New Zealand’s biofuel market is, apparently, a model of sustainability and transparency; it might be our route to fuel independence. Fitzsimons’ Bill to regulate it looks likely to be rejected

Biofuels are a bit of a yawn, but wake up!

With Jeanette Fitzsimons’ Sustainable Biofuel Member’s Bill set to be voted down, and one year in to Gerry Brownlee’s Biodiesel Grants Scheme, which ‘bills’ the taxpayer up to $36 million for biodiesel subsidies, it seemed about time to ask: what’s happening in our biofuel market?

As I wrote this time last year, Brownlee’s Biodiesel Grants Scheme risks subsidising biodiesel from palm oil, and other unsustainable sources. Fitzsimons’ Bill would have fixed this, by introducing mandatory sustainability criteria for biofuels supplied or sold in New Zealand. It tried to ensure that, in selling and subsidising biofuels, we don’t make the world’s problems worse. The government said, lukewarmly, it would give it an honest hearing.

Repeatedly delayed, with a select committee report now due on July 29, the Bill’s prospects don’t look good. Under the government’s “better regulation, less regulation” policy, the conclusion seems all but inevitable that it will be deemed unnecessary, in the light of market developments to date, and also poorly conceived, according to submissions available online.

Generalising very broadly, across all of the submissions, the Bill’s principles and objectives (eg, ‘well to wheel’ greenhouse gas emissions assessment, food security) were supported, but not the detail of it.

There is a large body of work and literature internationally, about biofuel sustainability assessment: therefore, it can be done. But submitters doubted whether that body of work can be converted to workable regulation, and whether this Bill’s effort was robust.

Some of the objections were silly. (For example, that the Bill’s prohibition on biofuels “grown on land of high value for food production” would undermine waste or substandard New Zealand food sources, such as whey-based bioethanol, and tallow-derived biodiesel. In fact, the Bill explicitly provides for exclusion of such by-products.)

Some seemed inconsistent. (For example, a requirement for approvals of biofuel sustainability, pre-sale, was allegedly unworkable in practice, because product source, origin, feedstock type and production method may vary per cargo. However, sustainability is, apparently, consistent enough across time for industry sources to recommend and give voluntary assurances.)

Others were more convincing. (For example, what appeared to be a random requirement in the Bill for a minimum 35% reduction in greenhouse gas emissions may discourage development of fuels which have smaller or neutral emissions reductions, but provide other benefits, such as security of supply, or being locally sourced.)

A probably sufficient number thought it would be better on the whole to rely on de facto safeguards, by way of voluntary disclosure and market pressure.

If you had a sales obligation, they said, as in Europe and (formerly) New Zealand, sustainability criteria are necessary; without that obligation, markets can be left to make their own choices (a luxury not, however, available to taxpayers under Brownlee’s grants scheme).

This contrasted with the submission of a masters thesis author on the subject, who had found most people supported a mandatory standard.

One might struggle a bit to reconcile the responsible well-intentioned tone of industry submissions (particularly Mobil, Chevron (Caltex), and Gull — BP’s and Shell’s were paltry) with, in practice, reports on biofuels’ secondary impacts to date. It called to mind Brownlee’s response on deep water oil drilling in New Zealand's EEZ, unconcerned, apparently, about the gulf between theory and practice:

“I am of the strong view that any of the oil companies that might be interested in pursuing their options will themselves, for the sake of their own liability, want to make sure that they are as safe as they possibly can”.

And, in the absence of a regulatory mechanism like Fitzsimons’, the onus rests on taxpayers and consumers to continually enquire of Mr Brownlee, and the internet, where their dollars are going, which seems not quite satisfactory.

However, according to those sources, a year from its commencement, the Biodiesel Grants Scheme seems a model of sustainability and transparency.

$178,127 has been paid in grants to the following biodiesel producers: Biodiesel Oils NZ Ltd (Tamaki), Ecodiesel Ltd (Onehunga), NZ Ester Fuels Ltd (Tuakau, South Auckland), Environ Fuels Ltd (Te Kuiti), and Biodiesel New Zealand Ltd (Christchurch). This is a fraction of the budget allocation, nonetheless, the scheme is hailed as a success for a fledgling industry, that will take time to establish.

The feedstock used to manufacture biodiesel has been from the following sources, which are all domestic sources: used cooking oil, tallow, chicken cooking residue, and oilseed rape from rapeseed grown as a break crop.

Other biofuels sold in New Zealand are bioethanol from whey, a byproduct of the dairy industry; and bioethanol from Brazilian sugarcane.

The latter is said to be sustainable, one of the most sustainable biofuels available, according to the overall conclusion of this Energy Efficiency and Conservation Authority (EECA) commissioned report , which tested a broad definition of sustainability, including social consequences. (There were, however, qualifications, and limited and conflicting information in some crucial areas, for example, land use change.)

And “to provide New Zealanders with confidence that they are using sustainable biofuels,” EECA has established a voluntary reporting scheme, that allows biodiesel producers and retailers to declare the sustainability of their products.

Other government work online includes research from the Crown forest research institute Scion. Five detailed reports, produced in a 3-year study, considered New Zealand’s bio-energy options. Waste biomass from all sources would be capable of making only a small contribution to primary energy supply, they concluded. However, biofuels are the future. A large-scale purpose-grown forestry resource (on marginal land, to minimise displacement of agriculture) could see New Zealand become self-sufficient in transport fuels:

“All of New Zealand’s current fuel consumption of 8 billion litres — including petrol, diesel, jet fuel and fuel oil for ships — can be produced from 42% of New Zealand’s medium to low productivity land, while providing significant environmental benefits. The greatest drawback of this option is that it is not currently economically viable. Technology improvements and rising oil prices are likely to see this change in the future.”

Transport fuel self-sufficiency is of course not half as sexy as drilling for the fossilised megabuck — even if it seems not beyond the bounds of possibility that New Zealand might become a small net exporter of sustainable biofuel.

But I hope the Minister of Energy and Resources isn’t so blinded by the sun setting on yesterday’s ‘opportunities’ that he overlooks the signpost to a nicer, tree-lined road.