The impacts of energy policy touch every level of our lives, from our daily meals to international trade and the global economy. The decisions made by governments and organizations about how we produce, distribute, and consume energy impact everything from the price we pay for electricity and gas to the reliability of our power supply and, ultimately, if the lights are on in our homes at night.
Well-crafted and considered energy policies ensure the security of supply that households and businesses need to go about their daily lives without the thought of sudden power outages or unaffordable electricity prices.
Policies promoting new energy sources like wind and solar power create new jobs while policies supporting traditional fuels can help sustain jobs in existing industries. This balance is essential for economic stability and growth as the world transitions to a lower- carbon, more electrified future.
Young professionals considering their early career moves are well advised to keep the energy sector and its policies on their radar. The sector is constantly evolving and adapting to the changing needs of populations, technological advances, and the need to mitigate the effects of climate change. This dynamic environment can be stimulating and rewarding and puts new entrants at the forefront of technological advancements and policy changes in many disciplines, including—but not limited to—law, corporate affairs, engineering, and policy analysis.
Young professionals working in the energy sector can be a part of significant societal changes, such as reducing carbon emissions, improving energy efficiency, and promoting sustainable practices. They can also be at the cutting edge of developing new energy systems and technologies and developing the required regulatory frameworks to support this innovation.
The Current State of Energy Policy in New Zealand
Energy choices are one of the policy world’s wicked problems. Wicked problems are unusually difficult or impossible to solve because they are incomplete, have contradictory inputs, and deal with complex and interconnected matters.
Wicked problems lack clarity, and real-world constraints often hinder attempts to find a quick or easy solution. The decarbonization of our energy system is one such wicked problem.
In April 2018, New Zealand’s industrial base and energy sector were blindsided by a new oil and gas exploration ban announced by then Prime Minister Jacinda Ardern. The ban was intended to hasten the electricity sector’s progress toward a 100% renewable electricity system by 2030.
The economic implications were clear. The ban coincided with significant gas fields nearing end of life, and the sector repeatedly warned the government that the exploration ban would suppress the gas supply. Without ongoing investment in new opportunities, gas imports were likely. Experts warned the Labour Government of lasting implications for electricity prices.
The sector was left to squeeze mature fields harder and harder to keep the gas flowing. Unfortunately, this came with limited success.
The hope of a fully renewable electricity system was an illusion. Unsurprisingly, shifting up from over 85% proved difficult and expensive despite large subsidies. Policies aimed at advancing the renewable cause proved to cause more harm to other long-term renewables and fossil fuel investments, dampening investor confidence in building other renewable power projects.
The policy promise under which all businesses invest—that today’s market-based investment will be kept alive tomorrow—was broken. This future sovereign risk fundamentally changed today’s operating and economic context, making all future fossil fuel-related investments in New Zealand much more challenging to justify.
The damage was not limited to the oil and gas producers and potential investors of new gas-fired power stations and import facilities. Under this specter, investors have fled New Zealand.
At the time of the ban, 20 international and five local companies were engaged in exploration and production in New Zealand, which permitted about 82,000 km2 of frontier exploration acreage.
Today, only nine investors are active in the sector. All New Zealand frontier exploration acreage permits have been handed back. There is currently 0 km2 in frontier acreage under permit.
Six years on, the ban has shown negative effects for New Zealand’s economy, environment, and people. Gas shortages, high prices, and the growing insecurity of the electricity supply have rapidly increased electricity prices.
This is having a real and immediate impact on ordinary Kiwis while inhibiting the international competitiveness of our gas-reliant heavy industry. Major gas and electricity users are reducing production so that the gas and electricity markets can avoid major blackouts.
While New Zealand’s renewable electricity generation is currently reliably at 85% and is expected to grow to over 90%, it is not reasonably expected that the country can move beyond 95% cost-effectively. Fossil fuels must back the intermittency and variability of our weather-based system. Coal imports have filled the gap left by the reduced gas supply, creating an environmental goal with the high use of this more emissions-intensive fuel.
Why Young Professionals Should Care and Their Role in Shaping Energy Policy
New Zealand’s experience demonstrates energy policy's crucial role in shaping job opportunities, living costs, and environmental impacts. Understanding these impacts can be incredibly rewarding for young professionals entering the sector.
Energy policy directly influences job opportunities. As the world embraces renewable energy and sustainability, there’s a surge in demand for skilled professionals in these areas. This means more jobs in solar and wind power, energy efficiency, and environmental consulting. For young professionals, this translates to a wealth of career opportunities and the chance to work on innovative projects that drive the future of energy.
A key benefit of these skills is that they can be easily transferred to help develop different energy sources. A recent IEA report said the oil and gas industry can play a key role in making geothermal power more competitive. Up to 80% of the investment required in geothermal involves capacity and skills transferable from existing oil and gas operations. And like in New Zealand, if these skills are lost overseas, the UK will end up with a skills gap and be at the mercy of global prices to get them back.
Understanding how policies promoting energy efficiency and renewable energy sources can filter down to impact daily life for households is also crucial. Incentives for solar panel installations or energy-efficient appliances can lower electricity costs, but misguided policies that lead to higher energy prices can increase living costs, affecting everything from heating bills to the cost of goods and services.
Getting involved in energy policy can be an exciting and impactful way for young professionals to shape the future. Staying informed about the latest developments in energy technology and policy is crucial. Connecting with professionals already in the energy sector is another great way to start. Attending industry conferences, joining professional organizations, and participating in networking events can open many opportunities. Most crucially, finding a mentor with lived experience in the sector can provide guidance, and insights can be incredibly valuable as young professionals navigate their careers.
Advocacy and public engagement are other important avenues. Engaging in advocacy efforts to promote energy policy can involve working with industry associations, participating in public forums, or even engaging in social media campaigns to raise awareness about energy issues.
Contributing to the field through research and analysis is another way to make an impact. Working with think tanks, academic institutions, or policy research organizations to research energy policy topics can help establish young professionals as thought leaders.
Conclusion
Working directly with policymakers to help develop and implement energy policies can be incredibly rewarding. This could involve roles in government agencies, legislative bodies, or consultancy firms that advise on energy policy. By taking these steps, young professionals can advance their careers and contribute to shaping a more sustainable and energy-efficient future.
The exploration ban on oil and gas has undermined New Zealand's goal of achieving a fully renewable electricity system by 2030. While the policy was intended to transition towards cleaner energy, the reality has unfolded quite differently. The subsequent economic repercussions and diminishing investor confidence have placed immense strain on New Zealand’s energy system. This has resulted in gas shortages, soaring electricity prices, and growing risks to supply reliability.
As we navigate these challenges, it must be recognized that a balanced approach to energy policy is necessary for a sustainable energy transition. Blind pursuit of renewable targets without a viable strategy to ensure energy security and affordability only served to jeopardize New Zealand’s economic foundations and the well-being of its people.
Young professionals also have a crucial part to play in energy policy; the wealth of career opportunities that renewable energy brings for them cannot be overlooked.
To secure a prosperous and energy-resilient future, we must re-evaluate our policies, prioritize investment in transitional energy sources, and foster a climate where renewable and fossil fuel investments can coexist to meet our energy needs sustainably. Failing to do so will leave us with a legacy of energy insecurity that could impact our growth for generations.
For Further Reading
Submission on the Petition To Retain the Ban on Oil and Gas Exploration, Energy Resources Aotearoa
Energy in New Zealand, Ministry of Business, Innovation, and Employment
