Parker David: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
Parker David: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
[Volume:651;Page:842] 
Hon DAVID PARKER (Labour) 
: 
 The Minister of Energy and Resources the Hon Gerry Brownlee did not take one call of substance during the whole of the Committee stage of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. He was exposed this morning as not having read the very important correspondence from BioDiesel Oils (NZ) Ltd—a company that this legislation may put out of business with the loss of 46 full-time jobs and the loss of $10 million of capital investment and research and development expenditure. 
As he gave his third reading speech he made another error that really disturbed me. He said that the Energy (Fuels Levies and References) Act already requires sustainability standards even when the detailed sustainability provisions have been taken out of it by this bill. He is wrong—he is just wrong and he does not understand the legislation. An empowering provision in the Act allows sustainability regulations to be developed to ban the importation of unsustainable biofuels but the provision is a power not an obligation. The obligation arose in the provisions that will be taken out by this very bill and it disturbs me that the Minister does not understand that fundamental point. This is Mr Brownlee who has been on Radio New Zealand National saying that National’s real reason for introducing this repeal legislation was that it did not want to see unsustainable biofuels imported into New Zealand. This bill makes a nonsense of that argument. He does not understand his legislation. 
I want to return to a higher level in this debate. I will not now traverse the issues of the terrible injustice that has been done to some biofuel producers in New Zealand but I will restate the reality that if biofuels were going to happen by themselves they would have happened by now. It is easier for oil companies not to incorporate biofuels in their fuel stream and that is why they do not. They have ample capacity to deploy 100 percent mineral oil and mineral oil - based petrol and diesel. They do not need to include biofuels and it is a bit of a hassle for them to do so. That is partly because they have to buy product from some other company. They like to have vertical integration of all parts of the supply chain and to have the profit stream that flows through to them as a consequence so they will not deliver biofuels unless they have to. That is why the mandatory obligation was necessary. 
The approach is similar to that taken in a lot of other countries. The approach being taken in New Zealand was a very moderate one—0.5 percent biofuel required in the first year. Again Mr Brownlee has it quite wrong. He pretended only 20000 litres of biofuel per annum would be available in New Zealand yet evidence has been read into this Parliament’s record that a factory in Auckland is already capable of producing 10 million litres per annum and an additional factory under construction in Waharoa is capable of producing 60 million litres per annum of bio-diesel from tallow which is the most environmentally prudent source of biofuel in the world according to the UN and most of the ecologists who follow these issues. Again it is a misnomer to suggest that if the mandatory obligation had stayed in place unsustainable biofuels would have come into the country. They would not have. From now—from 1 October this year—companies have to report the source of their biofuels. No fuel company will put its reputation at risk by importing unsustainable biofuels in the short period prior to the implementation of the detailed regulations that were to be promoted under the sustainability provisions and that are already quite detailed in the legislation. 
What was the import of the biofuels obligation? Most people in the world—as well as the National Government—say that they are convinced that human-induced climate change is real and that we need to reduce emissions. It is very hard for New Zealand to reduce emissions in agriculture. It can be done but there are no substantial ground-breaking alternatives to cows that do not produce methane. We can reduce the rate of emission but we cannot avoid emissions altogether. Some substitutionary technologies in energy can avoid greenhouse gas emissions and one of them is biofuels. 
Sitting suspended from 1 p.m. to 2 p.m. 
Hon DAVID PARKER 
: Before lunchtime I briefly recounted how the Hon Gerry Brownlee is still mistaken as to the effect of this legislation as shown in his third reading speech. He said that after the repeal of the sustainability clauses in the current legislation there will still be a requirement for biofuels coming into the country to meet sustainability standards when that plainly is not the case. He further said that there will be a requirement for the new Government to develop sustainability standards. That is not the case either. The legislation is permissive and allows standards to be developed but there is no guarantee that there will be a requirement to do so and there is no prohibition on unsustainable biofuels being imported in the meantime. 
I also highlighted that the Minister when sitting in the chair acknowledged that he had not read the statements that came from one of the major producers of bio-diesel from tallow. Correspondence that had been sent to his ministry on 2 December was copied to his office on two further occasions yet on no occasion did he read it. Indeed it appeared obvious that until we provided him with a copy of it this morning he had not read the correspondence. The reason I highlight that is that I think it is tragic that the effects of this legislation on that industry are going completely over his head. 
He did not read the important correspondence which showed that as a consequence of this legislation the $10 million investment made by Mr McNicholl’s company in production of bio-diesel from tallow is likely to fail the plant will be mothballed and the people who would be employed at the East Tamaki factory and the Waharoa factory will presumably be either laid off or not employed. A total of 46 full-time employees were intended to be in place by the early part of next year to operate on a 24-hour basis this very large facility that was going to be producing between the two sites a total of 70 million litres per annum of bio-diesel from tallow—a by-product of the livestock processing industry. The amount produced by that company alone during the first 2 years would have been more than enough to meet the mandatory prescription in the legislation. It was achievable. 
Mr McNicholl’s letter describes how giving biofuels a tax break equivalent to the tax break that we have given ethanol—relieving ethanol from excise duty is equivalent to a 42c per litre tax advantage for ethanol—is not the answer. We did not think it was necessary to bring the tax break forward for tallow if there was a mandatory obligation. But in the absence of a mandatory obligation it is obvious that the oil companies will do just as much as they have in the past—very little—to introduce biofuels. Gull Petroleum has produced a little but the major oil companies have not done much to incorporate it in their fuel streams. 
We tried to pass an amendment that would have made good the National Party promise that it would give equivalent relief or assistance to the bio-diesel industry. I proposed an amendment to that effect. This very simple amendment gave to sellers of bio-diesel relief of 42c per litre of bio-diesel sold and credited it against the levies that were payable under the Act. Again both the National Party and the ACT Party opposed that. 
It is interesting that this bill is opposed by Peter Dunne by the Maori Party by the Greens and by the Labour Party. We all see the injustice that is being done in addition to the environmental back step—one of many that are being taken by the Government at the moment be they on biofuels or on something else. For instance the next piece of legislation to be considered the Electricity (Renewable Preference) Repeal Bill makes it easier to build coal-fired power plants amends the Resource Management Act and abandons efforts to hasten insulation and other improvements—such as efficient light bulbs—to energy efficiency in homes which should be encouraged. This is to say nothing of the suspension of the emissions trading scheme and the job losses that have already occurred in the forestry industry and the carbon service industry as a consequence. 
However those consequences stand small in comparison with the environmental damage that is being done. The economic consequences of this bill are bad enough but I hang my head in despair that this Government is far from building on our fine traditions as a country of doing the right thing in respect of these issues and of taking sensible but not costly decisions that improve the environment and also create new jobs. The Government is ruining all that through the repeal of the biofuel obligation. Thank you.