Hon DAVID PARKER (Minister of Energy) : I move, That the Biofuel Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Local Government and Environment Committee. The bill introduces a biofuels sales obligation, which will see the widespread introduction of biofuels into our transport fuel mix. The bill also makes a number of changes to existing legislation to provide for the consistent regulation of modern fuels used in engines, including biofuels and biofuel blends.

Sustainability and climate change are obviously important issues. As countries around the world grapple with the challenges of the Earth’s changing climate, living and acting sustainably has been propelled to the front of the Government’s decision making and business planning. Sustainability is a key focus of this Government. We recognise that the goal of an environmentally sustainable New Zealand is central to future prosperity and international competitiveness. In particular, global trends towards more environmentally conscious consumption have created an opportunity for New Zealand to build on, and to present, our clean, green image and our reputation for business integrity.

The Government’s sustainability work is under way in diverse fields, including climate change, energy, transport, biodiversity, and science and technology—just to name a few. One of the major initiatives is the development of the New Zealand Energy Strategy, which sets out the vision for a sustainable energy system for New Zealand within which renewable energy plays a critical role. As one of the suite of policy initiatives in the New Zealand Energy Strategy, the Government is committed to encouraging the uptake of biofuels as an alternative transport fuel.

Transport in New Zealand is responsible for more than 40 percent of New Zealand’s energy greenhouse gas emissions, and is particularly dependent on imported oil and oil products, which make up over a third of our total energy supply. The Government has set a target of halving domestic transport emissions per capita by 2040, relative to 2007 per capita emissions. That will require improved vehicle efficiency, continued improvements to public transport, and the substitution of renewable alternatives for some fossil fuels, including in the electricity sector. Substituting carbon-neutral biofuels for fossil fuels will be part of the solution, and will contribute to transport emission reductions. When biofuels replace petrol and diesel, our net carbon dioxide emissions are reduced, because biofuels absorb as much carbon dioxide when they grow as they emit when they are used.

Biofuels are a renewable energy source derived from organic matter such as agricultural crops and residues, forestry residues and forestry products, and by-products from some agricultural, and industrial processes in some waste streams. Domestic tallow, a by-product of the meat industry, for example, can be used to produce bio-diesel, and whey, a by-product from the dairy industry, is already being turned into ethanol for blending with petrol. Biofuels will also help to reduce our reliance on imported fossil fuels by diversifying the transport fuel mix, some of which will be produced from local resources. That will increase the resilience of our transport system and economy to sudden disruptions in oil supply, as well as address longer-term concerns about the security of global oil supplies and about price uncertainty. Biofuels can also reduce harmful vehicle emissions such as those of carbon monoxide and particulates, creating positive impacts for air quality and human health.

For the purposes of the biofuels sales obligation, the term “biofuels” refers to those fuels that are used as a direct replacement for petrol or diesel. Such biofuels can either be used neat or blended with petrol or diesel. An example of a biofuel blend is the blend of 10 percent bio-ethanol and 90 percent petrol recently introduced by Gull Petroleum in Auckland. It is important to ensure that the biofuels available to consumers are of an appropriate quality and form, and I will come back to that. A range of likely developments will enable biofuels, over time, to make up an increasing proportion of transport fuels. The biofuels sales obligation should be viewed as being an initial step in the transition towards a greater uptake of biofuels in future years. It will trigger important changes in infrastructure that are needed to cater for these new fuels.

The Biofuel Bill is in two parts. Part 1 provides for the introduction of the biofuels sales obligation and the regulation of fuel quality through amendments to the Energy (Fuels, Levies, and References) Act 1989. In 2005 the Government agreed in principle to the introduction of an obligation to facilitate the entry of biofuels to the New Zealand market. That was followed by a period of consultation with key stakeholders to determine the appropriate design for and level of the obligation, and the final policy was announced in February this year.

The biofuels sales obligation applies to firms that first purchase or obtain petrol or diesel from a New Zealand manufacturer, such as the refinery at Marsden Point, or that import petrol or diesel directly from overseas. The liable firms would currently be the oil companies BP, Caltex, Gull Petroleum, Mobil, and Shell. The obligation will require a percentage of the energy content of the combined petrol and diesel sold or used by each oil company to be biofuels. The requirement will begin from the passage of the legislation at 0.53 percent, and will increase to 3.4 percent by 2012. Actually, we may change the inception date to 1 July 2008 rather than have it start at the passage of the legislation, because I think the oil companies would like a bit more certainty as to the date. That seems a pretty reasonable request, so we will look at that at the select committee.

Except for the first obligation period, which is a part-year, each subsequent obligation period is for a full calendar year. To ensure that firms meet the obligation, there will be financial penalties for non-compliance with it. Those penalties can, however, be reduced for a firm that fails to meet its obligation because of events outside of its control.

A point-of-excise collection is used as a proxy for measuring the sale and use of petrol, diesel, and biofuels. Aligning it with existing systems is intended to reduce compliance costs for fuel suppliers and reduce administrative costs for them and for the Government.

The Ministry of Economic Development will be the administering agency for the obligation. Liable firms will be required to submit independently audited reports on their compliance, with the obligation to report to the administering agency being within 4 months of the end of each obligation period.

The Government is keen to see that only sustainably produced biofuels are supplied to the New Zealand market, so as not to create a new environmental problem as we fix another. There are legitimate concerns that some biofuel production causes the destruction of rainforests, causing greenhouse gas emissions and the loss of biodiversity, or competes unduly with food production. From the commencement of the obligation, firms will be required to report on the country of origin of imported biofuels and biofuel feedstocks. The bill also contains a clause that enables environmental sustainability standards to be introduced to ensure that only sustainable biofuels count towards the biofuels sales obligation. Those standards will be developed in consultation with the industry. The issues around deforestation are expected to be reasonably easy to define. The line is more difficult to draw around what constitutes undue competition with food production. Sugar conversion to ethanol, for example, is seen by most people to be acceptable, but some grain and seed - based biofuels are less so.

