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Biofuel law change needs swift action

17 December 2008


Biofuel law change needs swift action to avoid ‘vacuum’

The Bioenergy Association of New Zealand (BANZ) welcomes the proposed changes in the biofuels legislation that will provide opportunities for the industry to move ahead. However with the loss of a guaranteed market the industry urges the new Government to act quickly, establish new proposals and give the fledgling industry the confidence it needs to grow.

Speaking today, Andre Hamman, Convener of the Bioenergy Association’s Liquid Biofuels Interest Group said that the changes were understandable and the majority of the industry accepted them. Mr Hamman added that New Zealand’s ability to seize the opportunity and become self-sufficient in sustainable ‘home-grown’ liquid biofuels for transport will be slowed unless the repeal of the biofuels sales obligation is replaced promptly. The Bioenergy Association of New Zealand (BANZ) has called on the Minister to act quickly to avoid a ‘policy vacuum’ within the emerging biofuels industry in New Zealand.

Mr Hamman noted that the success of the proposed alternative is predicated on a firm Government directive and defined standards. He said “We need to make sure that this gap is filled and filled promptly if the significant investment and effort that has occurred to date is to bear fruit. The industry is ready and would welcome any opportunities to discuss with the Government alternative policies that will provide investor confidence.”

Mr Hamman highlighted the ‘even-handed approach’ that the government has signalled with the proposed introduction of a positive incentive system that would provide a separate tax credit for bioethanol, biodiesel and other renewable energy. Mr Hamman said, “The equalisation of tax treatment between biodiesel and bioethanol creates a level playing field for the industry’s development – something lacking in the previous legislation. Fixing it won’t be straightforward though with diesel part of the Road User Charge regime and ethanol/petrol being on a sales tax system. We are keen to work with the Government to develop a solution.”

Mr Hamman noted, “This even handed approach proposed by the Government is being viewed very favourably by the industry as is the introduction of well defined sustainability criteria for biofuels. As an Association, we are keen to support the move and encourage the Minister to cement the changes into place as soon as possible.”

New Zealand biofuel producers have proactively responded to the Government commitment to introduce sustainable Biofuels to New Zealand. To this end, significant investment has occurred over the past 2 to 3 years in R&D, business establishment and capital equipment in preparation for the introduction of the Biofuels Sales Obligation on 1st October, 2008 which is now repealed.

Mr Hamman commented also on the idea of ‘sustainability standards’ for biofuels, adding that whilst there is full support for the development and use of sustainability standards, there is the risk that this process may become a protracted exercise. However it is well known and proven that the existing resources available in New Zealand such as tallow, used cooking oil, rotational oil seed crops and whey are indeed sustainable and moreover, are amongst the best performers in terms of net green house gas emission reductions. Mr Hamman said, “I’d like to think that we are setting the sustainability standard by default here in New Zealand. Looking at the feed stocks we are using, sustainability is a given”.

“The fledgling New Zealand biofuels industry has taken the initiative to rise to the challenge of New Zealand utilising indigenous transport fuels and is steadily gaining momentum. In order for that momentum to be sustained certainty and confidence is essential.” Mr Hamman said, “As an Industry Association, we would welcome the opportunity to work with the Minister to ensure that the opportunity presented by a New Zealand grown, sustainably produced biofuel will indeed create employment and value-add local resources. Early signs are encouraging and we welcome that”.


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