Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Biofuel Bill will hit prices at the pump

6 March 2008

Biofuel Bill will hit prices at the pump

BP New Zealand today warned the Local Government and Environment Select Committee that the current Biofuel Bill could result in a price increase on petrol and diesel of at least seven cents per litre at the pump.

In addition the mandate is too high, too fast and fails to deliver any of the three main aims of the Bill: sustainability, security of supply and carbon reduction,” Managing Director Peter Griffiths told the committee in his submission on the Bill.

“While BP supports the introduction of biofuels into New Zealand, and has been trialling them here for a number of years, we have serious concerns about the impact of the Bill as currently proposed.”

“The infrastructure required, additional raw bio material product costs, implementation and compliance costs will see our overall costs sky-rocket. We will have no choice but to pass these on to our customers.”

The Biofuel Bill requires oil companies to sell a minimum percentage of biofuels (calculated on energy content) from 1 July this year. The mandate increases from 0.53% in 2008 to 3.4% in 2012.

“While on the face of it 3.4% does not sound like a very high target, the way in which it is calculated and must be implemented means that over 90% of petrol and 30% of diesel will need to contain a bio content in order to meet the mandate. This will dramatically reduce customer choice” Mr Griffiths said.

The average age of a vehicle in the New Zealand fleet is 12 years. Older vehicles are less likely to be compatible with biofuels. The Bill makes it clear that the Government will not take responsibility for any vehicle issues. BP believes this is unwise given the Bill significantly reduces customer choice.

Japan’s Ministry of Economy, Trade and Industry (METI) has said that blends above 3% ethanol are not recommended in pre-2004 Japanese domestic cars. In order to meet the mandate, BP believes a 10% ethanol blend will be required in most of New Zealand’s petrol.

“This is one of the highest biofuels targets in the world and cannot physically be delivered at the moment.”

Specifically BP is concerned about:

- The expected increase in pump price of at least seven cents per litre.
- The need to import all ethanol from overseas as not enough is available in New Zealand. This is counter-productive to carbon reduction.
- The significant cost of infrastructure required to implement the Bill.

“We want to see biofuels in New Zealand but not when the cost to customers is so high and the environmental benefits are negligible.”

BP has proposed an alternative implementation plan which is still a challenging target but provides a steady increase in the delivery of biofuels.

“Our alternative implementation path reduces compliance costs, allows time for more biofuel compatible vehicles to enter the fleet and time for local biofuels production to develop,” Mr Griffiths said.

“We will continue to work with Government and officials to ensure the best biofuels plan is implemented.”

For more information see BP’s submission at


© Scoop Media

Business Headlines | Sci-Tech Headlines


Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>


Unintended Consequences: Liquor Change For Grocery Stores On Tobacco Tax

Changes in the law made to enable grocery stores to continue holding liquor licences to sell alcohol despite increases in tobacco taxes will take effect on 15 September 2017. More>>

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>


By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>


Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>


Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>