The obligation will allow flexibility to liable firms in a number of ways, so as to facilitate firms in pursuing the least-cost option to supply biofuels. Firms can apply to have the obligation partially or fully deferred in years 1 or 2 of the obligation. That allows time for firms to put in place infrastructure and for local biofuel suppliers to build plants. However, firms that defer the obligation will be required to supply an additional 5 percent of that year’s biofuels sales obligation at a later date. Liable firms can trade their biofuel sales in order to meet the obligation, so biofuels supplied by one firm could count towards another firm’s obligation. Biofuels supplied by third parties can also potentially count, which provides another incentive to biofuel producers. To provide for the normal irregularities in fuel supplies, liable firms will be able to bank shortfalls and surpluses of up to 10 percent of their annual obligation into the next year. Those shortfalls or surpluses must be used or made up in the next year.

In terms of quality, it is important that the biofuels supplied to consumers meet appropriate quality standards, so that consumers can buy them with the same confidence with which they currently purchase petrol and diesel. Where appropriate, biofuels will also be required to be labelled so that consumers are suitably informed. The bill also provides for a requirement that no petrol or diesel blend containing 1 percent or less of biofuel may be promoted as containing biofuels or as a biofuel blend.

Biofuels and biofuel blends are bought within the scope of the levy that funds monitoring activities. Responsibility for collecting that levy—to be known as the petroleum and engine fuel monitoring levy in future—is transferred from the Ministry of Economic Development to the Customs Service and is aligned with the collection of excise duty in the measurement of the biofuels sales obligation.

Part 2 provides a number of amendments to other pieces of legislation that are associated with the introduction of biofuels and caters for future diversification of the fuel market. The Petroleum Demand Restraint Act 1981 and the International Energy Agreement Act 1976 were enacted with only petroleum-based fuels in mind. This bill amends those Acts to explicitly cover or provide for the modern fuels used in engines, including biofuels and blends of fuels. In addition, the bill makes biofuels and biofuel blends subject to the local authorities petroleum tax and renames it the local authorities fuel tax. The bill also makes a number of amendments to the Customs and Excise Act and the Tariff Act. Those amendments are made to facilitate the use of the excise point in the administration of the biofuels sales obligation and the collection of the petroleum and engine fuel monitoring levy, and to ensure that the ethanol component of the petrol-ethanol blends is not subject to excise or excise-equivalent duties. Section 286 of the Customs and Excise Act is amended to provide more flexibility in the ability to make regulations to exempt facilities from being customs-controlled areas in appropriate circumstances.

I look forward to the consideration of this bill by the select committee, which I am sure will improve it further.

GERRY BROWNLEE (National—Ilam) : The National Party will be supporting the Biofuel Bill going to a select committee because we think there are some aspects that, while very laudable, do need a degree of scrutiny. I want to point to a couple of things that the Minister David Parker said in his speech. The first of those points revolves round the consultation that has taken place with the five large importers of oil products into New Zealand. It is our understanding that when the biofuels obligation was first talked of in 2002 some relatively small targets were set, but between 2002 and 2005, and then the New Zealand Energy Strategy released yesterday, those obligations appear to have increased quite considerably.

One of the questions that immediately comes to mind is whether the oil companies have the capacity to meet their obligations. That, of course, is also caught up in the proviso that any biofuel that is imported into New Zealand then blended into product here—or, in fact, imported as blended into product—has to be able to carry certification that it has been sustainably produced. There is no doubt that the world will have a considerable amount of biofuel available in the foreseeable future. The United States, for example, has established a very, very ambitious target of 20 percent of all motor fuel being biofuel by the year 2017. That is not because it wants to see biofuels replace other carbon-emitting fuels, but, rather, because it is concerned about security of supply. That is fair enough; that is its issue. But we hear of programmes in the United States where there are federal and some state tax incentives in order for biofuels to be produced in the first place, then blended with either diesel or petrol. What would concern us is that the actual source of the biofuel may not be all that clear. So part of the select committee’s work should be, I think, to work out what sort of regime will exist around that certification process.

Although the Minister has been quite open—and I think quite appropriately so—in saying that the date for the implementation might go out by 6 months or so, and we would support that, what is important is that any of the oil companies that decide that they have to defer for a period of time are not unduly penalised because the deferral is a result of their inability to source sustainably produced biofuel. The evidence coming at a rate of knots out of various countries around the world is that much of the biofuel being produced en masse at the moment is barely carbon neutral, and is, in most cases, carbon positive. So I think a problem may be faced there. I am sure that the select committee will be able to work with those oil companies to work out a reasonable regime. My point about the deferral, though, is that simply saying a company can defer for 12 months, but then it will have the added obligation of an increased amount of biofuel inside its mix, may, in fact, not be easily achieved. I urge that there be some sort of flexibility in this—particularly if a strong biofuels industry is to be developed in New Zealand.

The Minister and other members of Parliament will be aware that there is a company currently looking at some very substantial investments in the conversion of locally sourced tallow into biofuel. We would hope that that operation gets off the ground and that its production of biofuel is as carbon neutral or as low in its carbon emitting as is claimed. It is interesting to note that another company that was set up in New Zealand was looking at growing substantial acreages of maize for the purpose of producing biofuel in a plant that was to be fuelled, I understand, by a wood-fired source. That was a very, very difficult proposition in that event. It would have been pretty much closed cycle in terms of carbon dioxide emissions, but it has unfortunately fallen over. The question I would have—and I hope that company comes to the select committee to discuss the issue—is why that particular proposal has fallen over. Surely it cannot be because of the price of biofuel, because that will always be set internationally.

One of the interesting things about the biofuel initiative is that there will be a cost for consumers. The estimate is that a litre of biofuel will be between 4c and 6c dearer than a litre of standard fossil fuel. The question that arises for us is whether that will be shared across the whole of the consumption of combustion fuel inside New Zealand, or whether it will be borne individually by motorists who make that choice. I see the Minister is nodding and saying it will be borne across the whole portfolio. I think that is something we will want to hear more firmly during the select committee process.

