Smith Nick: Biofuel Bill — Second Reading 
Text is incorporated into the Bound Volume 
Smith Nick: Biofuel Bill — Second Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18257. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This is not just poor public policy—it is awful. Why on earth would we want to impose substantial additional costs on the household users of fuel at the very time when all the international evidence is that biofuels have a very dubious environmental benefit? The Parliamentary Commissioner for the Environment did not just say this bill should be amended; she told the Local Government and Environment Committee that it should be dropped. She even went further than that and said this bill will damage New Zealand’s clean green reputation.  
Just a month or two ago an article in  
Time 
 magazine “The Clean Energy Scam” said that although it is hyped as an eco-friendly fuel ethanol increases global warming destroys forests and inflates food prices. So why on earth are we subsidising it? New Zealand’s very well-respected former Minister for the Environment Simon Upton wrote in the  
Dominion Post  
“the road to hell is paved with biofuels”. We have the 400-page report from the British House of Commons that asks the question “Are biofuels sustainable?” and overwhelmingly concludes that they are not; we have the report from the OECD  
Biofuels: Is the Cure Worse Than the Disease? 
; we have pleas from the World Food Programme; we have Oxfam submitting to the committee and pleading with this Parliament not to go down this track; and we even have the United Nations Secretary-General calling on nations to halt the passing of these sorts of laws because they are a hoax.  
There are two fundamental flaws in this bill. The first is that despite all that the Minister says about the sustainability standards those standards do not come into effect until well after the compulsory requirement comes into place. If one ever wanted to have a bill where the cart is being put before the horse we have it here in black and white. On 1 October in just 27 days’ time it will be compulsory for fuel sold in New Zealand to have a component of biofuel in it. But the sustainability standard to ensure that that does any good is at least 9 months away and I put it to this House that it will be many years more than that. You see the European Union which has been debating these same issues has been trying to establish a standard for sustainability for 2 years and it has not been able to get there. So why does this Clark-Peters Government suddenly believe that it can instantly get there—that it can somehow get through those issues? Even the Government’s own officials said it would take at least until 2011 to come up with a proper sustainability standard. So I ask the House why we are to have a compulsory requirement—a nanny State “they know all” approach—before there is any sort of sustainability standard.  
The second key flaw is this: ethanol is provided with an exemption from excise tax. That means ethanol is being given a huge tax advantage over bio-diesel. We asked Government members we asked the Minister and we asked officials why they wanted to screw the scrum so hard in favour of ethanol over bio-diesel. The answer was blank. They said they would look at that issue some time in the future. Well why on earth would we want to provide an incentive to import ethanol from Brazil when there are very good reports that show that that product arises from and helps to drive the destruction of Amazonian forests? Why would we want to compel that? Why would we want to provide a tax incentive for that over for instance biofuels that are produced in New Zealand by converting agricultural by-products such as waste fat from the meat industry to biofuel?  
You see with this bill we are adding very substantial costs. If we can believe the Minister he says there is no cost for consumers arising from this bill because they would use biofuels anyway and these fuels are inexpensive. Well I simply ask the Minister why he needs to compel their use. If it is economic people will use them anyway. The idea that there is no cost for the consumer is about as straightforward as Winston Peters saying he has never received a donation from Mr Owen Glenn. The submissions heard by the select committee were that the oil companies say this requirement is likely to cost 7c per litre and the officials said the cost would be about 2c a litre. Let us take the mid-range figure of 4c a litre; that is an extra $240 million a year. Why on earth in the middle of a recession would we want to impose extra costs of $240 million a year around biofuels when there is an overwhelming international consensus that they are not the right way forward?  
I put this to the House. We know that the biggest challenge New Zealand faces is around agricultural emissions particularly from methane and nitrous oxide. We are spending $3 million a year on research in those areas and the Biofuel Bill proposes to bank $240 million a year in terms of the cost to road users. I say to the Minister that this bill has got it awfully wrong. How can the Minister and Government members claim there is no cost to the consumer? If there is no cost why do we need a law that compels people to comply with it?  
This bill represents another botched climate change policy. For 9 years we have seen emissions go up at record rates. We have seen huge growth in electricity emissions. We have seen more coal-produced electricity being used than at any time in New Zealand’s history. We have seen the Projects to Reduce Emissions policy fall over. We have seen the negotiated greenhouse agreement policy fall over. We remember the promise of the billion-dollar surplus from Kyoto and how it fell to pickle. We remember the policy announced on animal emissions levies. We have seen one botch-up after another for 9 years around climate change policy but I have to say this Biofuel Bill is the very worst of them.  
I challenge members opposite: why are they ignoring the Parliamentary Commissioner for the Environment whom they themselves supported? They appointed Jan Wright to that role. Her evidence to the select committee was absolutely damning in terms of this bill. This bill represents the Government jumping on the bandwagon just as the wheels are falling off. At the very least there should be no compulsion to use biofuels until the actual biofuel standards are put into place. The idea in this legislation that we are going to impose on the fuel sector the cost of introducing infrastructure without knowing what the sustainability standards are is seriously flawed.  
This bill should not proceed. We should heed the warnings of the United Nations the World Food Programme the Parliamentary Commissioner for the Environment and every one of the other submitters who have made it plain that this is flawed legislation. Biofuels do have a role to play in respect of the challenge of climate change but this compulsory legislation will impose costs for little environmental benefit and what is worse still it runs the serious risk of contributing to deforestation and some of the huge difficulties that the world is facing as we speak in respect of food prices and their impact on the poorest people of the world.  
I can only conclude with the contribution from Oxfam which said that in order to fuel our cars we are going to take food from the mouths of the poor.