NZ’s energy dependence won’t be solved by the private sector

2026-03-24 - 16:04

Opinion: A series of oil price shocks, shipping disruptions and policy reversals have laid bare just how exposed New Zealand’s economy remains, and how little progress we have made in reducing our reliance on imported fossil fuels. Despite repeated warnings, New Zealand has not become more self-sufficient in energy, which has economic as well as climate change consequences. Properly assessing vulnerabilities is often a first step in making progress. New Zealand’s economy depends heavily on trade, but has failed to reduce our dependencies on imports. Global climate change, driven primarily by rising atmospheric concentrations of carbon dioxide and other greenhouse gases, obliges every economy, including New Zealand’s, to rapidly decarbonise. Yet progress on this goal, outlined by the Paris Agreement in 2017, has stalled, especially because of the distortions led by the Trump administration in the United States. Domestically, the coalition Government has rolled back several initiatives that would have both reduced emissions and strengthened economic resilience. Initiatives aimed at curbing our emissions that have been cut, collectively signalling a retreat from transport decarbonisation, include: the ute tax (on big inefficient vehicles); the clean car discount; subsidies for EVs; a petrol tax for Auckland area; a fuel tax; speed controls; the public transport budget; walking, cycling and local road infrastructure projects; the Government Investment Decarbonising Industry Fund, and so on. And at the same time, bus prices for kids and teens have increased, along with the country’s climate debt. All of these actions have increased the use of fossil fuels and our dependence on them. The New Zealand economy’s dependence on shipping for exports and imports is enormous, and oil shortages caused by recent conflicts in the Middle East have led to significant increases in shipping costs due to surging fuel prices, risk-related insurance surcharges, and long detours for vessels avoiding the Strait of Hormuz, which have to opt for longer routes around southern Africa, adding up to 40 days to transit times. These disruptions have resulted in increased freight prices, with carriers implementing surcharges ranging from $1500 to $4000 per container. Insurance for goods has also increased. Diesel prices have surged and surcharges have been implemented as a result, such as:. Emergency Fuel Surcharges: The Mediterranean Shipping Company has applied a surcharge of US$200 per dry container and US$300 per refrigerated container for cargo from Europe to New Zealand as of March 2026. War risk surcharges: Exporters face additional charges between NZ$2500 and $6700 per container for routes near the Persian Gulf due to increased insurance and risk. This affects meat exports, potentially leading to lower farmgate prices for producers in New Zealand. Retail and grocery inflation: Because 93 percent of all products in New Zealand are delivered by truck, higher diesel costs will flow directly into the price of goods on supermarket shelves. Supply chain delays: Re-routing vessels away from the Middle East is adding significant time to transits, causing ‘freight chaos’ and months-long delays for imported goods. Airfare hikes: Air New Zealand and other carriers have warned of soaring ticket prices as jet fuel costs have risen – by nearly 96 cents per litre for some aviation customers There is a solution to all this, and that is to work to become more self-sufficient, decreasing imports, and especially imports of petroleum products. The latter can be achieved by providing incentives to use renewables for energy. New Zealand has abundant hydro, geothermal, wind and solar resources. The intermittency of solar and wind can best be offset by integrating it with hydro: saving water behind a dam when there is plenty of sunshine during the day and especially in summer. An alternative is to install batteries for storage, but these are quite expensive. If power companies were required to pay households the same price for surplus electricity they export to the grid as they are charged for electricity (known as ‘net metering’), rooftop solar would take off. Newer forms of solar, such as ‘balcony solar’ or ‘plug-in solar’ (small, DIY-installable panels designed for renters and apartment dwellers), are very popular in Germany, although yet to be legalised in New Zealand. If it were legalised here, it would cut or eliminate the installation costs of this form of solar. Also practicable are small wind turbines on one or more masts on a house. Such recommendations would help address climate change concerns as well as our economy and resilience. If we only took advantage of our geological advantages, we could cut emissions, reduce exposure to global oil shocks, and strengthen economic resilience. The private sector is unlikely to solve this issue. It requires some strong new initiatives from the government. We have the technology. What we now need is the political will.