Another aspect of the biofuel sales target is whether the target can be met by perhaps completely ignoring the vehicle fleet in New Zealand, and by simply supplying a greater percentage of biofuel to the stationary engine sector, and, therefore, meeting the obligation across the entire consumption of motor fuels at the present time without the need for blending. I know that the concern that oil companies have is that when a fuel mix changes, people inevitably experience things going wrong with their vehicles, that are—in their eyes anyway—directly a result of that changed fuel. We have seen it before with the taking of lead out of petrol and with the reductions of sulphur in diesel, and we will no doubt see it when it comes to biofuel, as well. I can understand the oil companies’ concern about that. So I think there is also a need for a strong education programme around the sorts of cars that can take this particular fuel. I understand that any car produced after the year 2000 can quite adequately take fuel blends of up to 5 percent and possibly even up to 10 percent, while cars produced before that time may not take them so easily. Given that the average age of a vehicle in New Zealand is now some 11 years, it means that the vast majority of our fleet will be able to run perfectly adequately on biofuels from the day of their introduction.

It was interesting to hear the Minister say that the excise that is levied on petrol, diesel, and other motor fuels at the moment will not be levied on biofuel or the biofuel component. Nonetheless, we have an increase in the amount of funds that are currently collected for measuring the quality of our motor fuels. At the moment, I understand it is 0.025c per litre—a very, very low figure, which I think produces only $15 million a year, or some such. The interesting point will be how much it increases, and what the actual value to New Zealanders of that particular increase will be. If it is desirable that more New Zealanders embrace the concept of biofuel, readily want to put the stuff in their tanks, and even ask for a higher level of blending in their fuels, we may want to mitigate the bureaucratic costs that go alongside of that.

The penalties regime is one that I think the Minister might want to have another think about. That is simply because it appears to me that the five companies importing oil into New Zealand have a willingness to try to make this work. They have concerns—and we have outlined some of those concerns—and we want to work through the select committee process to try to mitigate those concerns. But putting a pernicious regime in place exposes us—and by that I mean the country—to the risk that some of those biofuels that are eventually introduced are not as clean as they might be.

Can I conclude by saying that National thinks the population of New Zealand will probably quite willingly embrace the concept of biofuels. I think very few people in this country do not know that trying to clean up the exhaust emissions from vehicles will be useful. I do not think, frankly, that too many people understand the importance of reducing carbon dioxide emissions—largely because they do not see them—and it is hard to say that they experience the effects of them. One can guarantee the moment one tries to explain those effects, some sort of counter-activity will occur in the atmosphere that gets people away from the original point.

Overall, our view is that we will support this bill going to a select committee. We have a number of questions about the implementation of the legislation. I will reiterate what those questions are. Essentially, they are about the certification of the manufacturing process for biofuels, to ensure that it is not a carbon-emitting process, and, therefore, of very little value to New Zealand’s efforts; and, secondly, making sure that the biofuels obligation can be met from those clean sources without those companies experiencing unnecessary penalties, which we know are ultimately passed on.

I understand that the bell is not working this evening. Oh, I have another 2 minutes. In that case, can I simply say to the Minister that we hope the select committee process does not see the usual performance at select committees where the officials treat the Opposition members as though they are a completely adversarial party in these circumstances, and we hope that the Minister recognises that we support this bill—with considerable goodwill—going to a select committee, recognising the importance of all of this for New Zealand’s future. It has to be said that as an agricultural producing country with a huge emission problem from our agricultural sector, and not wanting to penalise ourselves unduly in the future, getting this part of the emissions profile in better shape is in all of our interests. So we hope we have that assurance from the Minister. With that comment, I simply say that we will participate in the select committee process very honestly and very willingly, but with considerable and diligent scrutiny.

Hon MARIAN HOBBS (Labour—Wellington Central) : I welcome the National Party’s support for the first reading of the Biofuel Bill, and its commitment to an honest and clear debate in the select committee. It is obvious that that member has not been a member of the Local Government and Environment Committee, because in that particular committee we have very good working relationships, most of the time—it does sometimes depend on the membership—and that has been worthwhile, particularly when we have been dealing with the waste legislation. With that legislation I saw the most honest work I have experienced in my 11 years in this House in a select committee. So I am very proud of the Local Government and Environment Committee.

I am also very proud of this Government’s response to the challenges surrounding climate change. We have to reduce our greenhouse gas emissions. Our Minister has chosen to move on a number of fronts, mainly because our greenhouse gas emissions come from a number of different activities. New Zealand’s distinctive greenhouse gas emissions portfolio has always been of interest. When one is with a European group whose members say: “You mean half of it comes from your animals?”, with a look of great query on their faces, one has to gently explain about methane and agriculture. This completely puzzles the Germans, as it does people from many other European countries. They just do not understand that sort of issue.

Elliott Morely, the previous Minister in the British Government who was responsible for climate change policy, was extremely complimentary when he was here of the manner in which we are dealing with this issue in New Zealand under our emissions policy. In other words, not one sector alone, or not one contributor alone, is bearing the total cost and responsibility. Every emitter is inside the framework. So, yes, the agriculture sector will come on board later, and, yes, it is quite obvious because it has some enormous scientific research issues to face in order to find some of the solutions there.

Questions of deforestation are being dealt with upfront, as are those relating to the energy needed to power industry, and also the energy that is needed to power our homes. So a focus comes on renewable energy rather than a reliance, as has been developing, on fossil fuels in terms of thermal energy. Our focus is therefore on conserving, and using less energy in our homes. It is about the kind of energy we use and the fact that we should be conserving it, particularly through how we build. So we have the Minister of Housing involved in that, as well, and the building industry in terms of how we insulate and heat our homes.

Then there is transport. As the Minister said tonight, 40 percent of New Zealand’s emissions come from transport, and there is a commitment out there to halve that by 2040. When we look at the options, we see a move to efficiency in the movement of freight. Too often when people talk about transport they are thinking about the movement of people, but if members sit in their offices and look down Lambton Quay, they will see that it is not about the movement of people they see during the day; it is small freight on the move, in vans and trucks, up and down and through our cities. So there has to be some efficiency that is gained there. A lot of work needs to happen in that particular area.

