Parker David: Biofuel Bill — Second Reading 
Text is incorporated into the Bound Volume 
Parker David: Biofuel Bill — Second Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18257. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Minister of Energy) 
: 
 I move  
That the Biofuel Bill be now read a second time 
. Let me first extend my thanks to the Local Government and Environment Committee. The committee worked hard and gave full consideration to the important matters raised in public submissions. The Biofuel Bill introduces a biofuel sales obligation and makes other legislative changes to provide for biofuels in the New Zealand market. The obligation will provide for greenhouse gas reductions in the transport sector and will also reduce our dependence on oil. Since the bill was introduced to the House last year those objectives have become all the more important.  
Since that time the sustainability of biofuels has also come under significant scrutiny. The select committee made a number of recommendations to sharpen the focus of the bill on the sustainability of biofuels. That is provided by the principles of sustainability contained in new section 34GA(3) in new Part 3A which is inserted by clause 9 of the bill. Principle 1 states: “Sustainable biofuels emit significantly less greenhouse gas over their life cycle than obligation engine fuel.” This principle ensures that biofuels will provide a genuine contribution to greenhouse gas reductions. In the first instance the bill requires a minimum reduction of 35 percent. Principle 2 refers to food production and states: “Sustainable biofuels do not compete with food production and are not grown on land of high value for food production.” That principle recognises the concern that where biofuel crops are directly substituted for food production that can increase food prices by decreasing food supply. Where food supply is maintained or even enhanced however that is not a concern. So by-products from food production—like tallow for bio-diesel and rotational oilseed crops—are expressly set out as meeting that test. The third principle states: “The production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value.” That principle addresses concerns that increasing biofuel production can have negative impacts on the physical environment and in particular on biodiversity and precious ecosystems.  
From the beginning of the biofuel sales obligations companies will be required to report on the sustainability of the biofuels they supply and under new section 34GA the Minister of Energy “must recommend the making of an Order in Council … as soon as practicable” requiring biofuels that are sold towards the biofuel obligation to be consistent with the principles of sustainability. Under new section 34GA(4) if no recommendation has been made by 30 June 2009 the Minister of Energy must report to this House and explain why a recommendation has not been made outline any alternative methods of ensuring qualifying biofuels are sustainable and indicate when the associated recommendations will be made.  
The second major change relates to the proportion of biofuel that oil companies will be obliged to sell. The obligation now begins at 0.5 percent of total sales on an energy equivalence basis rising in 0.5 percent increments annually to reach 2.5 percent by 2012.  
As a consequence of the time taken to carefully consider the bill the commencement date has been changed to 1 October 2008. That reduces the period of the first obligation from 9 months to 3 months. There is no impact on subsequent periods.  
Once again I thank the select committee for the work it has done on the bill and I commend the bill to the House.