The regulation of hydraulic fracturing in New Zealand: Risky business?

Abstract

As resources of conventional oil and gas have dwindled, the international industry has responded through utilising a raft of techniques to access “unconventional” energy sources. The most controversial technique is hydraulic fracturing. This paper focuses on the regulation of hydraulic fracturing in New Zealand. Environmental concerns are outlined such as the high demand on water use, potential for groundwater contamination and deterrence of renewable energy investment. The current regulatory framework is found to devolve all responsibility for managing the environmental effects of hydraulic fracturing to local authorities. The relevance of the precautionary principle considered, finding that at present its utilisation is left to the discretion of the decision maker. This paper finds that lack of central government guidance has led to varying approaches to regulation across regions. The current regulation shows a lack of local government power and lack of appropriate remedies. Finally three options for reform are presented. Firstly, central government guidance through a National Policy Statement, National Environmental Standard or both. Secondly, transfer of consenting responsibility to a centralised body. Finally, declaration of a moratorium. New Zealand looks destined to experience a boom in hydraulic fracturing and this paper advocates for a tightening of regulation so that regulators stay ahead of the game.