Fitzsimons Jeanette: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
Fitzsimons Jeanette: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
[Volume:651;Page:763] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 This tragic little Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill which is being rushed through all its stages under urgency by a Minister of Energy and Resources who is ignorant of most aspects of his portfolio—apart from perhaps sexy coal—will do exactly the opposite of what the Minister says it will do. It will replace a potentially sustainable local industry—stable secure and well known—with intermittent imports of biofuels from unknown sources which are likely to include palm oil from South-east Asia grown where the tropical forests the last refuge of the orang-utan used to grow and corn ethanol with a higher carbon footprint than petroleum subsidised by the US Government. That is what this bill will do. 
Let me tell members about who is already investing or is poised to invest in biofuels in New Zealand. Although there are many companies doing little bits there are three major companies involved. The company that people have heard most about is BioDiesel Oils (NZ) Ltd. Its managing director is Tom McNicholl and it has a plant already operating in East Tamaki that makes small quantities of bio-diesel from tallow as well as a large plant under construction in Waharoa to make 60 million litres a year. That plant has now been mothballed because there will be no market for the fuel under this plan—and I will tell members why that is so in a minute—and that has caused the loss of 46 jobs. The point Mr McNicholl makes is that unless the oil companies are required to set up blending facilities there will be no possibility of selling biofuels for blending but only the possibility of selling it for use in 100 percent biofuel vehicles which is a much more difficult market. In his letter to me Mr McNicholl states “Exempting excise and road-user charges from biofuels act only as a subsidy to fuel consumers. They do not compel the use of biodiesel unlike the biofuel obligation.” 
Secondly there is Ecodiesel Ltd in South Auckland which is producing small quantities of bio-diesel from tallow. It was planning an expansion of its production to 40 million litres but that has been delayed for at least 6 months because of the uncertainty created by this bill. 
Thirdly there is Biodiesel New Zealand Ltd which uses rapeseed oil grown as a rotational crop with other food crops so that the green material is ploughed back in as a green soil conditioner. The oil is extracted from the seeds and the seed cake is used as an animal feed. That is a sustainable biofuel and that company was planning to produce 70 million litres but that is now under review. 
That is what this bill has done. Those are three significant entrepreneurial companies in New Zealand that want to do the right thing by sustainability and that are all undoubtedly sustainable by any definition of the term but now their investment is seriously under threat. 
Hon Gerry Brownlee 
: Why? 
JEANETTE FITZSIMONS 
: Perhaps if the member listens he will find out why. 
The intention of the bill is to set up a stable local market. It would have actually been better for sustainability to say that we will not allow the import of any biofuels and that we will have them made only in New Zealand so that we know where they come from and that they are sustainable. The Greens could have supported that but unfortunately people got nervous about the World Trade Organization and so forth and did not think that was an option. 
Mr Brownlee says the Parliamentary Commissioner for the Environment recommended against the passing of the Biofuel Bill and that is true. She came to the Local Government and Environment Committee when the bill was in its form as introduced to the House and she said “the bill currently before Parliament should not proceed in its current form”. That bill was not proceeded with in the form it had then because that was before the Green Party negotiated with the Government a sustainability provision. We made it clear that without that sustainability provision we would not support the bill at all. That provision was drafted—and I had a large hand in that—it went through the select committee and it was adopted. As far as I can make out that sustainability provision is the most stringent sustainability provision in the world yet it is being abolished by the Government today. It says that to be sustainable a fuel has to reduce by at least 35 percent the carbon it produces relative to petroleum it must not be grown on land suitable for food production—it must not compete with food—and it must not be grown on land of high conservation or biodiversity value. Those are the three criteria—they are in section 34H(3) of the principal Act—and those have now gone. 
Members opposite have been making a big feature of the fact that the regulations to give effect to that section are not yet drafted. They are partly drafted. The Minister and I met with the officials and said the idea that they could not do that until 2011 was rubbish. We asked whether they could do it by the middle of 2009. They said yes so they were directed to do that by the middle of 2009. The amount of biofuel that is required under the legislation to be used in New Zealand by the middle of 2009 is so infinitesimally minute that there was no reason not to proceed without the regulations. But the fact is that because the section is in the Act there is still a conceptual standard against which to measure biofuels that come into the country. It was always the intention that there would be a reporting obligation for those biofuels. 
In her advice to the committee the parliamentary commissioner provided a table of carbon emissions for a wide range of different biofuels around the world showing that some of them—like the US corn-to-ethanol programme—have higher carbon emissions on a life cycle basis than petroleum and others particularly those made from wastes like tallow have very low carbon emissions. Not all biofuels are equal. That is the thing the National Party has never been able to grasp. 
The Minister said that the work on drafting the regulations will continue. Well I ask what he will do with those regulations because now there will be no primary legislation under which they can exist. We cannot have regulations that just hang in the air. 
The Minister also says biofuels will cost up to 8c a litre more than petrol. That figure comes from the oil companies. I remember back to the days when we had a big campaign to get lead out of petrol because it poisoned children’s brains. The oil companies told us repeatedly that petrol would be massively more expensive—I think they said 10c a litre more expensive at the time—if the lead was taken out. Eventually we forced them to take the lead out and nobody even noticed any change to the price. The oil companies are absolutely the last people we should trust if we want to know what biofuels will cost. 
The fact is that whether biofuels cost more or less than petrol will depend on the price of petroleum. The Ministry of Economic Development gave advice that whether biofuels would increase fuel prices will depend firstly on the amount of infrastructure investment required by oil companies. Currently that is estimated to add 0.2c to 0.4c per litre to the price. Secondly it will depend on what the price of petroleum is at the time. When oil actually reached $157 a barrel biofuels were cheaper than petroleum. But it cannot be left just to the market because if we do not have the infrastructure if we do not have the industry all that the market will do is to produce a fluctuating import—or not—of fuels depending on what the price is. So we will get the worst stuff going. We will have no stability in the market we will have no blending and we will have no New Zealand industry. All we will have is ad hoc imports from wherever biofuels might be available in order to make up the difference. 
The Minister says he wants to give a tax subsidy instead of a mandatory obligation. I will pick that issue up in my second reading speech. There is plenty more to say.