Written By:
- Date published:
3:07 pm, February 10th, 2026 - 19 comments
Categories: Christopher Luxon, Simon Watts -
Tags: clean energy, climate change, electricity, energy, LNG
Yesterday afternoon, Auckland Takapuna MP and “Climate Change” Minister Simon Watts fronted up to media with Christopher Luxon.
Their announcement:
A minimum $1 billion new investment to build an LNG gas import facility in Taranaki, and a “levy” to be introduced to fund its build and operations.
Victor Consulting Director Clint Smith calculated the tax to cost $90 – $180 million a year. Of that, $28 to $56 million will hit households directly with the rest flowing through to higher prices, higher business failures, and fewer jobs.
Estimates because National refuse to give us precise numbers – either of the build or operations.
Compass Climate’s Christina Hood said this was a disaster for renewable energy, pointing out that the government was effectively subsidising fossil fuels and harming the prospect of solar, wind and hydro:
“$22/GJ subsidy is the equivalent of a $407/tonne carbon price subsidy. How are clean alternatives like biomass, pumped hydro or demand response supposed to compete with the playing-field tilted against them to the tune of $407/tonne?
The right way to lower consumers’ bills is to actually start with the cheapest options, not pick an eye-wateringly expensive one and hide the cost.”
Here’s a quick video of the presser:
Cost of living crises ? Not in the land of the sorted.
Just rubbing everyones nose in it now with this uncosted lazy effort after they fkd future windfarms and cancelled the onslow battery scheme before destroying our construction industry.
Coal, Housing on floodplains, crippling the health system, tobacco, now this whatever next from the think tanks that fund them.
The most interesting angle is , that shareholders have been reaping dividends( ever since slippery key hocked off the power companies for his little tax bribe,) maybe they should have been forced to be building resilience into the system instead
it's not a tax or a levy Watts and Luxon try to tell us. So what, we are making a voluntary donation to power companies?
Why can’t Luxon just call it was it is, a levy or a tax.
Luxon is pulling our tit.
This is a subsidy of the gas industry, and gas users, paid for by electricity users. But only 30% of our current gas is used for electricity generation, the rest goes to Methanex and other industry, with a small amount to domestic users.
He could at least be honest and finance this with a levy on gas users, but no, they're making electricity users pay for it. And that's when gas can only provide 23% of our electricity needs, it's an important 23% for security though.
This policy doesn't come close to basic tests of policy development regarding costs falling appropriately. They've taken the easy road, it's blown up in their faces and it's showing
Small side note, maybe there's something in a gas supply contract somewhere that precludes loading the cost onto the gas industry?
Industry has contended with the government on the issue of continued access to gas.
The government has determined on a contract to Methanex till 2029 (with them willing to transfer supply to power generation in dry hydro years).
The key line is that rationing is an option
Methanex is the user of Maui gas (once 80% now 20% of total supply). It uses c40% of our gas.
The existing industry problem is the dependency on the Methanex use of the gas (note other fields are now supplying gas for methanol production).
The future problem is how to have a reserve supply for power without Methanex cutting off its own use.
The other industry users will want access to gas 12 months a year.
https://www.rnz.co.nz/news/business/571830/gas-used-by-methanex-needs-to-be-redistributed-says-building-industry
Still bizarre that National finances this by a levy / tax on electricity when the sole benificary is the gas industry. And they expect voters swallow that?
I agree that there’s probably not much alternative to maintain the economic value existing gas user, maybe Methanex excepted. But at least finance it responsibly.
Had a nice email from my electricity provider today (Frank Energy, supposedly budget retailer operated by Genesis), reviewing their rates:
Daily charge – was $1.76 now $2.28, up 29.5% or $0.52/day and $15.85/month
Power usage – was $0.221/kWh now 0.248/kWh, up 12.2%, or $25/month Summer and $45/month Winter (average approx $35/month across the year)
For this household it represents an increase of about $600 for the year beginning 19 March 2026.
Without getting into the maths too much it's about a 14% increase in power costs, out of the blue, which is a huge jump and I'm assume all providers are doing the same.