The other option is the move in the transport of people out of private vehicles and into public transport. We have already seen the investment the Government has made. I look at my own area of Wellington and see the investment that has been made there—the investment in trains. Our trains—and I particularly think of the trains coming in from the Wairarapa—were pretty basic, to put it mildly. They were very rarely on time. So what has gone in there? Seven new sets of trains have gone in, and they are beginning to run on time. And never let anyone talk to me or lecture me about the efficiency of private companies, when the private company that bought and sold our train system totally let down this country in the way it managed both its rolling stock and the actual railway lines. So whenever anyone quotes the sort of God-given efficiency of private enterprise, I can think only of what happened to our railways in New Zealand when it went into private enterprise.

Gerry Brownlee: Don’t be so narrow!

Hon MARIAN HOBBS: No, I am not narrow; I just get very suspicious of people who are so black and white and rigid in their presumption that private necessarily is always good. So we in Wellington have come in and put an extraordinary amount of money into trains.

We also, thank God, solved the issue around trolley buses, and now we will see those trolley buses. If members have ever been down Lambton Quay and seen the diesel buses go through, they will notice the noise they make in that narrow canyon of Lambton Quay and Willis Street, compared with the quietness of the wonderful trolley bus.

There is still room to improve, so we come to biofuels—the subject of this bill. Biofuels lower emissions. Biofuels also—and I did not notice this in Mr Brownlee’s speech—lower our dependence on fossil fuels. I think that is quite important. It is not only that they are carbon neutral in themselves, but that a number of people out there are reminding us that oil may not last forever. It is a fossil fuel. So I think I read that this Biofuel Bill will require 3.4 percent of total fuel sold by oil companies to be biofuel by 2012. This requirement will begin from either the passage of the legislation or July 2008, and at that stage it will be 0.53 percent. I heard Mr Brownlee say he was worried about the capacity of oil companies to meet the obligation. I understand that 0.53 percent is almost about where they are right now. So as it goes up gradually over those numbers of years, to 3.4 percent, I think it is attainable.

However, a number of questions are asked around these particular issues.

Gerry Brownlee: You know; you’re in the pocket of oil companies.

Hon MARIAN HOBBS: I doubt that anyone would ever say I was in the pocket of an oil company. That completely amuses me.

What is the Government proposing regarding biofuels? The Government is developing and introducing a biofuels sales obligation for the sale and use of biofuel blends in New Zealand. The aim is to ensure that oil companies selling petrol or diesel must also sell a small amount—3.4 percent—of biofuels. It would be up to the oil companies—and this is important—to determine which combination of biofuels, which blend levels to use, and where to market them. So inside this—and this is worth exploring in the select committee—there is actually quite a lot of room for the oil companies to move. It is not saying that every time I lift the handle to put petrol in my car that 3.4 percent of that particular blend will be going into my car. It may not be. As I think Mr Brownlee pointed out, it could also be just in stationary engines and not actually in the car fleet.

The second question asked at the end is: what are the benefits of biofuels? There are a number of benefits, not only to do with the lowering of emissions; they are about air quality and human health, and if we are looking at Auckland, then anything we can do—as we did—around the amount of sulphur and diesel used is therefore to meet the needs of improved air quality. Better fuel lubrication reduces deposits in diesel engines. It is also non-toxic, biodegradable, and speeds up the break down of any spills of diesel that may be made, and that is also important in a country with so many rivers.

Thirdly, does the use of biofuels affect vehicles? Modifications are not necessary for petrol or diesel engines using low-level biofuel blends. Petrol engines, tuned correctly for the use of ordinary petrol, would normally not exhibit any problems when using bio-ethanol petrol blends of up to 3 percent. Diesel engines tuned correctly could take biofuel blends of up to 5 percent bio-diesel. Most modern vehicles are compatible.

There is the controversy around biofuels that they can compete with growing for food—and we have heard a lot about that in recent weeks—and that they can affect the biodiversity by massive agricultural farming. That question about biodiversity is about how one farms, not about whether one farms for biofuel. It is that that we have to look at. When there has been a wholesale taking out of certain kinds of rainforests in order to replace them with certain plants, either maize or some other palm oil plants, there are some real problems around that. It is the same thing when working out about timber. There are ways of actually being able to do that. The world is far better now at looking at and being able to measure whether something is sustainable. In New Zealand biofuels may come from initially tallow, animal fats, and, afterwards, from things like wood waste, syngas derived from biomass, or algae grown on sewage ponds. There is room to develop here.

Finally, I would like to say that this whole issue around climate change and managing these emissions is an incentive for us to get going in research and actually get out there and find some solutions to the problems. For too long we have said that this issue is so big that there are no answers. This bill is an incentive to companies and people to start providing the answers. Thank you.

ERIC ROY (National—Invercargill) : I am quite enthusiastic about taking part in this debate. I think this is a debate we need to have, and this is a process we need to go through. We need to look at this Biofuel Bill, and we need to hear what the public has to say through the select committee process and the submissions. I acknowledge the Minister of Energy, David Parker, who is still in the House listening to the debate. Quite frequently, it has been the habit of Ministers to drop a bill into the House, make a prepared speech, and then have other pressing business, so I just acknowledge his interest in staying here.

There are a number of complex issues that come together and focus us on this issue of whether biofuels are part of the solution we have in terms of our response to the whole issue of climate change. I believe that they are a part and that therefore it is important that we have this debate. I also believe that New Zealand has to be in there at the developmental and experimental stages, because we will gain credibility in terms of the products we sell. You see, we sit at 19.5 tonnes of greenhouse gas emission per head of population, and the rest of the world is at 5.5 percent. I happen to believe that there is something immoral in First World countries saying that, yes, the planet is in crisis but that they will just hold where they are, and everybody should hold where they are, which means that underdeveloped countries stay underdeveloped. So we need to look for solutions.

