Yesterday Pansy Wong put out a press statement lauding the National government’s move to “kickstart New Zealand’s fledgling biodiesel industry”. Coincidentally, I’ve been visiting biofuel companies over the past few weeks and they’ve been telling me that the policies of the current National government are doing the opposite – they feel like the rug is being pulled from under them.
Before the last election the Labour government put in place a biofuels sales obligation. It would have required fuel retailers to mix a small amount of biofuels into their blends, thus guaranteeing a market for biofuel producers and ensuring the development of the fledgling industry, whilst at the same time also reducing our carbon emissions from transport.
For reasons known only to them, National repealed the sales obligation as soon as it took office and replaced it with a subsidy scheme for biodiesel. It was an odd move for a government that claims it wants to cut government spending – the sales obligation wouldn’t have cost the government anything, it would have put the cost back onto the oil industry, unlike their subsidy.
Biofuel producers I’ve spoken to have all said the same thing, as soon as the sales obligation was removed the oil companies walked away.Their slick marketing may try to convince us they care about sustainability and the environment, but in reality the mighty dollar rules.
The biofuel sales obligation wasn’t perfect, and I think companion legislation ensuring the sustainability of the feedstock (the material the biofuels are made from) was also needed. But recent history has shown that left to its own devices without any sort of government regulation, the oil industry has no intention of supporting biofuels. Gerry Brownlee’s biodiesel grants scheme has been a flop. It’s time to go back to the drawing board.
But it’s not an odd move for a government who’s sole purpose is to feed their rich mates taxpayer funds.
Nacts are not working for NZ.
So at a time when your leader is wanting to drop GST on food to help poor people you are supporting something whihc would hike fuel prices to sustain’ a few rich investors in an industry that even when subsidised can’t make a go of it.
But of course it;s all the evil oil companies’ fault because apparantly it’s their job to implement your policy ‘at no cost’ to govt (ignoring the tens of millions in wealth transfer from consumers to your new friends) even though they are private companies with no interest in biofuels.
Putting aside of course that the government owns a fleet of cars that could use the fuel, it subsidises bus and ferry companies it could insist use the fuel, it owns industrial power generators and power stations across the country that could run on the fuel, and railways and ferries, all of which could have created a demand for the industry to earn its stripes, all of which was suggested but none of which you did in govt.
So you can’t blame others for a lack of imagination. Instead you went for the easy way and tried to make everyone else do the work and make the industry run before it could walk.
The world is so simple when you are spending other people’s money.
The Left is facing up to the problems, seriously and realisitcally.
The Right is simply doing what the Right always does. Move wealth to the wealthy.
And since none of which is going to happen under National, 2011 is time for them to go.
“Before the last election the Labour government put in place a biofuels sales obligation. It would have required fuel retailers to mix a small amount of biofuels into their blends”
With little / no public consultation.
Did you know that there are a lot of mototbikes / cars out there that CANNOT run biofuels – either the E3 or E10 blend.
It can actually ruin them.
For example all models of Ducati, Hyosong and Kawasaki motorbikes cannot run them.
Of course there is no advertising at the pumps – causing damage to people who do fill up. What do you do to the poor person who purchased one and then finds that he cannot fill up with fuel anymore?
The same goes with a lot of cars as well.
So Mr Hipkins – your compulsory blend makes my $40k Ducati worthless.
How do you justify that? How to you make good to me that your change has makes me have to sell my econovzn (who wants it – I cant put fuel in it) and force me to having to buy a new one?
Do I get compensated ? No – you didnt even run a campaign to notify the public of the changes / impact.
After reading a number of George Monbiot’s articles in The Guardian I realize that there are concerns about the humanitarian impacts of first and second generation biofuels. Maybe biofuels will have a small part to play as a partial substitute for oil in NZ’s transport system but let’s proceed with caution. See:
http://np-net.pbworks.com/f/Monbiot+(2007)+Biofuels+causing+starvation,+The+Guardian.pdf
@ Insider, are you saying that governments should not use the tax system to provide incentives or disincentives in order to encourage or discourage certain behaviours? These are choices made by governments ever since we had a tax system. It seems to me the biofuels sales obligation was quite clever, in that it was not costing the taxpayer to encourage a public good behaviour. Big Jezza, on the other hand, chose to reach for the cheque book. Ironic, really.
Its hard to engage in debate when opposing views (who seem to be more moderated) are left in moderation forever – it dosnt help a fair discussion – by the time comments are approved they are often way passed by several more ‘friendly’ post and get missed unless people scroll back.
Sorry Chris – all of us have full time jobs Trevor
@ Jennifer
No I’m not, but the BSO was not a tax based scheme it was volumetric, so the question is irrelevant – although there was a tax element to encourage an uptake in one area and even that didn’t make it workable.
One of the biggest issues was that it was about the most expensive form of carbon mitigation you could possibly develop. I think it was going to cost $170m to achieve $30m in carbon savings (can’t remember the exact numbers but there was a significant multiple of excess cost over benefit).
