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First step towards biofuels

30 August 2005

First step towards biofuels

The government has responded positively to those wanting greater certainty about the future direction for biofuels by agreeing in principle to set a sales target in law. The decision comes after several months of consultation with affected parties, including oil companies, motor vehicle industry groups and potential biofuel producers.

The government is focusing on two types of biofuel - bioethanol to be blended with petrol, and biodiesel to be blended with diesel. Enough biodiesel can be produced from tallow to provide around five per cent of New Zealand's diesel, while the dairy industry could today produce enough bioethanol to meet only 0.3 per cent of our petrol needs.

However, an Energy Efficiency and Conservation Authority (EECA) commissioned report is also released today. It suggests that at least three per cent of our petrol needs can be competitively met from bioethanol from forestry waste, straw, and waste paper.

"Biofuel has great potential in New Zealand," said Pete Hodgson. "It can help improve the security of transport fuel supplies and offer worthwhile health and emissions benefits. The time has come to take the first small step so that the industry can make investment decisions with certainty."

Biofuels are already used in many Western countries including the US, Australia, most European countries and Canada.

Biofuels are a success in these markets because high quality standards have been set, as they have been here, and because fuel and vehicle manufacturers endorse their use. The Japan Automobile Manufacturers Association has already said that it would not have a problem with the use of a three per cent ethanol petrol blend though there are distribution and storage issues to be identified and addressed.

It will be important to have a non-biofuel alternative available at least for the first few years. This is so people, particularly with older Japanese imports, have a choice.

"The industry now has the certainty it needs to invest and I hope that we will be pleasantly surprised by how quickly it responds. I want to see the transport sector given the choice of biofuel as soon as possible, and by 2008 at the latest."

ENDS

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