Fossil fuel subsidies in New Zealand | The Jackal

10 Aug 2013

Fossil fuel subsidies in New Zealand

The total subsidies the National led government has given to the oil and gas industry between 2008 and 2012 is $326.6 million.

However this does not include the subsidy of a very low tax for oil and gas companies. New Zealand has one of the lowest overall tax takes, at only 46% compared with other oil producing countries at an average of 70%.

Here is the breakdown of where those hundreds of millions of dollars in subsidies go:

Figures in millions NZ$

According to Nick Smith "The world spends about US$500 billion per year on subsidies". That money could obviously be better spent preparing for climate change, which is a cost that the oil and gas companies are also being subsidized for.

Some scientific reports are putting the cost of anthropogenic climate change at costing $60 trillion by 2030. Of course this cost will be paid with people's taxes, taxes that come from far more productive enterprises than the oil and gas industry.


WWF-New Zealand has not included the cost of maintaining an oil reserve in the above table. Although this may technically be a fossil fuel subsidy, it is relatively small and is not something over which the New Zealand Government has a choice, as it is part of its obligations as a member of the International Energy Agency (IEA).

* The full title for this is the ‘Nonresident drilling rig and seismic ship taxexemption’. This tax exemption is currently due to expire on 31 December 2014.

** the full title for this is ‘Tax deductions for petroleum mining expenditures’.

*** This refund applies to petrol, compressed natural gas (CNG) or liquid natural gas (LNG) use in off-road vehicles such as agricultural vehicles and ‘commercial vessels’. It also applies to the fuel used by the NZ Coastguard and in ‘dedicated
rescue vessels’, presumably those used by lifeguards.

The data in the table above comes from three sources:

1) The data on production support comes from a response by the Inland Revenue to an Official Information Act request made by WWF in May 2012.

2) The data on consumption support and the acquisition of exploration data comes from the
Treasury budget spreadsheet 2012.20

3) The data on fossil fuel related research and development 2009 – 2011 comes from an OECD report on fossil fuel subsidies,21 while the 2012 – 2013 figures are WWF estimates based on previous expenditure.

H/T World Wildlife Fund - Fossil Fuel Finance in New Zealand (PDF).