It might be more like the folic acid in bread issue – using bread as a vehicle to achieve a public health good – and making them responsible for achieving that good, even though they are bread companies not health providers. Then realising you’d need to build a whole bunch of duplicate grain and flour silos because you have to change the way you traditionally handle your ingredients;
and then you’d have to hope that folic acid would appear on the market because there was actually no local supply and little imports as well, and the ‘fol’ and the ‘ic’ that were used to make it were limited in availability too because they were important ingredients in other products like ‘folios’ and ‘icing’. so you’d not only have to compete for them, but it would be the bread companies’ responsibility to make sure that folic acid was available in sufficient quantities or else they would get fined a year or more’s gross profit, even though they don’t have any expertise in folic acid production.
And the cost of all that would be borne by every bread consumer to the financial benefit primarily of a few folic acid producers.
Yes very simple from government’s pov when you can wash your hands of it and tell someone else it’s their problem.
Regulation or subsidy..?
Shall we punish consumers or taxpayers..?
Not sure the issue is as cut and dried as “more biofuel = good”.
Its estimated in the US (which primarily uses corn as a feedstock) that 1 unit of biofuel energy from corn requires 1.3 units of fossil fuel to produce. And that’s before you look at the fertiliser runoff damage and price impact on grains grown for food.
Not sure what the primary feedstock is in NZ, would be interesting for Chris to expand on that, but globally the only thing that comes close to efficient ( in energy terms and in availability) is sugar when grown in places like Brazil. But even then the increasing usage of sugar for biofuel and a drought in India caused a more than 100% rise in sugar prices in 2009.
Using secondary feedstocks (like vegetable oil, meat works bye products, biomass from food production etc) is either incredibly energy inefficient or only hobby size in scale.
Government mandated biofuel levels or subsidies only make us use energy less efficiently and impose an additional cost on either taxpayers or consumers. The only goverment action you could argue has economic merit is some r&d provision.
So does this mean you’ll be having another crack at a sales obligation with strong sustainability requirements if elected?
Poor chris, can sympathise, I’ve been to jail
)
I hope he lets you out soon. (Hint hint mods?
@ nadir
The main source for biodiesel would be tallow (fat) from meat renderings. It was doable, albeit costly. Far less costly than crop based diesel though as it was already a centralised supply, available as an output of another process.
Ethanol would mainly have to be imported. Some local supply from dairy factories but not a lot.
Problem with both domestic sources is that the feedstocks had alternative uses. Tallow gets exported for animal feed and soaps, ethanol goes into alcohol but, more importantly, the lactose it is made from can be diverted into food manufacturing instead of sugar. So fuel uses would constantly be having to compete for these resources to maintain their supplies, potentially adding some significant uncertainty and cost.
IMO if the govt wanted to encourage a biofuel industry it should have focused on diesel and ignored ethanol because of limited local supply. It should then have looked at developing it for use in stationary engines or large motive plant like trains or mine machinery.
Firstly because they tend to use large volumes creating a demand but have simpler supply issues with a limited number of users and dedicated storage making logistics and quality monitoring easier; secondly the equipment is often quite robust so would be able to handle product quality variations more easily than your common rail turbo diesel Peugeots, Volvos and Mercedes etc. Eg, The ferries can run on diesel or on heavy fuel oil which is almost close to tar.
AS for the sustainability criteria, that will make biofuels even harder not easier.
You’ll restrict supply, have ongoing arguments about provenance, and potentially breach international trade rules and bilaterals by introducing a trade barrier.
If we try and go it alone on a standard it will be a very difficult bureaucratic exercise – not sure we have the capacity to independently and robustly assess other countries’ production systems in a reasonable timeframe.
Look how long it takes for similar such exercises to be done at a local level where we know the people and the territory, eg carbon counting in forestry or assurance schemes in agriculture.
Sounds like you should be writing bio-fuel policy to me Insider, not politicians…
An industry Insider perhaps..?
slightly (very) off topic, but in response to Trevor earlier “Sorry Chris – all of us have full time jobs Trevor”
you could always ask Chris Carter to moderate the blog for you, he’s not doing much else these days aside from the odd great escape. Although I guess getting kicked out of the caucus might disqualify him…
@insider
Side note:
I work at the freezing works. I will tell you most a lot of the tallow DOESN’T get exported for animal feed and soaps, it chucked with the blood and bone. I doubt very little of it would be animal feed, because of various health regulations!
They only do it if people are actually buying it at that very moment in time, they won’t store it and wait for a customer.
LOL
Store it and then it go rancid 
So tallow, blood and bone – sounds like a recipie for a gunge machine 
@Spud
hehehe, they not going to waste space in the freeze or chiller at the peek of the season storing useless tallow when it really need it to store some real income, lamb and mutton.
Question is, would you like an latrentaive to fossil fuels before they run out or become prohibitively expensive, or wait until we have a collapse and try and everything that should have been done in an incredibly short time with fewer resources?
Ones rich-kid toy motorbike won’t be worth much when it comes down to pure survival, any rate, it’s usually a matter of some fuel line material’s compatibily changes, re-jetting, or re-mapping of ecu’s and vehicles are not so impossible to run as beleieved/said to be. Of course there’s other issues such as ign timing, cold starting etc, but as in WW2, when there’s mo alternative, needs must.
Do we carry out a planned descent out of the use of fossil fuels, or do we wait until we go off the cliff? I know which I’d prefer.