New Zealand Pilots a Green New Deal for Oil Workers
A blueprint for transitioning to a zero-carbon economy
While debate about an extremely hypothetical Green New Deal looks set to rage for the entirety of the Democratic primary and beyond, a small corner of the globe is actually putting the policy into action.
Welcome to Taranaki, New Zealand. Despite being a relatively small region (even by Kiwi standards), Taranaki is responsible for literally all of the country’s oil and gas production. With the highest GDP per capita of any region in New Zealand, Taranaki has seen an economic boom driven by its energy sector and rich reserves of petroleum. Expectations for further growth were extremely high, with 97% of the Taranaki basin ‘unexplored’ - ie, the vast majority of oil reserves off New Zealand’s coast remain untapped.
2018 saw a rapid dampening of those expectations. On April 12 that year, Jacinda Ardern (New Zealand’s Prime Minister) announced a nationwide ban on oil exploration, saying the “transition to a zero-carbon economy has to start somewhere.” While Taranaki operations with existing oil permits are allowed to continue, the ban on new oil and gas permits came into immediate effect. The leader of the opposition cleverly worked out the government’s game plan:
“What’s going to happen here is international investment [in oil] will literally dry up from now. If you’re a business in New Zealand in this sector you’re not going to do more…”
Understandably, workers in the energy industry in Taranaki responded with anger and frustration - not dissimilar to how coal miners in the American Midwest or Australia have responded to proposed climate regulation. This is a rational response when your career faces an existential threat. It’s one thing for the oil sector to slowly recede, replaced by more sustainable and effective renewables; it’s entirely another for a government to essentially end the oil sector by decree, as in New Zealand. The oil exploration ban might cost the Taranaki economy $40 billion by 2050, according to a report by the New Zealand Institute of Economic Research.
However, in their 2019 Budget, the New Zealand government unveiled the second arm to their Taranaki strategy. Prime Minister Ardern announced a $27m ‘clean energy centre’, to investigate and develop new business initiatives utilising clean energy. The style of this announcement was arguably as important as the substance - Ardern travelled to Taranaki to make the announcement herself, as part of a ‘Just Transition’ summit focused on transitioning New Zealand to a zero-carbon economy. In her speech, she sought to reframe the region’s expertise in oil and gas as the same skills that would enable local businesses to succeed in clean energy.
The Energy and Resources Minister, Megan Woods, followed the Prime Minister with support for a proposed ‘energy college’ in Taranaki to help the region’s workers upskill in engineering clean energy. There was one more arrow in the government’s policy quiver: a $20m science research fund for energy technology, looking into the likes of organic photovoltaics, super conductors, nanotechnologies and inductive power. The Prime Minister confidently painted a picture of Taranaki’s economic interests aligning happily with with the environmental interests of future generations.
Did the charm offensive work? Hard to say. Critics noted that the $27m ‘clean energy centre’ would only create 45 jobs at first. However, the tenor of the government effort did seem to make an impact. The Taranaki Mayoral representative Neil Holdom, who had previously described the oil exploration ban as a “kick in the guts”, sounded more positive following Ardern’s speech:
“It’s a really good start and it’s really good to hear the Prime Minister talking about building a partnership and wanting to support us as we look to maintain the standard of living of the people who live here, because that’s fundamentally what this is about.”
He’s right. The transition to a zero-carbon economy is necessary (oh boy, is it necessary), but demonstrating support to the workers displaced in the process is vital to making that transition a success. If people think that climate regulation is going to see them without a means to feed their family, of course they will resist with all the political force they have. The Green New Deal is predicated on the notion that marrying economic and environmental reform is necessary for sustainable policy. Offering substantial assistance to disaffected energy sector workers might not make them into political allies, but it’s the right thing to do both morally and practically speaking.
Ardern and the New Zealand government understand this trade-off between effective climate policy and the livelihood of those workers. Their strategy blends aggressive climate policy with real support for those detrimentally affected. The Taranaki package is essentially a Green New Deal in miniature. It’s obviously too early to say if the policy combination will be effective: whether the Taranaki region and oil sector make a successful transition to clean energy will be measured over years, if not decades. This is new territory for countries and business alike, and New Zealand deserves credit for at least laying a formative blueprint for other states to consider.
Don’t get me wrong. As oil powers go, Taranaki is no Saudi Arabia. But the fact that the energy economy in New Zealand is relatively small makes little difference to the individual oil workers who have worked in that industry their whole lives. While they may not have many oil workers compared to larger countries, New Zealand has a comparatively small economy and far fewer resources to craft policy solutions with. If the Taranaki strategy works well in New Zealand, there is no reason to believe a scaled-up package wouldn’t work for a much larger energy sector in Australia or the United States.
After all, countries face a very similar challenge in terms of prospective climate and energy policy. The stronger the environmental regulation, the more devastation is usually wrought to existing interests in the fossil fuel industry, and heated political opposition flows from there. But the world is (I dearly hope) slowly coming to terms with the fact that drastic action is needed with respect to climate change and the environment.
When more and more states come to consider their policy options, New Zealand may come to be seen as having set a blueprint for how to balance environmental regulation with economic and societal support. Transitioning to a zero-carbon economy necessarily means there will be winners and, yes, losers. Disaffected workers need leaders that show empathy for their plight, not leaders that revel in the destruction of their livelihoods.
No matter how history ends up judging it, New Zealand’s Taranaki strategy has at least sought to respect the dignity of the oil workers now facing the end of their careers. In doing so, Prime Minister Ardern may have given her climate policy the best possible chance of success.