David Farrar: The cost of turning off gas

Labour and Greens want us to run out of gas, having banned future exploration. They think the country can be powered by 100% renewables.

One problem is that many New Zealanders have gas powered heating and cooking. So what would be the cost of doing away with gas?

We now have an answer with this analysis by Castalia for the Gas Industry Company.

They find:

Consumers face higher direct cash costs from switching off the gas network than the BAU. Holding historical energy prices constant, switching off the gas network increases consumer costs by $1 billion over the 25-year forecast period, a 45 percent rise compared to the BAU scenario, as shown in Figure 0.2.

So an extra $1 billion cost to consumers.

At a regional level, switching off the gas network is projected to reduce emissions by 1.2, 0.2, and 2.1 million tonnes CO₂e in Hamilton, Gisborne, and Wellington, respectively. Under the historical energy price scenario, this produces an abatement cost per tonne of CO₂e of $879 overall.

Note the current ETS price is $57, so turning off gas would cost 15 times as much as other ways to reduce greenhouse gas emissions.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders