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Biofuel Law Change

Hon Gerry Brownlee
Minister of Energy and Resources

Date 11 December 2008 Media Statement


Energy and Resources Minister Gerry Brownlee today tabled in Parliament a Bill to repeal the obligation placed on oil companies to sell a certain proportion of biofuel.

“The government supports the introduction of biofuel as an alternative fuel source with potential for New Zealand,” Mr Brownlee said. “However, we do not support any form of mandatory obligation.

It will mean consumers have a free choice and certainty for the future. Fuel suppliers will make decisions to supply biofuels based on commercial, environmental and marketing considerations.
“There are a number of reasons why National wishes to repeal the biofuel obligation. The old law brings uncertain costs to consumers, oil companies estimated it would increase the cost of fuel between two and eight cents a litre.”

The Parliamentary Commissioner for the Environment warned against Labour’s bill, saying it could damage New Zealand clean, green image and importing biofuel could contribute to hugely damaging environmental and social impacts in other countries,” said Mr Brownlee.

“Labour failed to even put in an environmental sustainability standard when it pushed through the old law.”

The government will consider other issues in respect of biofuels. These include tax considerations relating to biodiesel and bioethanol, and biofuels, as well as electric vehicles and other alternative fuels. All of these have potential benefits, so must be considered in an even-handed way.

The Energy (Fuels, Levies, and References) Biofuel Obligation Repeal bill has been tabled in Parliament. It will be passed under urgency through all stages next week.

When was the old law enacted ?
The Biofuel Bill was enacted in September 2008 through amendments to the Energy (Fuels, Levies, and References) Act 1989. Part 3A of the Act covers the biofuel obligation, which requires oil companies to also sell biofuels. The obligation began in October 2008 at an amount equal to 0.5% of petrol and diesel on an energy equivalent basis, increasing annually to reach 2.5% by 2012. The repeal of Part 3A means that this obligation on oil companies is removed

What will the repeal mean to consumers, oil companies and biofuel producers?
Oil companies should be free to market biofuels if they choose to do so, and well informed consumers may make that choice. It was pleasing to see this was already happening, with several companies successfully promoting biofuel blended fuel before the obligation was imposed”

What has been done to ensure biofuel quality in New Zealand?
The Engine Fuel Specifications Regulations 2008 cover petrol, ethanol, petrol/ethanol blends, diesel, biodiesel and diesel/biodiesel blends. Offering fuel consistently of a quality that is suitable for our vehicles is important towards building consumer confidence in the use of biofuels, and for protecting the reputation of the biofuels industry.

What incentives has National considered to encourage biofuels ?

National went into the election promising a consistent tax incentive for sustainable biofuels, exempting ethanol and biodiesel from excise and road-user charges in portion to the blend (ie a 10% blend will receive a 10% exemption)

It will develop a process for approving sustainable biofuels to gain tax exemption once sustainability standards have been established that take into account net greenhouse emission reductions.


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