest burning fossil fuel, natural gas could replace coal for electricity generation internationally – particularly in developing countries like China and India. Underexplored areas like those off the Wairarapa and Otago/Southland coast could be prospective for natural gas (and oil).

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