Chris Mole - Associate Editor
• Argent Energy having second thoughts
• Other bio-fuel companies also worried
• Govt’s hands appear to be tied

NZ’s fledgling bio-fuel industry is under threat from cheap subsidised bio-fuel imports from the US. Three companies are working to establish bio-fuel plants in NZ but all are worried about the long-term viability of their businesses, with the Govt apparently unwilling to do anything to keep out cheap imported bio-fuel. UK firm Argent Energy, which is investigating the viability of setting up a plant in NZ to make bio-diesel from waste tallow, appears to be on the brink of abandoning its plans. Argent’s NZ Managing Director Dickon Posnett says the company won’t wait forever for the Govt to create a “level playing field” for the NZ bio-fuel industry.

Posnett adds while NZ tallow is one of the best available feedstocks in the world for making bio-diesel, his company won’t invest here unless it is absolutely certain the domestic industry has a long-term future. Equally concerned is Auckland company Ecodiesel, which is nevertheless pressing ahead with plans to build a bio-diesel plant this year. Ecodiesel claims to have developed a low-cost process for producing bio-diesel from tallow and is in talks with the major fuel companies about supplying them from 2009. Ecodiesel’s Commercial Director, Neil Domigan, says the company expects to announce a site for a plant within a few days, and hopes to start construction during March, with a view to commissioning the plant by the end of 2008. Domigan notes Cabinet minutes last year, which state the Govt’s bio-fuel objectives, including “preferably … a domestic bio-fuels industry encompassing feedstock supply, production and distribution at least cost.” In view of this, he believes it would be “untenable” for the Govt to allow subsidised bio-fuel from the US into NZ and thus undermine its stated objective to establish a domestic industry. Domigan adds the Govt is investing several million dollars in bio-fuel research, through the Foundation for Research Science and Technology, with a view to underpinning NZ’s future energy security.

But these efforts will be seriously undermined if subsidised imported bio-fuel is allowed. The Govt’s bio-fuels legislation is now before a Parliamentary Select Committee and is due to become law on July 1. The legislation includes an amendment by the Green Party to ensure all bio-fuel used in NZ is “sustainable” and does not harm food supply or the environment. But there’s nothing in the legislation to rule out the importation of cheap, subsidised bio-fuel. At a time when the Govt is trying to sweet talk the US into a free trade agreement, there’s little likelihood it will impose trade barriers against US bio-fuels. And Govt subsidies for NZ bio-fuel producers are equally unlikely.

The best NZ bio-fuel producers can hope for is a change in the US administration’s stance towards subsidising its bio-fuel industry in the longer-term. Otherwise, the prospects for a sustainable NZ bio-fuel industry are looking shaky.

 Copyright © Media Information Ltd
NZ Energy & Environment Business Week