Really bad news for ordinary households but even worse news for Luxon's re-elction chances having toady announced an additional levy on top of that.
This should be meat and drink for Hipkins. Let's see if he can make it count.
Agree totally with Graeme above in terms of Methanex.m
But the real issue here, as Tui explains in the post, is that rather than invest in the cheapest power on the planet, solar, this government is instead investing in expensive fossil fuels.
So not only is the consumer being hit with higher prices, but the planet gets trashed at the same time. Just brilliant.
The Think Big era was the precursor to National's current Fast Track thinking, but from a slightly more socialist / altruistic time. Muldoon thought he was setting New Zealand up for a better future, but in reality was sailing the country with undefined liabilities. Methanex was a bizarre move then, sell 50% of our gas resource at a loss, it's even more bizarre now that the resource is much smaller than thought, and declining more abruptly than thought. Details of these contracts are still a bit opaque.
My theory is that these Muldoon era supply contracts are binding New Zealand to have to find gas from somewhere or face penalties. Importing LPG may be the most effective solution right now, both to practically keep the economy functioning, and fiscal. This may explain the very aggressive, arrogant, messaging around the project. Admitting a previous National government fucked up bigly would be a tad embarrassing going into an election. Especially when the current National government is trying to emulate the policy and style of that government.
The ghosts of Muldoon are lurking.
It's not that bad. It was not fixed a contract. The current one is for them to use gas to 2029.
But, when there is low hydro storage power supply shortages, Methanex, the country's largest gas user, has signed deals to sell its contracted gas (2021 2024 and 2025).
To Contact's Taranaki Combined Cycle plant and Genesis, its gas turbines at Huntly.
The smelter shuts down potlines at times to take less power.
This system will end when the gas runs out.
Thus the resort to building a terminal to receive imported gas.
An alternative is increasing renewable supply (thermal, wind off Taranaki) and reducing grid demand (battery use for industry, solar homes and commercial property roofs).
This would allow more reserve power in the storage dams (even in drier years)(the Onslow dam is a longer term option – but that need might be negated by improving battery systems)
Another issue is some industry prefer coal/gas supply.
If anyone thinks savings will be passed on to consumers, I have a bridge to sell you.
I admit I don't have all the facts, but perhaps someone here might.
I understand this LNG is coming from the USA.
Has Trump threatened tariffs if we don't buy it? Or have other countries experienced such tariffs or threats of tariffs?
Oz is one of the world's largest exporters of Liquefied Natural Gas.
It exports to Japan, China ans South Korea. It's rivals are Qatar and USA.
Yes. Stats for that are here.
There's no public evidence that the US has threatened NZ specifically with tariffs if it doesn't pledge to take US LNG. However, there is some evidence it has threatened the EU with that.
The US seems to have pressured the EU re-importing of energy, which seems to include LNG.
…
However, the article says the amount pledged is unrealistic and unlikely to eventuate. It relies on EU member states doing the importing.
A 5% hike in power prices coming for next 12 months apparently.
National and Nicole Willis, getting NZ further off track
Oh well, there goes the trade-off for the new
levytax, without so much as a "decent interval".not a
taxlevy according to Luxon, Willis, Watts. Must be a 'voluntary donation' then, a 5% 'voluntary donation' to power company profitsMine's already going up 14% next month so I suspect the 5% number will end up being little conservative.
In a way, calling it a tax is going easy because we have a progressive tax system. Even though "tax" seems to be a dirty word compared to "levy", at least tax in this country is progressive while this funding grab from consumers is at very best flat and in reality highly regressive.
It's regressive because high electricity costs are born mostly by people in poor housing with poor and expensive heating solutions and landlord who do the bare minimum to make their product warm and dry efficiently.
If the government were to build this facility funded by tax the wealthiest would pay more according to our progressive tax system but this levy is based on flat kw/h usage which means low income people in draughty and poorly designed and insulated housing are bearing most of the load.
This of course is catnip to the National Party and their RWNJ voters.