We have a situation now where planet Earth is combusting fossil fuels and producing over 6 billion tonnes of carbon equivalents every year, and when we look at the sort of activity that is creating that, we see that the transport industry is a significant part of it. It is important that when we are looking for solutions we do not just provide placebos—things that sound good, such as holding international forums and making great speeches, and setting in place criteria that actually make no difference. If we are looking at the transport industry, we have to say that there are probably, with the knowledge we have at this time, three areas we can develop. There is the electric motor, and probably the thing that is holding that up is that at this stage we are pretty reliant on lead-acid batteries that negate any advantage. So we are looking for further development of titanium batteries or lighter batteries and also a quicker way of charging them. There is the possibility of converting internal combustion engines to burn hydrogen fuels, but there are two or three problems surrounding that. At this stage that technology is quite expensive, and the sustainable forms of generating hydrogen through electrolysis in tidal waves, photovoltaic cells, or wave action are not developed far enough. Biofuels are actually something we can engage in almost immediately. Both our diesel engines and our internal combustion engines can get straight into utilising these fuels. So we have an advantage there, and while not neglecting those other things, we are off first base in terms of working with biofuel solutions.

The concept of biofuels is not new. When the first oil shocks came along there was a company in Southland that grew oilseed rape, and with only 5 percent diesel added to the oilseed rape, most of the diesel engines that were either in tractors or transport vehicles would run quite well on it. They smelt a little bit like fish and chip shops, but there was not any noticeable lack of power, and they actually operated. Dr David Stewart at Invermay Agricultural Centre in the late 1970s, about 30 years ago, did a lot of work on growing biomass and digesting it under anaerobic situations to produce compressed natural gas (CNG), and that looked to have some considerable possibilities. So this is not a new thing that we are doing. The problem with CNG was that one could not actually compress it into a liquid unless one got up to about 1,200 atmospheres, so a very large tank was needed to make it work. Again, with CNG a bit of power was lost.

There are a variety of options that have been tried, and some exciting things are happening right now. The previous speaker, the Hon Marian Hobbs, suggested anaerobic sewage. Right now I happen to know that both Rolls-Royce plc and Pratt and Whitney are testing jet fuel equivalents. I guess it is a kerosene equivalent that is being produced that way, and some of it is coming out of Invercargill. They are actually looking at that as a jet fuel alternative. So there are some quite exciting possibilities. We have looked, as previous members have said, at the use of animal fats and tallow to create bio-diesels and ethanol equivalents, which will replace gasoline.

There are some traps here, though, and that is why we need to have this debate, take the public on board, and seriously consider the submissions. Although National is happy to support this bill through the select committee process and the first reading, we want to see those things aired, and we want to get our heads around exactly what those issues are. As I said earlier, it is important, if we are going to solve this, that it is not either a knee-jerk reaction that might be going in the wrong direction or a placebo that does not work.

The economics surrounding a lot of the decisions that have been made in some countries look, to me, to be very, very questionable. A significant portion of North America’s arable land—in some states it is about 40 percent—is now going into maize production to produce ethanol. The figures on that look to be very negligible. We can read figures that say that there is from about a 7 to 30 percent gain in terms of the carbon imprint. It would seem to me to be quite impractical to try to create ethanol out of a crop that has a high requirement in energy for tillage and a high requirement for fertility in order to grow anything in any way of a decent crop. I think that the world is just now starting to notice the impact of converting significant areas of its arable land into ethanol production. In the balance of what the world is producing in foodstuffs to consumption, there is normally between 110 and 120 days worth of food in the food chain. That is from harvest to consumption through shops, etc. Right now it is under 50 days; it is down at about 47 days. There are obviously a lot of complex issues in that. It is maybe more that just the fact that quite a considerable amount of arable land has been taken out to put into ethanol production. But, again, we will get distortions if we do not approach this whole process of ethanol production or biofuel production in a way that is sensible and does not cause disruptions that put us in a worse place than where we would be if we never did it.

There are also some exciting developments in New Zealand in the ethanol areas. I have talked a little bit about anaerobic activity on sewage to produce kerosene equivalents. I have heard and seen presentations from Genesis Energy, and it has very cautionary comments to make about lurching into fertility-hungry crops to produce ethanol. Genesis has done some very interesting work on a couple of crops of Salix, willows, which can be planted and harvested every 2 years, and which can provide products like lignans and sugars that are not glucose-based. The economics of that look to be on. Sawgrass is another one, but the future could be in harvesting gorse, for all we know, and we do not want to close our minds to what will actually be the answers. Who would have thought that sewage would fly a jet plane?

The field is wide open for us, but there a number of things that we need to be very clear about. We need to make sure that what we are doing is viable and not just something we are doing to mitigate against our liability to the Kyoto Protocol. We need to be sure that it will fix the problem. There are issues about the durability of engines. To replace my No. 1 tractor with a new tractor today would cost $150,000. I do not want to force that to happen any sooner by being forced by legislation to burn fuels that might shorten the life of that tractor. There are compliance costs. There is the whole net gain in the carbon footprint. There are issues in the distribution of what may be new fuels.

Change is already happening. We need to engage in it. We have a responsibility not only to look good but to find solutions. I believe we should have this process, and National is certainly supporting this bill’s referral to the select committee.

JEANETTE FITZSIMONS (Co-Leader—Green) : People would expect the Green Party to celebrate a technology that replaces scarce and polluting fossil carbon with cleaner, renewable carbon in our motor vehicles, but, in fact, the Greens approach the issue of biofuel with very considerable caution.

The advocates of biofuel claim it will reduce climate-changing greenhouse gases, provide oil security and energy independence for the future, revitalise rural communities with new farming and processing industries, and clean up local air pollution. The critics point out that some biofuel takes as much, or more, fossil fuel to make as it saves, that it replaces one scarce resource, oil, with an equally scarce and probably more precious resource, fertile land, that it will seriously increase world hunger, and that it could destroy the last great areas of wilderness and biodiversity such as tropical forests. There is some element of truth in both of these claims, and that is why the Greens have negotiated a clause in this bill that sets out criteria for biofuels that qualify to meet the New Zealand standard.

