Fitzsimons Jeanette: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
Fitzsimons Jeanette: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
[Volume:651;Page:848] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 I have to begin with that last point from Dr Nick Smith. As he well knows New Zealand’s greenhouse emissions rose fast under the National Government of the 1990s and they rose faster under the Labour Government of the 2000s for one simple reason—that is the economy grew faster under Labour than it did under National. I make no excuses on the grounds of economic growth; the climate does not care how fast the economy grows. And it did take the Labour Government a long time to realise it had to take some action. But finally the Labour Government took some action. It put in place some provisions to reduce our greenhouse emissions—very late nevertheless it did it. But what is the first thing the National Government has done? It has repealed the lot of them. Well maybe that is a lesson to Labour—that a Government has to do things early in the term if it wants them to stick. But the fact is that we did get some good policy and now it has gone. 
I begin my third reading speech on the bill to abolish the biofuel obligation by reading a little bit from the briefing to the incoming Minister of Transport. This is what the Minister was told by the Ministry of Transport: “Reliance on fossil fuels to power transport leaves New Zealand exposed to the expected rises in oil prices due to increased demand and a supply that many forecasts suggest will peak between 2010 and 2020.” The Ministry of Transport has finally got on board with peak oil! “To help our society and economy adjust to the true cost of using oil and emitting carbon dioxide the transport sector must improve energy efficiency and shift to energy sources and modes of transport that are more sustainable and over which we have more control. New Zealand is relatively well placed to generate electricity from renewable sources has good sources of first-generation biofuels in limited volumes and is developing sources of environmentally friendly second-generation biofuels. Making the most of our opportunities will be an important focus of the ministry’s activity over the coming decade.” Well it looks as though the ministry will not have that opportunity. 
I note that despite that briefing from officials the new Minister of Transport has not spoken once in this debate. Would we not think that an incoming Minister of Transport would be interested in a debate about what vehicles in New Zealand will be running on in the future? But he has not contributed one thing to this debate and I find that sad. No one in Government in fact has spoken up for our need to reduce dependence on imported oil. No one has spoken up on our need for fuel security at least in an emergency—to have enough fuel to get food to the supermarkets and to maintain emergency services. I have to say to Dr Smith that electric cars will not do that. No one from the Government has spoken up on the need to encourage science innovation and entrepreneurship which will lead to second-generation sustainable biofuels in New Zealand. That is an area where New Zealand has a big competitive advantage. Nobody over there has recognised the importance to business confidence of being able to rely on a law. Those issues have been left to the Greens. 
Biofuels are not the saviour of the world. They are not the whole answer to climate change and nobody has ever pretended that they are but they are part of it. New Zealand is particularly well placed because of our large land area and good growing climate and because of the wastes that occur from our agricultural industry. There are good biofuels and bad biofuels and the way to distinguish them is with a sustainability standard but the Government is repealing detailed instructions for writing that sustainability standard. Nick Smith in all his speeches and the Minister as well insists on conflating the United Nations’ concern about the effects of ethanol grown from subsidised corn in the US with the effects of bio-diesel made from tallow in New Zealand but they are as different as chalk and cheese. To be for one does not mean that one is for the other. 
The Government position is based on an aversion to mandatory means but we already mandate the composition of motor fuel. We already mandate sulphur levels the lack of lead and a whole lot of specifications around volatility and combustibility. What is so different in mandating 2.5 percent of renewable composition? Nick Smith again knowingly misrepresented the situation by saying that it was equivalent to compelling oil companies to buy Tom McNicholl’s product. Well he knows that is not true. It is equivalent to requiring oil companies to buy some renewable fuel. Tom McNicholl has to compete with everybody else on whether his product is the one that makes it. 
I thought that one benefit of this debate was that the Minister Gerry Brownlee was learning some stuff from all the contributions in the House. But I heard his third reading speech and I am afraid I was wrong because he still does not grasp the most important point of this whole debate. He is taking an economics 101 approach that says if the demand is there the market will provide. If we are talking baked beans or shoes that is correct but in this case the market will not provide and here is why. First of all oil companies will never demand biofuels. Why should they? They have their own product. They are not the consumer. As oil prices rise they will just put up the price of what they sell. So there will never be demand from oil companies for biofuels until oil wells are physically incapable of delivering enough oil. 
Members should remember that the briefing to the incoming Minister of Transport—and a very conservative briefing at that—says that that time will be from 2010 to 2020. If it is 2010 we need to have infrastructure in place now but we are not going to have that. As well when oil wells are incapable of delivering enough oil it will be very hard to import biofuels because everyone will want them. We may not even have our own tallow at that stage in order to set up an industry because it may well be under long-term contracts for export to China where the Chinese will be making biofuels out of it for their people because tallow will be a valuable ingredient. 
Gerry Brownlee thinks that because Fonterra and Gull Petroleum have a contract to sell 22000 litres of ethanol that shows that it can be done. Well they had a bit of surplus feedstock they were already making ethanol and Gull Petroleum was expecting a legal obligation so it got in first. It was a marketing strategy; it was a one-off drop in the bucket little bit of ethanol blended with petrol and it will be the last of that kind because the company did it expecting an obligation. If a company is building a biofuels plant will it invest under the law as the law is going to be in a few minutes? Well it will not if it is making ethanol because ethanol cannot be sold here as a fuel unless it is blended and oil companies will not be providing blending facilities. Most vehicles cannot run on pure ethanol so companies will not be proceeding with trying to make ethanol from waste wood for the same reason and that research will go overseas. If a company is making bio-diesel it may focus on whether it can make direct sales such as to the fishing fleet we have heard a lot about. When oil is $150 a barrel companies will get orders and when oil is $49 a barrel as it is now they will not get orders and nobody will build a plant when there is a stop-go market that depends on the fluctuation of international oil prices. So when oil hits $200 a barrel there will be no industry and maybe no feed stocks. 
The Minister even says that oil discovery in New Zealand may reduce our dependence on foreign oil faster. Well I am sorry but I tell him that oil discovered in New Zealand will not belong to us. It will not necessarily be refined here and it will be sold on the world market. We will have as much ability to buy it here as we have to buy any other oil in the world. It is frightening that as we get so close to peak oil we have a Minister of Energy and Resources who does not know that. He says we cannot meet our obligations within New Zealand without imports so let us look at the arithmetic. The first company has 10 million litres now with 60 million litres under construction making 70 million litres in all. If we add eco-diesel we have 20 million litres now with 20 million litres coming online next year. When we add BioDiesel Oils (NZ) 70 million litres are planned and under way. I tell Mr Brownlee that a total of 280 million litres a year by 2010 is already in the pipeline and that is almost the 300 million litres the Minister said we would need in 2012. That is without any wood or any algal biofuels. Clearly we can do it within New Zealand. The quantities in the Act are designed to keep pace with what we can do in New Zealand but all of that careful thought to give just enough encouragement to a New Zealand industry is being wiped away by this legislation.