Ian Templeton at Parliament
• Date for start set back.
• Obligation levels adjusted down.
• Cost to economy noted.

Significant changes to the mandatory introduction of bio-fuels into NZ’s transport fuels have been proposed by Parliament’s Local Govt and Environment Select Committee. The date for introduction has been amended from July 1 to October 1, and the Committee has altered the obligation levels. Instead of an initial level of 0.53% in 2008 rising to 3.4% in 2012, the mandate will be 0.5% this year rising to 2.5% in 2012. Reporting the legislation back to the House this week, the Committee said “we were advised that the level of 2.5% by 2012 could be met through domestic production.”

In a minority report the National Party strongly opposed the Bill which it says is “seriously flawed” in its timing. “It is madness the mandatory sales obligation comes into effect before the regulations defining sustainable bio-fuels.” Cost estimates ranged from 1.5c a litre from bio-fuel suppliers to 7c a litre from fuel companies. National says a mid-range figure of 4c a litre amounted to a $240m a year cost to the economy. The bio-fuels policy contradicts the underlying principles of the emissions trading scheme. Bio-fuels will get “double assistance” from the ETS as well as the sales obligation.

The Committee says the majority of 36 submissions it received supported the introduction of a bio-fuels sales obligation, on the grounds of promoting sustainability, security of energy supply and the reduction of greenhouse gas emissions. The Committee found a major challenge in considering the Bill, was to ensure only sustainable bio-fuels would qualify for inclusion in the bio-fuel sales obligation. Bio-fuels are commonly perceived as carbon-reducing substitutes for fossil fuels, with the carbon they release as they are burned in engines being offset by CO2 absorbed into the atmosphere as the crops grow. Reductions vary significantly and a bio-fuel may create more greenhouse gas emissions than it saves over its life-cycle.

The Committee was also concerned about bio-fuels displacing cereals and other food crops, and the impact on bio-diversity of conversion of land from native forest, food crops or other current uses to bio-fuel production. It recommended principles of sustainability be inserted into the Bill, including they must not compete with food production, and must emit significantly less greenhouse gases over their lifecycles than fossil fuels.

National, in its minority report, is particularly concerned the advice of the Parliamentary Commissioner for the Environment is being ignored. The Commissioner says bio-fuels pose a risk to NZ’s clean green image. There is huge difficulty in verifying the sustainability of imported bio-fuels. “National concludes this bio-fuel Bill is very poor public policy. It has high costs for small, if any, environmental benefits.”

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