Hodgson Pete: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
Hodgson Pete: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
[Volume:651;Page:831] 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I will continue to read the letter: “Stop work will also be issued to the various supply partners to whom BDO has outsourced the fabrication of tanks vessels and process equipment for the new plant. This will invite cancellation fees from our supply partners and their material suppliers which could be detrimental to the bottom line in this troubled time. The company will also have to lay off two full time stainless steel tradesmen employed at the East Tamaki site. 
We plan to employ 22 staff on three shifts at the Waharoa plant and 24 staff on three shifts at East Tamaki; a total of 46 full-time jobs when both plants are in full production to meet the mandate. 
3. It must be noted that oil companies (BP and Shell NZ) are vital partners in the upstream supply chain of biofuels as they possess the expertise and facilities for blending and control the infrastructure for distribution and retail to the market. 
It is however our contention that the oil companies are against retailing both biodiesel and ethanol as this will have direct implications on their sales volume of mineral diesel and gasoline and monopoly. 
Some two and a half years ago we wrote to the oil companies pointing out that preparations be made for blending biodiesel with mineral diesel at their terminals. This suggestion was ignored to the extent that the oil companies have now requested us to undertake the blending at our site. This has imposed an additional $20000 on us to install a storage tank for mineral diesel at our East Tamaki site. We complied with this request as we realised that we were at the oil companies’ mercy to ensure the continued sales of our biodiesel. This proves our point that the oil companies had never been serious in retailing biofuels. 
The government must take notice of the consumers’ mindset in that they would not buy a new product such as blended biodiesel or ethanol unless there are cost savings compared to conventional fuels. In this regards the biofuel obligation would be a valuable aid to change the behaviour. 
4. The undersigned who owns BDO has during the last 8 years invested over $10 million in research and development and plant and equipment including the purchase of sites. 
 He firmly believes that any change contrary to the current biofuel obligation will see the instant demise of the biodiesel and biofuel industry in New Zealand. Apart from that it will destroy every dollar that has been invested in this sector by private individuals and companies like ours who believed in the government’s policies and goals for securing a better future and economy for her people and the country. 
To achieve the desired outcomes in reducing the rate of carbon emission the government has to see that sufficient volumes of biofuels are consumed. And to facilitate this demand huge capital costs and cash flow is required to build and operate biodiesel plants. It will therefore be stupid for BDO to build production facilities if it is unable to recover its investment due to the lack of volume off-take. 
Exempting excise tax and road user charges from biofuels act only as subsidies to fuel consumers. They do not compel the use of biodiesel unlike the biofuel obligation. 
Repealing the mandate will also halt all on-going work and efforts in new technological innovation and development. The future value of this advancement will be completely wiped off for the investors and shareholders as well as place New Zealand in a disadvantaged position worldwide in terms of engineering and process technology export to the rest of the world. 
We would urge you to recommend the retention of the mandate as laid out in the Biofuel Act. There is no sustainability issue regarding the product we produce which meets all standards. 
Yours sincerely 
Tom McNicholl 
Managing Director” 
I say to the Minister in the chair Gerry Brownlee that this is the letter that he did not read. This is the letter that he said he had not seen. This is the letter that goes to the heart of what he is seeking in this legislation to undo. I say to the Minister that this letter could not put it more clearly.