20 February 2023

The Government’s decision to halt the biofuels mandate may ease concerns about looming price hikes at the petrol pump but it’s a political can that can’t be kicked down the road forever.

Prioritising New Zealand’s cost-of-living crisis in this way might seem sensible in the short term, but it ignores solutions that will help to mitigate the climate crisis – a climate emergency that is hitting home for many Kiwis this year. Devastating floods and landslides that we’ve seen impact the North Island are affecting our environment and communities like never before and sadly, this is only the beginning.

At the moment biofuel is more expensive than fossil fuel, so it’s important to consider how a biofuels mandate may affect prices for drivers at the pump. Meeting the obligation in 2024 will only increase the pump price by a few cents per litre (less than the price difference between petrol station in the same town). But stopping the mandate is like throwing the baby out with the bathwater.

The biofuels mandate would have come into effect in April 2024 and required fuel companies to mix an increasing amount of fuel derived from biobased sources (often purpose-grown crops) into petrol and diesel. The Sustainable Biofuels Mandate would have prevented around one million tonnes of CO2  from transport emissions over the next three years, equivalent to taking more than 70,000 cars off our roads every year.

Biofuels are better for the climate than fossil fuels because the plants used to make them recycle carbon from the atmosphere.  But where biofuels are produced from crops planted where forests have been cleared or from crops that would otherwise be used for food, they are less sustainable. Policy makers recognise this and have developed standards to make sure biofuels aren’t made from crops grown in this way.

Opponents of New Zealand’s biofuels mandate have wrongly argued that we couldn’t be sure that imported biofuels would be sustainably sourced, and so no biofuels should be used here.

Arguing against the mandate on this basis is misinformed and ignores work to develop strict criteria to make sure all our biofuels is sustainable, both imported and domestically produced.

The reality is the biofuels mandate aligned with the Government’s landmark New Zealand Energy Strategy; its terms of reference were published last year. It sets out the ambitions and next steps for transitioning our energy system to a high performing, low emissions future.

New Zealand is already behind the curve on biofuels development and deployment. Many countries have an aggressive set of policies to encourage increased use of biofuels, in particular transport sectors. As part of efforts that would lead to the establishment of a sustainable biofuels industry here, the Emissions Reduction Plan, and associated planned Sustainable Biofuels Obligation, would have ensured that every litre of biofuel imported or produced in New Zealand is sustainable.

At Crown Research Institute Scion, biofuels research is focused on domestically produced biofuels made from wood for the marine and aviation sectors, as well as industries that currently burn coal to generate energy for heating.  These sectors have fewer options to reduce their emissions in the short term, and biofuel can make a big difference

Our research shows that New Zealand can establish a sustainable biofuels industry, sourcing domestic production from the more advanced processing of woody biomass and wood sourced from dedicated and renewable energy forests – forests that will be developed as part of the Government’s Forestry and Wood Processing Industry Transformation Plan.

The reality is we do have enough woody residues or low-value exported wood to kick start a sustainable biofuels industry in New Zealand whilst, at the same time, removing coal from the process heat sector and deliver product to support the growth of a new circular bioeconomy.

A domestic industry will ensure that we’d have even greater control over the sustainability of the feedstock – a point that we will continue to highlight to the Government. The decision to cull the mandate is disappointing but a silver lining is that it does buy everyone more time to ensure that when it is re-introduced, and we’re confident that it will be, New Zealand can be reassured that biofuels will be sustainably produced.

As the Minister for Climate Change James Shaw has also acknowledged, dropping the mandate means we’ve just made meeting our climate change targets harder. Given the scale of the climate change challenge, we are going to need a range of technologies in the transport sector, including biofuels, EVs and hydrogen.

The catastrophic events over the last few weeks show we urgently need to use every tool available to tackle climate change. Sustainable bioenergy must be an essential part of our response.