Brownlee Gerry: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
Brownlee Gerry: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
[Volume:651;Page:776] 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
:  
I move  
That the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill be now read a second time 
. During the first reading debate a number of points were brought up by people who think that this is the worst thing that could ever happen to the biofuel industry in New Zealand. But I have a few questions for them. They will be aware that there are about 20 million litres a year of biofuel produced in New Zealand right now. So the first question is: where is that being sold? Or are those people out there producing the stuff and somehow stockpiling it in hope of the day their captive clients by way of the obligation who need the stuff will come along to buy it off them? Of course they are not: they are selling it now; it is being used now. Since the obligation came in on 1 October have there been any purchases by some of the major oil producers or oil sales—or should we say motor fuel sales—outlets in New Zealand? No. So those companies like BioDiesel Oils (NZ) that are saying “It’s all over we’re out of here we are gone.” are not being straight up and down with the real current situation. 
I had one of my office staff phone that company’s representative to ask whether we could talk about its situation so that I could know more about it because I had noted that that particular company had had significant business development grants through Government agencies. I thought: “Why don’t I go along and see what they’ve done with that money and what is now at stake?”. The response was: “Don’t bother.” The representative said: “Don’t bother. They’re going out of business.” But if a company is producing 11 million litres of biofuel right now why would it go out of business? The problem you see is that the previous Government created an expectation that industries could be built off the back of compulsorily acquired customers. But that is simply unreasonable—quite unreasonable. 
My colleague Mr Auchinvole has just explained that to meet the obligation in the current year this country would need some 60 million litres - plus of biofuel. If we look at the list of what is being produced even if these organisations geared up there is no guarantee that domestic production would be aggregated purchased and blended by the oil companies here. The easy way around it is simply to import the lot and there we have the simple problem. There are no standards in place no measure against the sustainable production of that particular biofuel and there would be the strong possibility that New Zealand could be importing someone else’s problem. There would be no mark against us no measure against us but the world’s carbon dioxide emissions would rise as a consequence. The Greens sit there saying: “We must develop the local industry and if we do not have compulsory acquisition of product then it won’t happen.” The bill we are repealing did not make the compulsory acquisitions that their argument relies on. 
I want to make a couple of strong predictions for the future of biofuels in New Zealand. Here we are in 2008 a country that produces about 22 million litres of bio-diesel. I bet that in 2 or 3 years’ time we will be producing much much more. 
Hon Darren Hughes 
: How much? 
Hon GERRY BROWNLEE 
: I will put a figure on it. I say it will double in 3 years—there is no question about that. I have faith that the investments made by these organisations will see them able to sell their product in this country. I point to some extraordinarily exciting things like the deal that Solid Energy has done with the Stark fishing fleet in Nelson. Fishing boats out there are 100 percent fuelled by bio-diesel. That is marvellous; if they have a spill it is fish food. Do they have stinky diesel on the boat and the crew? No they do not. That sort of use is going to develop in this country and it is going to expand in this country. That is why we are going to persevere with the development of sustainable production standards for biofuels. That is why we will continue on our exercise of equalising tax treatment for bio-diesel bio-ethanol and other biofuel products. 
I ask those who are so downhearted about the future of the industry in this country whether—since if we were to go ahead with the obligation as it is in place currently by 2012 we would need some 300 million litres of biofuel a year—there would be any chance that we would get from 22 million litres a year now to 300 million in a couple of years’ time bearing in mind that Mr Hughes over there thought it was a huge joke for me to suggest that the capacity would double let alone go right up to 300 million. 
Hon Darren Hughes 
: The member’s capacity could easily double. 
Hon GERRY BROWNLEE 
: Yes it could. That is right. It would certainly not go from 30 million 20 million or 60 million or whatever it is to 300 million—absolutely not. It will not go up tenfold inside 3 years and the former Minister knows that. We were always in a position where this country would be heavily reliant on imported product and cannot guarantee where that product comes from. 
I do not need to recite to people here what the UN says about biofuels. It is amazing that members on the other side of the House always talk about how wonderful the UN is until they disagree with it. 
I want to make one other point: that the current law we are repealing made provision for those who are obligated by the law to come to the Minister of Energy and Resources and say “We can’t meet our obligation this year. Can we defer it?”. The answer to the House—before the question is asked—is that it is highly likely. In fact it was obvious to us that all of the major sales outlets were going to ask for that deferral. All we are doing is saying: let us get some standards in place let us continue to put the incentive—and significant Government money has gone into this industry—into developing the local biofuels industry and then have a look at how much we might see going into our daily vehicle fleet. I make the point again that 20 million litres - plus is produced in this country right now—all being sold.