There is no doubt that burning ethanol or bio-diesel in vehicles does have lower harmful emissions that contribute to respiratory disease, and that it releases no fossil carbon directly into the atmosphere. But we have to take a life cycle analysis here and look at how the biofuel is made. The biofuel with the worst press—and deservedly so, and the previous speaker referred to it, as well—is ethanol from corn. In the United States, Government subsidies encourage diversion of corn from food markets to fuel, and the high price of petroleum with which it competes has encouraged a large increase in corn growing and has just about dried up US exports of corn for food. The price of tortillas in Mexico has doubled as a result, and a source of food grains for Africa has virtually gone. Some say that raising the price of corn will help struggling farmers in developing countries, but the simple fact is that the poor in those countries cannot buy food at that price. Worse, high corn prices for fuel are international, so the market will divert corn grown in developing countries into exports for fuel production in the West, perhaps making a few farmers in those countries a bit richer, but starving many more of their people. To put it crudely, to make ethanol we need sugars or starches, to make bio-diesel we need oils—those are what food is made of too.

Biofuel can be made of any food, grain, or sugar, or oilseed; the determining factor is how much can be got from an acre of land. Even if biofuel is not made from a food crop, it may be grown on land that would otherwise be used for food production. If it needs nitrogen fertilisers, water, and tractorable land, it is competing with food production, and in the competition of the market the engines of the rich will always out-compete the stomachs of the poor, even though the result is large-scale death.

Food is not the only land use that can be out-competed by biofuel. The forests of South-east Asia, last home to an incredible number of rare species, like the orang-utan, are being clear-felled to plant palm oil plantations for bio-diesel. Add to that that some biofuels do not even reduce carbon dioxide emissions; the amount of fossil fuel that is used to grow them, fertilise them, cultivate them, harvest them, transport them, and process them outweighs the benefits of having a renewable fuel.

Why, then, would the Greens support this bill? We are supporting the bill because there are some possibilities, particularly in New Zealand, of making some biofuel without causing starvation or destruction of habitat. There are some possibilities of making biofuel with a significant net energy gain, and we want to provide for that kind of industry here.

First of all, there are wastes: wastes from all forms of farming and crop production, wastes from food processing, and by-products from agricultural industries such as tallow and whey. We could get maybe 5 percent of our current fuel use from those sources. It is a very small amount, but it is a start and it could be very valuable in an oil-constrained future. Getting a small-scale industry started, and getting the cars and the fuel distribution system organised and capable of accepting biofuel will set the stage for second-generation biofuels, which may give us much more than that, if they come to pass.

The first of those, and a particular advantage for New Zealand, is wood, waste wood, and woody biomass of many kinds. It is harder to break down the lignin and the cellulose, but wood does not need top-quality food land to grow, it generally does not need added water, and it generally does not need added nitrogen. The energy yield may not be all that high, but if the energy inputs are from wood, that may still be acceptable. We do not know when or if that will be commercial, but we do know there are some very interesting trials going on—for example, with willow.

I have spoken to Genesis Research and Development, the firm that is developing the Salix to ethanol projects, and it has this exciting vision for the Taupō basin, where we have to de-stock land where animal excreta are causing serious pollution of Lake Taupō. The company reckons it can offer dry stock farmers as good an income from growing willow and coppicing every couple of years for biofuel as they currently get from animals. At the same time, the willow would tend to suck the nutrients out of the subsoil and would not add more nitrogen into the lake, and some of that land has to be de-stocked anyway. So there are some possible win-win solutions—where there are environmental benefits as well as fuel benefits—and they are the ones that we should be pursuing.

A second possibility in New Zealand is bio-diesel from algae grown on sewage, and if that actually becomes commercial—and there are still a lot of questions around it—it is a real win-win. It does not take any land, it grows on sewage ponds, and it cleans up the sewage much better than current treatment methods. It is hard to think of something that could be more of a win-win solution than that. It is a very long way from being commercial, but I have driven in a car fuelled from a small quantity of bio-diesel obtained from that algae, so it is not totally a pipedream.

Because there are good biofuels and there are bad biofuels, the Greens have negotiated for a requirement that biofuel cannot be counted towards the sales obligation unless it is produced sustainably, and that is given effect to in clause 34G(2)(e), which provides for an Order in Council to set a sustainability standard, really, that the biofuels are not significantly impacting on food production or the environment and biodiversity. I am not convinced the wording is quite right yet; I think the select committee needs to have a look at it, and needs to amend it to make it an absolute requirement, rather than an opportunity, for an Order in Council to be passed to set those standards, and we will certainly be looking for that in the Committee stage.

This bill is very tentative—a toe in the water. By 2012 only 3.4 percent of our fuel will be biofuel. That is less than 1 year’s growth in demand at the moment. It shows the futility of our starry-eyed belief that we can carry on just as we are with our inefficient transport systems, our inefficient vehicles, and stick biofuel in the fuel tanks instead. But New Zealand is much better placed than most countries, with its land, and its climate, and its knowledge of growing things, to make a success of biofuels if it can be done. But they will only ever provide a part of our needs.

We have to face the unsustainability of our wasteful vehicles, and our wasteful use of them. We can save far more oil much faster through efficiency standards for vehicles, as provided for in the National Energy Efficiency and Conservation Strategy, with a stretch target of 25 percent better efficiency for vehicles coming into the country by 2015. We also need to expand our provision and use of public transport and travel-demand management. If we do all those things on the demand side, not just on the supply side, then 3.4 percent by 2012 might actually mean something.

TARIANA TURIA (Co-Leader—Māori Party) : Tēna koe, Mr Deputy Speaker. Tēna tātou katoa. In simple economic terms, this bill is a demonstration of the principle of energy returned on energy invested. The bill amends the Energy (Fuels, Levies, and References) Act 1989 in order to implement the biofuels sales obligation policy. In doing so, it puts into being the equation that energy is required to make energy. The biofuels sales obligation policy will require suppliers of petrol and diesel in New Zealand to also supply a proportion of biofuels up to a level of 3.4 percent by 2012. Basically, for every petrol supply provided a certain percentage of biofuel will be included.

The amendment to the Customs and Excise Act 1996 ensures that biofuel and blends will be free of excise or excise-equivalent duty. In terms of the 3.4 percent by 2012, this is certainly not fast enough, from the Māori Party’s point of view. The Māori Party supports the use of alternatives to oil-based fuels to address both the immediate crisis of peak oil and the longer term crisis of climate change. But we must do more, as progress is far too slow. Biofuel—the liquid fuel produced from biological fuel sources like vegetable oils, animal fats, sugars, and other food crops—can act as either a substitute for, or an additive to, petrol and diesel.

