The geopolitics of our energy crisis - Jason Heale

Recent power crises are just the first warnings of the potential upheaval a destabilised global order could bring, says Jason Heale.

Opinion

Jason Heale is the communications manager at independent think tank Maxim Institute

OPINION

New Zealand’s energy gap isn’t simply a domestic issue — it’s a warning about our vulnerability in a rapidly changing world.

As power costs surge, companies like Oji Fibre are on the brink of closure, while Methanex, once a major natural gas processor, is selling off resources instead of producing. And making more money doing so. Simply put, cashing out is more profitable than keeping the lights on.

Critics, like Dr Bryce Edwards, blame the Big Four power companies for acting like a cartel — price-gouging consumers while neglecting infrastructure. However, while corporate greed and government inaction play a role, they don’t tell the whole story.

New Zealand’s recurring power shortages reflect a world in flux, where shifting global dynamics and deglobalisation are shaking the ground beneath us.

China’s expansion in the South China Sea threatens shipping lanes, while Russia’s weaponisation of energy in Europe exposes the fragility of global supply chains.

As BRICS (Brazil, Russia, India, China, and South Africa) nations gain influence, the global energy market is fragmenting, turning our reliance on imported energy from a luxury into a liability.

The old rules-based world order has afforded New Zealand its status as a net energy importer. However, this is a dangerous gamble in this new era of resource competition. With both US presidential candidates signalling a stepping back from the role as the free world’s security guard, countries like ours are exposed.

As an island nation far from major energy producers, we depend on long, fragile supply chains — remember the spike in shipping costs during Covid-19? The Drewry World Container Index showed container prices jumped from below $2000 to over $10,000 between March 2020 and March 2022. Rising maritime conflicts and less reliable trade routes reduce our energy security.

Recent power crises are just the first warnings of the potential upheaval a destabilised global order could bring.

Yes, renewables are vital for a sustainable future, but this strategy is too narrow. Solar and wind, while essential, are also intermittent. And they use imported technology, making them unreliable in a world of unstable supply chains. Hydro? It’s tapped out.

We must diversify our energy sources to ensure New Zealand can keep the lights on, even when the sun doesn’t shine or the wind doesn’t blow. Our small population limits our ability to scale energy production, making self-sufficiency even more challenging.

The solution isn’t to abandon green energy but to diversify with geopolitical realities in mind.

We need to start by upgrading our energy grid, which was nearly overwhelmed earlier this year.

Investing in reliable, domestically produced energy sources — like oil, gas, and geothermal — is essential, especially if global supply chains collapse. This can be managed to offset the carbon output by investing in “carbon sinks” or “carbon capture” technologies.

As the global order shifts, nations that secure their energy independence will thrive. Those that don’t will be at the mercy of unreliable markets and potentially hostile powers.

As Contact Energy CEO Mike Fuge notes, “New Zealand needs 30 to 40 big new power plants by 2035.” Time to act now; the world is changing.