Officials redacted advice showing 'low need' for LNG imports

Advice that government officials tried to redact shows there is "low need" for a liquefied natural gas (LNG) facility.

A newly unredacted version of modelling commissioned by the Ministry for Business, Innovation and Employment (MBIE) was released to RNZ following a complaint to the Ombudsman.

It shows that in some scenarios, no LNG is needed at all.

But Energy Minister Simeon Brown criticised the modelling report, saying it made "optimistic assumptions".

The government confirmed this week it is still proceeding with plans for an LNG import facility in Taranaki, but scrapped its initial plan to fund the billion-dollar plus cost through an electricity levy.

The proposal has been widely questioned, including by some gentailers.

Ministers and officials have continued to insist that importing LNG is the best option to see off a "dry year" risk while more renewable energy is developed.

As part of the ministry's analysis of options, it commissioned Concept Consulting to model the impact of an LNG facility on New Zealand energy prices in a range of scenarios.

The redacted version, reported on by RNZ in April, provided a description of how the modelling was done, but redacted crucial slides summarising the outcome.

The newly released summary of the analysis states: "Modelled need for LNG is low, even in scenarios with less other security resources."

It identified one extreme scenario with a higher LNG requirement. Other scenarios in the modelling "require much less LNG - none at all in some cases".

There were several reasons for that finding, the analysis continued.

It was cheaper to burn coal in one of Huntly Power Station's Rankine units than LNG in a gas turbine, and the country had made progress on building more renewable energy since the last dry year crisis of 2024.

There was less domestic gas to burn since 2024, but that was offset by a better supply and demand balance, the document said.

Parts of the document - including the very first page of analysis - remain redacted.

Greens co-leader Chloe Swarbrick said the new material showed an LNG terminal "makes absolutely no sense", and nobody except the government and the fossil fuel sector seemed to want it.

"Their officials don't want it, economists don't want it, energy experts don't want it, regular New Zealanders don't want it."

There seemed to be no logic in the government's decision to forge ahead, she said.

Prime Minister Christopher Luxon did not respond directly to the information in the modelling, but said the terminal was "an important element as a back-stop for dealing with dry-year risk".

Importing LNG would still be cheaper than the $800 per megawatt hour that had been charged at the height of the 2024 energy crisis, he said.

The facility would exist largely as an insurance epolicy, he said.

"We'll use it when we need it."

Question marks

NZ Climate Foundation chief adviser Christina Hood said she and others who had also requested the analysis would continue to pursue the remaining redactions through the Ombudsman.

"It was already pretty clear from the scant detail that they had released that there were real question marks around the analysis and this is really showing that the consultants thought that LNG is not necessary," she said.

"We think that's probably even more strongly stated in the material that they're still withholding back, and we want to see that material."

There was no reason to withhold any of the consultants' analysis in the first place because it did not meet the Official Information Act's definition of "free and frank" expressions of opinion, Hood said.

"What they've released now is really just pieces of fact from the consultants' analysis."

Simeon Brown said Concept Consulting's model made assumptions about New Zealand's electricity supply "that are not supported by MBIE's own robust modelling using realistic scenarios".

Emails previously released to RNZ show ministry officials worked closely with Concept Consulting to develop the scenarios the model tested.

The report was also produced before the latest data on New Zealand's natural gas reserves was released, showing they fell 23 percent last year alone, and before the owners of the Maui gas field signalled it would cease production by the end of this year, Brown said.

"New Zealand needs the energy insurance that only LNG can provide before the next potential dry year in 2028 because, with rapidly declining natural gas, we need an alternative back up and we need it quickly."

"No other option" could be stood up as quickly, he said.

"The price of under-insuring could lead to significant economic destruction, job losses and the deindustrialisation of New Zealand. A responsible government would not let that happen."

MBIE has previously said the LNG terminal was selected from a shortlist of five options that it considered "timely, feasible and of sufficient scale to meet dry year needs".

It would also be beneficial to major industrial gas users, who had been forced to limit production or shut up shop altogether in recent years as domestic gas supply dwindled, the ministry said.

The announcement had already had a positive effect on wholesale prices, MBIE said in March.

"While forward prices will move around in response to a range of factors, electricity forward prices dropped substantially in the weeks following the government's LNG announcement."

But in analysis published earlier this week, Christina Hood cited Electricity Authority commentary on long-dated winter electricity prices.

"This is likely due to the influx of new renewable generation coming into the generation investment pipeline, lowering expectations of future prices as they contribute cheap energy to the system," the authority said.

Lawyers for Climate Action spokesperson Laura MacKay said the newly unredacted sections of the document showed there was "no evidence that the government needs to rush a decision to procure an incredibly expensive facility to manage such a small risk to electricity security."

"It's unclear why its taken since February - and an Ombudsman's complaint - for the government to release this information," MacKay said.

"It's also unclear why they are still withholding some of the conclusions of independent experts."

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