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Shell welcomes dialogue on biofuels

Shell welcomes dialogue on biofuels

Shell New Zealand welcomes the Ministry of Transport’s discussion paper on biofuels released for consultation today. Shell believes that an open dialogue between Government, industry and consumers is essential to find the most effective way of increasing the use of biofuels in New Zealand.

“Biofuels have the potential to be a key part of the way that we meet our future energy needs. The Ministry of Transport’s consultation paper will encourage a full discussion about the benefits and costs associated with biofuels,” said Jim Collings, General Manager, Shell New Zealand.

Biofuels are renewable fuels that have the potential to produce lower carbon dioxide emissions than conventional fuels and are currently made primarily from food crops and animal waste bi-products (tallow). The two main types of biofuel are bioethanol (blended with petrol) and biodiesel (blended with diesel). Shell is one of the world’s largest distributors of biofuels.

“Developing biofuels to become a sustainable alternative to conventional fuels is an important focus for Shell. We expect biofuels to grow to make up over seven percent of our global road transport fuel volume over the next 20 years,” said Mr Collings.

While Shell is committed to greater use of biofuels, it supports an approach based on creating incentives related to the degree of carbon dioxide mitigation achieved, rather than mandated sales targets.

“We do not support a biofuel mandate as we believe that mandates distort markets, and that a mandate will increase the cost of fuel in the short to medium term. Biofuels should be encouraged based on the proven performance of individual biofuels in the delivery of well-to-wheel carbon dioxide reduction. Biofuels that are the most effective at reducing carbon dioxide emissions should receive the most support.”

“The discussion paper proposes that a minimum percentage of all road transport fuel sales should be made up of biofuels by 2008. Shell is working with existing local and regional manufacturers to ensure that we can meet that requirement if it’s introduced, but it’s clear that it would have a high cost for industry and consumers,” said Mr. Collings.

To meet the proposed minimum sales requirements, major infrastructure modifications would need to be made to fuel storage facilities and petrol stations throughout New Zealand over a short period of time. The cost of sourcing fuel would also increase as a result of the need to import biofuels or rely on a small domestic manufacturing base. Shell has estimated that this could require the cost of petrol and diesel to increase by at least 5 cents per litre. At 5 cents per litre New Zealanders will be paying an extra $300 million per annum for their fuel.

“Based on these elements and to ensure the greatest possible uptake of biofuels, it is critical that the strategy for New Zealand is based on minimising infrastructure costs and maximising local biofuels inputs.”

Shell believes that the best way to introduce biofuels into New Zealand is to create incentives to support the development of next generation low-carbon, low-cost biofuel manufacturing technologies. This will help to achieve a sustainable, market-based mechanism that will help to make biofuels competitive with conventional fuels and support speedy acceptance by the consumer and businesses alike.

“Shell is currently involved in the development of next generation biofuels, which would be made from plant waste rather than food crops. These biofuels have the potential to be much more effective at reducing carbon dioxide emissions than current technologies, cheaper to produce, and will provide a more renewable source of fuel,” said Mr. Collings.

Mr. Collings said that until improved biofuels are available it may be more effective to reduce greenhouse gases through other measures.

“Shell’s view is that using biofuels as transport fuel would be an expensive way to reduce carbon dioxide emissions in the New Zealand situation in the short term. Other uses such as electricity generation may be more efficient ways of using renewable fuels to reduce emissions,” he said.

Shell looks forward to the outcomes of consultation and working with Government, industry and consumers to further develop the right biofuel solution for New Zealand.


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