Taranaki's future as an energy powerhouse could be in "green" hydrogen, finds a report just launched by Prime Minister Jacinda Ardern.
But the oil and gas industry has questioned how much this zero-emission resource would cost to produce, given the "enormous" amounts of electricity required.
With the Government's move to end new deep-sea oil and gas exploration permits, energy-rich Taranaki has been scrambling for greener alternatives to sustain its multi-billion dollar local industry.
The H2 Taranaki Roadmap, produced by local agencies and formally released by Ardern at a function in New Plymouth this afternoon, suggests much of its future may hinge on a form of hydrogen, which is already produced in Taranaki from natural gas.
The report – co-incidentally launched on the same day thousands of students are marching for climate change action - forecasts that in future it will be increasingly produced using electricity to split water, with the only emission being oxygen.
When renewable electricity is used the outcome is "green" hydrogen.
Justine Gilliland, chief executive of local economic development agency Venture Taranaki, said the region was "perfectly positioned" for its production.
"We have significant water, wind and solar resources, existing hydrogen production infrastructure and expertise, and established energy generation and distribution infrastructure," she said.
"The development of a hydrogen industry will be further supported by the region's industrial, service and operational industries, strong culture of health and safety, and deep-water port with easy access to export markets in Australia and Asia.
"Hydrogen offers Taranaki an enormous economic opportunity to be extremely well positioned as we head into a low-emissions future."
Hydrogen could be utilised as a fuel, particularly for heavy vehicles, as a feedstock for products such as urea or methanol, or to store electrical energy for long periods of time from weeks to years.
A new network could include storage of hydrogen or synthetic natural gas in depleted gas fields, and electricity generation using green hydrogen in Taranaki's gas-fired peaker plants.
These plants could be rapidly powered-up to produce vital electricity during periods of peak need, typically supplying the crucial final 15 per cent of electricity demand, the report found.
New infrastructure around the region's natural offshore wind and wave resources – and onshore wind, geothermal, hydro, and solar resources – could be combined with an integrated hydrogen gas and electricity system.
Hydrogen refuelling infrastructure throughout the region could also link up with neighbouring regions to allow heavy vehicle freight movements.
Port Taranaki, which was already experienced in handling industrial chemical products, would be a key hub for hydrogen export.
"The development of a hydrogen industry will be further supported by the region's industrial, service and operational industries, strong culture of health and safety, and deep-water port with easy access to export markets in Australia and Asia," Gilliland said.
The report's author, Andrew Clennett of Taranaki-based Hiringa Energy, was also enthusiastic about the potential hydrogen could have in transitioning the regional economy.
"Taranaki is very fortunate with its natural resources, infrastructure, and the forward thinking and the leadership shown by our regional officials and industry."
The Roadmap is the first of the projects released under Tapaue Roa, Taranaki's Regional Economic Development Plan.
New Plymouth mayor Neil Holdom said Taranaki was at the forefront of a "just transition" to a low-emissions New Zealand.
"Taranaki is the perfect region to lead from the front in helping New Zealand transition to a high value, low carbon economy, given our decades of history with the energy sector and the knowledge, skills and expertise we've developed."
The region's oil and gas industry was currently responsible for an estimated $1.57b of Taranaki's total GDP, and directly employed 4340 fulltime equivalent roles.
Overall, the industry was linked to the creation of 7070 jobs in Taranaki.
The National Party's energy and resources spokesman, New Plymouth MP Jonathan Young, said he saw better opportunities for the region in "blue" hydrogen, which is obtained from natural gas or industrial residual gases by splitting them into hydrogen and carbon dioxide.
He said the UK was pursing production of blue hydrogen because the technology could be put in place quickly and cheaply.
"And I think that is very important to consider when we're looking at the transition that's been envisaged," Young said.
"Even though the Government says renewables are coming down in cost, it's the scale and manufacture that is also critical – and I do think the intermittency of many renewables that make the manufacture of green hydrogen probably less desirable, in terms of cost and reliability."
His concerns were echoed by oil and gas lobby Petroleum Exploration and Production Association of New Zealand (PEPANZ).
"Around 95 per cent of hydrogen around the world is produced using natural gas, and we already produce major amounts of it this way in New Zealand," its chief executive Cameron Madgwick said.
Using the process electrolysis, as proposed in the report, was possible but would be very expensive as it would require enormous amounts of electricity.
"Hydrogen can be produced using natural gas with zero emissions if carbon capture and storage technology is used," Madgwick said.
"There is already a concrete proposal from private investors 8 Rivers wanting to make a multi-billion investment into this technology in Taranaki.
"To enable this, we'd like to see the Government passing legislation to enable carbon capture and storage technology in New Zealand. It would be a big step forward for hydrogen, and a win-win for our economy and environment."
What is hydrogen?
• Hydrogen is the smallest and lightest element. It is the most common element in the universe but is not readily available on earth as pure hydrogen as it rapidly combines with other substances to create compounds such as water, hydrocarbons and carbohydrates.
• When hydrogen is produced commercially from hydrocarbons, it's typically classified as either "brown" hydrogen – when carbon dioxide is released – or "blue" hydrogen – when carbon dioxide is captured and stored.
• When it's produced from water - as is the aim of the Taranaki strategy – it would be classified as "green" hydrogen, as it was produced with zero emissions and using renewable electricity.