Biofuels revisited

Jeanette Fitzsimons’ Sustainable Biofuel Bill has been drawn from the Member’s ballot. It’s sustainable, all right—defying repeal—and the first real test of this Government’s green credentials

Jeanette Fitzsimons’ Sustainable Biofuel Bill began its first reading last week. She says it corrects mistakes in the government’s Biodiesel Grants Scheme, which commenced on 1 July. Oh, and by the way, it reintroduces in large part legislation repealed by the Government in its first 100 days.

This is a tale of two Bills, and a political microcosm. The 100-page Labour-Green Biofuel Bill, which imposed and enforced a minutely-calculated sales obligation, has been supplanted by National’s 11-page memorandum of commercial understanding, that is money-driven and broad brush.

If re-enacted, there seems no reason why Fitzsimons’ Bill would not work equally well in tandem with the Biodiesel Grants Scheme. There are clear reasons why it is necessary, to give effect to the Scheme’s objectives.

Fitzsimons’ Bill is a weathervane. Low key and lukewarm, the Government says it will support the Bill to select committee, and give it an honest hearing. Already, this much is clear: presented with a choice between a proactive sustainability measure and equivocation, this government has once again chosen the latter.

This is not a complaint about the Biofuel Bill repeal. The repealed Labour-Green legislation required all companies selling engine fuel to include a small proportion of biofuel (0.5% initially, rising to 2.5% by 2012). The proportion was negligible, but had been developed by reference to quantities likely to be obtainable and, in particular, quantities domestically obtainable. As a matter of political philosophy, the incoming National government preferred to use price signals, and had other objections to the mandatory sales requirement. But in repealing the Act, they also repealed Green Party-negotiated sustainability benchmarks, which Fitzsimons’ Bill reinstates.

Fitzsimons’ Bill requires all biofuels supplied or sold in New Zealand from 1 May 2010 to meet Ministerially-approved sustainability criteria. It sets out three sustainability measures:

  1. the life cycle of the biofuel produces at least 35% less greenhouse gas than other fuel;
  2. the biofuel does not compete with food production, either by utilising food crops or land of high food production value; and
  3. the production of the biofuel does not adversely affect land with high conservation value.



The explanatory note to the Bill rehearses familiar reasons. The petroleum-fuelled cultivation and coal-fired processing of some biofuel crops, like corn-based ethanol, has a larger carbon footprint than if the petroleum was directly used in cars. Rainforest felling to grow palm oil for biodiesel is an environmental charade. But there are plenty of examples of sustainable second-generation biofuel sources—tallow, lignocellulose (from waste woody plant material), algae, jatropha—and New Zealand is well-placed to produce them.

The Energy Efficiency and Conservation Authority-administered Biodiesel Grants Scheme subsidises biodiesel up to 42.5 cents per litre, to support the economic development of the New Zealand biodiesel manufacturing industry, and assist the production and adoption of environmentally responsible fuels. It also levels the biofuel playing field: biodiesel is currently excise-taxed (42 cents); ethanol is not.

However, the Scheme’s definition of biodiesel includes “plant oils”, and therefore palm oil. Biodiesel is eligible for grant purposes if it is manufactured here, which requires only that here is where “transesterification” occurs. In other words, New Zealand taxpayers could end up subsidising palm oil producers that are neither local nor environmentally responsible.

Fitzsimons’ Bill doesn’t overtly address the “local” part, but her World Trade Organisation reference explains. The necessarily unspoken assumption is that New Zealand is better placed than most to meet a sustainability test. Her proposal addresses when biofuels may be sold or supplied; Brownlee’s (Gerry Brownlee is the Minister responsible for the Biodiesel Grants Scheme) when biodiesel will be subsidised. However, the Scheme requires grants to be paid post-purchase. If only sustainable biodiesel can be sold, that problem, too, is elegantly fixed.

It seems so self-evidently sensible, you have to wonder: why on earth would Fitzsimons faff about with the lottery of a Member’s Bill in these collegial blue-green days? The Bill was drawn almost immediately, on 18 June—what if it hadn’t been? And why on earth would the Government then faff about in its turn, sending the Bill to select committee for another six months? It’s been to select committee, very recently, albeit in a different Parliament; the clauses are identical to those previously enacted. The Government should adopt the Bill, and try to progress it with urgency. It seems to like the method, and this once it might be valid.

I checked out Nick Smith’s former minority view on the Biofuel Bill. He had lots of friends (although none on the select committee). The OECD Roundtable on Sustainable Development. The UK House of Commons Environmental Audit Committee Report. The G8 Conference of Legislators. The UK Chief Scientist. The World Food Organisation. Britain’s Royal Society. The World Bank. The United Nations Secretary General. Anti-biofuels, all. But much of this criticism was targeted at biofuel unsustainability, and problems with mandatory targets set without reference to sustainability.

Smith maintained that Fitzsimon’s clauses were unworkable—and again, he was not alone. The Parliamentary Commissioner for the Environment (PCE) didn’t support the Bill either, with or without sustainability clauses. She noted the difficulty and cost of verifying sustainability offshore, and thought biofuel solutions not worth pursuing, even in New Zealand. Smith said 20 years’ legislative effort has shown that sustainability is too difficult to define and administer by way of regulations; the proposed timeframe for devising regulations was also unrealistically short, compared to Europe’s 2011 timeframe.

The timeframes under this new iteration of the Bill remain ambitious: a 1 February 2010 deadline for establishing what one imagines must be complex methodologies (eg, for the life cycle assessment of greenhouse gas emissions from conventional engine fuels versus biofuels, and for assessing the effects of a biofuel’s production on food). But unless no methodology is viable, this is a matter of commencement detail rather than substance—and all the more reason to get started.

The PCE said verifying sustainability is too hard. This stuff is all hard. If we know for a fact that the source is domestic waste, then it might in fact be quite simple. If sustainability can’t be ascertained to whatever standard the Minister requires, the solution seems pretty simple, too: the biofuel won’t be approved for sale or supply.

Biofuels, as the PCE said, may well be a small low-priority part of the range of solutions. But if we fail to ensure that it is only sold or supplied— and taxpayer-subsidised—when sustainable, it’s no solution at all.

I think Smith was right at the time, in his minority view. I think that persisting with it now no longer makes any sense. Fitzsimons’ Bill needs Government support for its passage, and the Government needs her Bill, to spare Gerry Brownlee’s blushes.