Climate Change Commission sees 'no future' for methanol production in Taranaki

Monday, 1 February 2021

New Zealand’s only methanol manufacturer – Methanex – may not be part of New Zealand's future as the government considers how to meet 2050 emissions targets.

They employ more than 270 people and are renowned for their high wages, but Taranaki’s methanol manufacturing plants may not see the decade out.

On Sunday, the independent Climate Change Commission released its draft advice for slashing the country’s emissions, in which it predicted the country’s methanol production would stop during the 2020s.

The commission’s consultation advice said the amount of natural gas used in New Zealand needed to be reduced to reach the proposed 2050 emission targets and Taranaki’s Methanex-owned methanol plants consumed around 40 per cent of the total gas supply.

With new offshore oil and gas exploration permits banned, the draft report stated it may soon become “uneconomic for Methanex to continue operating in Aotearoa in its current form”.

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New Plymouth Mayor Neil Holdom said he thinks most people in the industry would have seen the contents of the report coming.

Methanex has three plants north of New Plymouth and employs around 270 people, as well as outside contractors.

The draft plan said there were options to eliminate the use of natural gas for electricity generation but these were likely to be expensive for the size of the emissions reductions they delivered.

The commission’s blueprint for reaching the 2050 targets assumed an end to methanol production in New Zealand.

In an emailed statement, a Methanex spokeswoman declined to comment on the commission’s advice to Government, but said they would be putting in a submission on the report, “once we’ve had a chance to digest it.”

However two of the region’s leaders said there was nothing unexpected in the commission’s blueprint for moving the country to carbon neutrality.

Taranaki Chamber of Commerce chief executive Arun Chaudhari said any closure of Methanex plants would absolutely hit the region’s economy. (File photo)

The draft plan included a host of proposals to slash emissions, including an end to new residential gas connections by 2032, a reduction in livestock numbers, and restrictions on importing petrol cars.

New Plymouth Mayor Neil Holdom said elements of the draft plan didn’t come as a surprise.

“I think most of the people in the sector have understood this is coming.”

He said a lot of the proposal already aligned with the Taranaki 2050 Roadmap, which was created to help guide the region and its economy towards a low-emissions future.

“I think the issue is we’ve just got a lot of work to do now to ensure this remains a fantastic place to live,” he said.

“We’d like to see some support [from the Government].”

Holdom said they needed to work together to develop local tertiary education to help those who lost jobs to retrain, and keep the region moving in other sectors.

“I am hugely optimistic for Taranaki’s future because of the way people pull together here.”

Taranaki Chamber of Commerce chief executive Arun Chaudhari agreed with Holdom that the contents of the proposal weren’t shocking.

However, he said should the proposal go ahead and Methanex close, it would “absolutely” hit the Taranaki economy hard.

“There’s no two ways about it. Methanex is a huge contributor to our economy.”

Any closure of Methanex plants would impact more than just its own staff.

Methanex exports its methanol through Port Taranaki and is currently its single biggest customer, according to the port’s latest annual report.

In an emailed statement a Port Taranaki spokeswoman said it would take time to evaluate the report and “any potential effects on the business”.

“Port Taranaki may make a submission on the report, however, it is too early to assess what points could be covered.”

On Sunday, Prime Minister Jacinda Ardern said the Government would not hold back in doing what needed to be done to meet the country’s emission targets.