The most commonly used biofuels are bio-diesel and bio-ethanol. Biofuels are a renewable energy source, they are non-toxic in the event of spills, and they reduce carbon emissions. Of course, that all leads to the emissions cycle proceeding rapidly through the atmosphere, resulting in less adverse effects on the climate. One would think, therefore, that there should be a great deal of optimism related to this bill. Soaring oil prices have made biofuels economically viable. Energy demand is predicted to keep soaring, the future for oil supplies is constrained, and, to top it off, biofuels are resoundingly eco-friendly, or so we are told.

So what does it all mean? Will the humble tortilla chip become the next black gold? Or will Kellogg’s cornflakes become the new luxury breakfast item? One of the challenges of biofuels is that the energy produced is always less than the energy that created it. The energy utilised in the manufacturing process is lost in the fertilising of the land used to grow the biomass; the irrigation, maintenance, and harvesting of the biomass—all usually done with oil-dependent heavy machinery—the transportation of the biomass; and the biomass to biofuel conversion. What all this means is that there are difficult choices and decisions around how we can rationalise the viability of the whole process, especially in a future that will be energy scarce.

The Māori Party has advocated for a genuine progress index as providing a measure of comprehensive, sustainable, and inclusive advancement. We believe that a more comprehensive indicator of progress towards sustainable development would be useful to this debate. When measured by the genuine progress index we find there is a deficit, and the production of the biomass overall ends up being uneconomic. So how sensible is that?

A particularly useful contribution to this debate has come from Cuba and its revolutionary leader Fidel Castro. At the end of March this year Mr Castro warned American President George Bush “against the sinister idea of converting food into fuel.” Mr Castro’s concern was that the United States’ use of corn to make ethanol biofuel to reduce the country’s dependence on foreign oil has already driven up the price of corn, and as corn is used as animal feed, when the price of corn goes up, the price of meat goes up. Given that more land is used to grow corn rather than other food crops, their prices also rise. In other words, the poor people of the world go hungry while America’s greedy, guzzling Chryslers are well fed on biofuel.

The key issue for us, therefore, is that the materials used to produce biofuels—[Interruption] Did Mr Mapp have something to say? Does the member want to take a call?

Dr Wayne Mapp: When Africa had decent Governments, they grew their own food; look at Zimbabwe.

TARIANA TURIA: I thank Mr Mapp for his contribution.

The key issue for us, therefore, is that the materials used to produce biofuels must be sustainable and do not have adverse consequences for any other consumer. We would be extremely concerned if actions taken to reduce energy consumption and conserve energy led to food shortages and increased food prices. In New Zealand it appears the single biggest source of bio-diesel could be tallow—an animal fat that is a by-product of meat processing. Likewise, bio-ethanol in New Zealand is made as a by-product of the dairy industry. However, the worst case scenario would be that increasing the value of biofuels may incentivise farmers to grow biofuels and not food.

It is in light of such concerns that the International Food Policy Research Institute has issued a warning that in order to make strong environmental and economic contributions and to look after the interests and well-being of the poor, we need to take a precautionary approach. Such caution is of particular relevance as we approach 17 October, the International Day for the Eradication of Poverty. The theme for this year’s International Day for the Eradication of Poverty—“Working Together out of Poverty”—promotes the concept of a global anti-poverty alliance.

The Māori Party believes that any further consideration of biofuels must take into active consideration the impact of biofuel production on the lives of poor people as both energy producers and consumers. The regulations in this bill go some way towards giving us confidence in this regard. Included is a regulation that provides for an Order in Council to specify in the future that biofuels having certain characteristics may or may not qualify as biofuels.

We would hope this will mean that the bio-diesel we use as a substitute for ordinary diesel, or the bio-ethanol we use as a substitute for ordinary petrol, will meet specified environmental or sustainability standards. We want to make absolutely sure that the green alternative we take on to power our cars, buses, and trains does not create famines, trash rainforests, bump up food prices, and create a market opportunity for the corporate world to exploit. We want to avoid a fuel versus food trade-off, as well as developing an efficient and sustainable bio-fuels industry. The Māori Party is acutely aware that the transport sector is responsible for 45 percent of our greenhouse gas emissions, and we appreciate too that as bio-fuels are produced from biological material they are, to varying degrees, carbon neutral.

Finally, I want to return to Cuba for inspiration as to how we survive peak oil and create alternatives for vehicles and generators through the consistent regulation of modern fuels used in engines, including bio-fuels and blends. Mr Beres from Cuba Solar, a renewable energy organisation, in talking about the challenge facing humanity, concluded: “There is climate change, the price of oil, the crisis of energy, and what we must know is that the world is changing and we must change the way that we see the world.”

It is indeed a challenge to find new ways to reduce energy consumption, new ways to conserve energy, new ways to address the longer time crisis of climate change, and new ways to eradicate poverty, and to take collective responsibility for the well-being of future generations. The Māori Party will support this bill, in order to open the doors and allow the debate to take place for the new ways to be given life. Kia ora.

MARTIN GALLAGHER (Labour—Hamilton West) : It is certainly wonderful to note the enthusiasm on all sides of the House for this very important bill, the Biofuel Bill. As a member of the Local Government and Environment Committee I certainly look forward to being on the committee that considers this very important bill as, of course, does the chair of that committee, Steve Chadwick.

To restate the situation, the bill introduces a biofuels sales obligation that will potentially see the widespread introduction of biofuels into our transport fuel mix. Indeed, the bill will start in terms of its current proposal with the obligation that 0.53 percent of petrol or diesel content sold be biofuel, increasing to 3.4 percent by 2012. Firms will be encouraged to meet that target, and those that do not do so will potentially face financial penalties. The bill also changes existing legislation to provide for the consistent regulation of modern fuels used in engines including biofuels and biofuel blends.

