Woods MeganSUSTAINABLE BIOFUEL OBLIGATION BILLFirst ReadingHon Dr MEGAN WOODS (Minister of Energy and Resources): I present a legislative statement on the Sustainable Biofuel Obligation Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr MEGAN WOODS: I move that the Sustainable Biofuel Obligation Bill now be read a first time. I nominate the Environment Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 27 April 2023.ASSISTANT SPEAKER (Hon Jenny Salesa): My humble apologies Minister. If you could just begin the I move" and just read out the text please? There were a couple of words that were out of order.Hon Dr MEGAN WOODS: Sorry Madam Speaker. I move That the Sustainable Biofuel Obligation Bill be now read a first time.ASSISTANT SPEAKER (Hon Jenny Salesa): "I nominate".Hon Dr MEGAN WOODS: I nominate the Environment Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 27 April 2023.ASSISTANT SPEAKER (Hon Jenny Salesa): Excellent.Hon Dr MEGAN WOODS: If we are to avoid the worst of the climate crisis we know that transport emissions in Aotearoa New Zealand must be reduced and they must be reduced quickly. Since 1990 transport emissions have increased by more than 60 percent. They represent about half of long-lived carbon dioxide emissions and roughly one-fifth of all greenhouse gas emissions in Aotearoa New Zealand.As a Government we are committed to targets of net zero carbon emissions by 2050 and one half of total energy consumption coming from renewable energy sources by 2035. We also have commitments to meeting our nationally determined contribution under the Paris Agreement of reducing net greenhouse gas emissions 50 percent below 2005 gross levels by 2030.Action is needed across the whole of the economy to ensure that we meet these targets and get to where we need to be. Fossil fuels will continue to play a part in our transport sector for a long time to come but a managed phase-out of fossil fuels remains our goal and must be our goal. While we recognise that change cannot happen overnight we cannot afford to delay action to reduce our transport emissions. The light vehicle fleet represents almost two-thirds of domestic transport emissions so change here—including increasing the uptake of zero emissions vehicles like electric vehicles—will be critical to what we do as a country. However it will take time to develop this infrastructure and to reach the high proportion of zero emission vehicles in the fleet. Unlike biofuels other low-emissions transport fuels such as hydrogen are not yet compatible with existing vehicles and fuel infrastructures. Biofuels have been used safely and effectively in many countries around the world for many many years and it is a technology that is available to us today.Sustainable biofuels are a viable mitigation opportunity for New Zealand's existing internal combustion engine vehicle fleet. Each vehicle that enters the fleet remains active for an average of 20 years in New Zealand. Biofuels offer us the opportunity to reduce emissions in the vehicles that we drive today without changing those vehicles. Biofuels also provide emissions reduction pathways for hard-to-abate transport—like heavy trucking like shipping—where other ways of reducing emissions are not yet commercially viable and available in New Zealand. The sustainable biofuels obligation introduces an obligation on any company or person who imports fuel into New Zealand or refines fuel in New Zealand. This will introduce an obligation for five companies which operate here in New Zealand. An obligation is important because without it we will not realise the biofuels opportunity because of the significant barriers we face including the lack of scale in production.The obligation is designed to reduce the overall emissions intensity of transport fuel. This means that the average greenhouse gas emissions of each litre of fuel used in New Zealand will need to reduce over time. The targets for reducing emissions intensity have been set so that they provide an ambitious but achievable pathway; the target for 2035 is 9 percent emissions intensity reduction. This is a substantial contribution towards reaching a net zero economy. The obligation will prevent about a million tonnes of emissions from cars trucks trains and ships over the first two years of its operation and up to 9 million tonnes by 2035.The design of the obligation means that biofuels which are better at reducing emissions will count for more. It incentivises fuel wholesalers to source and supply biofuels with the lowest emission and it guards against the risks that only the cheapest biofuels—which are little better than fossil fuels—will enter the New Zealand market. This will be a significant change for fuel producers fuel retailers and motorists. The Government previously intended to introduce the obligation from 1 April 2023. However in preparing this bill I became aware about the lack of infrastructure for the first generation of biofuels—ethanol and bio-diesel—and this meant that there would only have been limited and more expensive options available to meet the 2023 target. To avoid imposing these unnecessary costs on motorists the obligations will come into effect from 1 April 2024. This will give the industry more time to get ready for the change and to build the infrastructure it needs. I've heard some people say that this is us putting cost of living against climate change. This is not the case and let me take the House through the numbers. The foregone conclusions if everybody were to introduce biofuels—the 2023 date is up to 230000 tonnes of carbon emissions reductions. It is the obligation on us under the emissions reduction plans to then tell how we're going to make up those forgone emissions. What we have done is we have kept the 2035 reductions targets—we'll need to have a bit of a steeper curve through there. But in reality the 230000 tonnes of carbon removed is roughly the equivalent of two relatively small programmes that we've funded through the Government Investment in Decarbonising Industry Fund programme in terms of industrial decarbonisation. This is the budgeting that Governments now must do. If you are not going to reduce emissions in one area you must tell us where you are going to reduce this. We need to avoid the climate change equivalent of the Bermuda Triangle of budgeting that we've seen across this House. So my challenge to any party in this House that is not intending to support this bill is to lay out in fine detail where 9 million tonnes of emissions reductions are coming from. This is what parties in this House signed up to when they supported the Climate Change Response Act. This is what parties in this House signed up to when they supported the targets set by the independent Climate Change Commission. This is where the rubber hits the road. If parties are not going to support this bill I want to hear where 9 million tonnes of emissions reductions are coming from in other parts of the economy and I look forward to that. Now some people question whether biofuels are truly sustainable. It is not true that all biofuels are created equal and overseas there have been instances where some biofuels such as those produced from palm oil have harmed the environment and their local communities. Biofuels can cause deforestation which will have unacceptably high levels of emissions and may be even worse than fossil fuels. This is not acceptable and we will not accept these biofuels in New Zealand. To address this the bill that we are debating here contains a power to create regulations which limit or exclude unsustainable biofuels from the obligation. The regulation-making power can be used to limit biofuels derived from crops which are food sources. This is important; it means our demand for fuel will not compete with the world's need for food. Earlier this year we consulted on proposals for these regulations. The obligation on fuel wholesalers is clear—failure to meet it will attract liability for a civil pecuniary penalty. In setting the level of this penalty I knew that we needed to get it high enough so it gave an adequate incentive for fuel wholesalers to comply and ensure they are reducing emissions. The Environmental Protection Authority will monitor how fuel wholesalers are discharging their responsibility. This bill is another—and important—step in the Government's comprehensive plan to reduce emissions in the economy and reach net zero by 2050. It's also another step that makes parties in this House accountable for telling us how we are going to reach our targets we have all signed up for.ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to."