New Zealand lowers proposed 2012 ethanol mandate to 2.5 percent

In New Zealand, a parliamentary select committee reduced the Government’s 2012 biofuel target from 3.5 to 2.5 percent, citing environmental concerns. The opposition National Party opposes the bill, saying it will cost consumers $240 million. The target was reduced after projections for New Zealand corn production were lowered. The bill does not include a sustainability standard.

New Zealand background

The Parliamentary Commissioner for the Environment said in April that the Biofuel Bill should be rejected on the grounds that biofuels may be worse for the environment than fossil fuels. The Biofuels Bill called for a 1 percent blending mandate starting in 2008, and rising to 3.4 percent by 2012.

BP testified earlier this month that biofuel requirements proposed to take effect July 1st would result in a price increase of 27 cents per gallon or more, for diesel and gasoline.

The oil refiner said that the cost increase, on a target of 0.53 percent biofuels content in 2008, rising to 3.4 percent in 2012, would come as a result of infrastructure requirements to move and store the fuels, primarily the building of storage and blending facilities in multiple terminals. Oil companies face a fine of as much as $20 million for missing their obligations, rising to $30 million by 2012

New Zealand’s Prime Minister Helen Clark has committed the government to use B10 blends or electric power for 80 percent of its fleet by 2015, and the country has a 3.4 percent biofuel mandate target for 2012.

In August, a 10 percent ethanol blend went on sale in New Zealand, prompting strong public support from the Green Party while the Director of New Zealand’s Advanced Energy and Material Systems Lab called biofuels a “waste of time and money”.

Seven NZ-based companies have formed the Biofuel Manufacturers Association to oppose entry of US biodiesel into the market. The manufacturers said that the introduction of subsidized US biodiesel into Europe caused massive shutdowns and capacity reductions among European biodiesel manufacturers.

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