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Sustainable biofuels likely to reduce fuel prices

Hon David Parker
Minister of Energy

23 June 2008
Media statement

Sustainable biofuels likely to reduce fuel prices

The introduction of a biofuels sales obligation will help New Zealand move away from our dependence on imported oil and is most likely to lessen, not increase, the cost of transport fuel, Energy Minister David Parker said today.

The Minister welcomed the report of the Local Government and Environment Committee today on the Biofuel Bill, which recommends that the bill be passed with amendments.

For practical reasons, the obligation is recommended to now come into effect on 1 October 2008. The obligation levels have been changed so that they start with 0.5 percent this year and rise by 0.5 percent increments to 2.5 percent in 2012, instead of the originally proposed 3.4 percent.

“This change means a much smoother rate of increase to the obligation, and according to submitters, will reduce costs and improve the chances of biofuels being produced in New Zealand,” David Parker said.

“This bill allows for a future where an increasing proportion of New Zealand’s transport fuel can be produced locally, from by-products of the dairy or beef industry, from wood and grasses grown on otherwise unproductive land, or perhaps one day from algae from sewage ponds.

“The introduction of biofuels is a forward-looking move which will start to free New Zealand from the tyranny of the international oil market, and is likely to reduce the cost of fuel to consumers. Gull Petroleum is already selling biofuels at less than the cost of a similar non-biofuel product.

“We’ve had a clear message from the industry – both fuel companies and potential biofuel producers - that they want some certainty on the future for biofuels so they can invest with confidence. If the obligation is not put in place, that certainty disappears.”

David Parker said sustainability principles now in the bill will make sure biofuels sold towards the obligation in New Zealand:

• Emit significantly less greenhouse gas over their life cycle than fossil fuels

• Do not compete with food production

• Do not reduce indigenous biodiversity or adversely affect land with high conservation values.

The requirements necessary to achieve these principles will be specified through an Order in Council, which the Minister of Energy must recommend as soon as possible. If the Minister has not done so by 30 June 2009, the bill now requires them to explain to Parliament their reasons for not having done so.

In addition, the bill now requires annual reporting by oil companies against the sustainability principles in the bill and gives the Minister of Energy the right to request information on the source of any biofuel, the process by which it was produced, and its consistency with the sustainability principles.

“The sustainability principles are clear, and the industry knows what’s expected of them. The public will be able to tell if any company attempts to sell unsustainable biofuels before these principles are regulated,” David Parker said.

“I thank the committee members who worked hard on this bill and who have made recommendations to address the issues raised by submitters. I particularly thank the Green Party select committee member who has made a strong contribution to the sustainability principles.

“This is a good bill and it deserves broad support, which it might have had, if the National Party hadn’t backed themselves into a corner very early on by stating publicly they were opposed to it, before these changes were worked through.”


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