Power station ban 'to go after election'

The plan to impose a 10-year ban on new gas-fired or coal-fired power stations will probably be abandoned by Labour and would certainly be ditched by a National government, a leading energy and resources lawyer says.

The oil and gas industry has strongly opposed a ban because it would discourage further exploration for gas and mean big rises in wholesale electricity prices.

"Absolutely it would go [under a National government]," Bryan Gunderson, a Kensington Swan partner, said. "Assuming a Labour government [after the election], you might see it go anyway."

The planned Emissions Trading Scheme, which includes the ban, was not expected to be passed in its present form before the election because time was running out and Labour did not have enough support from minor parties to pass the legislation.

There would certainly be an Emissions Trading Scheme and it would have a big impact on the economy, regardless of which party was in power, Mr Gunderson said, but Labour might give up the 10-year ban on base-load coal or gas-fired power stations for pragmatic reasons, even if it was re-elected.

"The chickens are coming home to roost. Investors [in gas exploration] are shifting focus away from New Zealand," he said. If firms were exploring, they were looking for oil.

"The moratorium on gas-fired stations was a quite extraordinary piece of regulatory intervention," Mr Gunderson said.

Without gas-fired power stations one of the key alternatives was wind power, but big wind-farms meant spending much more on transmission lines too.

More than a third of national gas supply is used for power generation. That is expected to shrink because of the 10-year ban and the government target for 90 per cent renewable power by 2025.

Opponents say the policies would also drive up wholesale power prices by as much as 50 per cent over time because renewable sources such as wind are more expensive than gas-fired generation.

To get the bill through, Labour would need to make concessions to the Green Party, reversing some of the changes made by the select committee.

"The changes to the ETS have really put the bill in serious doubt and it is the flagship of Labour's climate change approach," Mr Gunderson said.

The Green Party supported the legislation but was unhappy about the delay in bringing the transport sector under the scheme till 2011.

The Maori Party supported the bill in principle but had similar concerns to the National Party.

It was hard to say where NZ First stood on the bill, Mr Gunderson said.

National believed the process to bring in the scheme had been too rushed and it wanted to see what Australia did with its scheme.

- © Fairfax NZ News