I listened very keenly, albeit on the TV monitor, to the first reading speech of the Minister in charge of the bill, the Hon David Parker, which, indeed, was a very good speech, and I think summarised the issues very, very well. I have to say that although I acknowledge some of the points that Jeanette Fitzsimons has made, and some of the areas that we do need to look at with some caution, I am particularly excited and enthusiastic by this legislation and by the leadership that this Government is showing in addressing an overall energy efficiency strategy. Indeed, I am delighted that this is part of the Government’s sustainability and climate change plans.

The point that has been made, and made very well, by the Minister, is that transport is responsible for more than 40 percent of New Zealand’s energy greenhouse gas emissions and, of course, we are particularly dependent on imported oil and oil products that make up over one-third of our total energy supply. Indeed, the Government has taken an in principle decision to set a target of halving domestic transport emissions per capita by 2040 relative to 2007 per capita emissions and, of course, logically and obviously, this will require improved vehicle efficiency, continued improvement to public transport, and the substitution of some fossil fuels with renewable alternatives.

I am certainly delighted, in the context of talking about this bill, about alternative sources of fuel that we are boosting, encouraging, and putting in major, major investment into public transport. That is, indeed, the most spectacular and dramatic investment in public transport that has been seen in many, many years.

Hon David Parker: 1,200 percent!

MARTIN GALLAGHER: It is 1,200 percent, and I know it is not just the Green Party that is enormously impressed with this Government, but many people in addition to them as well. That is actually unparalleled, I believe, in terms of our history. Historians can correct me, but I reckon that will be unparalleled for any Government in our country’s history. I note also that biofuels are carbon neutral so will contribute to those emission reductions in transport. Biofuels will also reduce, as I pointed out, our reliance on oil, are better for our air quality, and therefore better for human health.

This bill is only one of a raft of measures—of strategies, if you like, for climate change, a strategy tool box, if I can use that word—looking at alternative supplies of energy. Indeed, Minister Parker, who spoke in the first reading, recently visited the University of Waikato in my city and looked at its electric car initiative and the work being done in developing different forms of locomotive power. I want to take this opportunity to say that just the other day I popped into the University of Waikato. The school of science and engineering hosted a wonderful open day, and I was taken around by Dr Michael Walmsley and others from the school. It was wonderful to see some of those initiatives at very early stages—New Zealand inventors and New Zealand developers looking at different forms of powering vehicles—and looking at electric vehicles is certainly one of the options.

The Biofuel Bill in itself is very important legislation but is not the only tool in the Government’s tool box in terms of addressing our obligations to limit the negative effects of climate change. It is certainly not the only tool in the tool box in terms of looking at a range of alternative forms of energy, particularly when it comes to transport. But it is potentially quite an exciting part, so to speak, of that tool box. As a member of the select committee I will be listening with huge interest to what I believe will be a number of very positive submissions from people, not just in the science community and the transport community, but across the board. I think this is a very good example, again, of leadership.

One of the issues that I want to take up, which the Minister certainly touched on in his first reading speech and which I think is very important, is how we encourage motorists into consumption of alternative fuel sources. The point he made was that it is very, very important that biofuels supplied to consumers meet appropriate quality standards so that consumers buy them with the same confidence that they currently purchase petrol and diesel with. I know everyone in the House would agree with that. It is a very obvious and clear statement, but it is important that it be stated and restated. Indeed, in terms of the legislation, where appropriate, biofuels will obviously also be required to be labelled so that consumers are suitably informed as to what goes in their vehicle tank. The bill also provides the requirement that no petrol or diesel blend containing 1 percent or less biofuel may be promoted as containing biofuels or as being a biofuel blend. Again, that product information and consumer information is very, very important. Biofuels and biofuel blends are brought within the scope of the levy that funds fuel-monitoring activities. I think that is an obvious, good idea. Responsibility for collecting this levy—I note it is to be known in future as the petroleum and engine fuel monitoring levy—is transferred from the Minister for Economic Development to the New Zealand Customs Service and aligned with the collection of excise duty and the measurement of biofuel sales obligations.

In the time I have left I think it is very, very important to say that along with this legislation there is a really adequate information and education campaign to raise motorists’ and others’ awareness of alternative sources of fuels. This has to be a situation where—believe you me—as a country we work together with industry and we certainly work together with the major transport sector groups to have an outcome whereby we meet those targets. It is very interesting to observe other nations that have a relatively high production of biofuels—for example, Brazil, and there have been other countries. In a sense—and the Minister David Parker will correct me if I am wrong—I do not think we are necessarily pioneers in this area. There is certainly overseas practice to have a look at. Jeanette Fitzsimons quite correctly gave some words of caution in terms of ensuring that we look at the good and bad and that in our enthusiasm to look at biofuels we also acknowledge that there are some dangers. We need to be very aware of that, as well.

At the end of the day, it is really excellent that we are looking at legislation that is addressing the problem posed by the fact that 40 percent of New Zealand’s emissions come from the transport sector. It is a big challenge and a very significant challenge to halve those emissions by the year 2040. Frankly, I do not see us as a nation having any alternative whatsoever but to take up that challenge. Again, I want to compliment this Government and the Minister in what I think is superb leadership in this area. It is excellent that we have such a very hard-working Minister. I will also say as a member of the select committee that all members of the committee will be considering this bill with enthusiasm.

Dr Wayne Mapp: You don’t have to fill up all the 10 minutes.

MARTIN GALLAGHER: I know Dr Wayne Mapp is just as enthusiastic for this bill as I am. We look forward to its coming to the select committee. In his heart of hearts, Dr Mapp acknowledges the wonderful leadership of this Government. Thank you, Mr Deputy Speaker.

JACQUI DEAN (National—Otago) : I rise to support the Biofuel Bill going to the select committee. I believe that the Biofuel Bill raises far more questions than it actually answers. I will elaborate on that a bit further in my speech. National supports the first reading of the Biofuel Bill but would like to note that the ongoing support of National will depend very much on the evidence heard at the select committee. I understand that this bill has been referred to the Local Government and Environment Committee. I am very pleased to be sitting on that committee, because I look forward to hearing submissions on the bill. As I say, I believe that the proposals of the Biofuel Bill raise far more questions in practical terms than perhaps have been addressed tonight—questions over the environmental benefits of introducing biofuels into New Zealand, the cost-effectiveness of a biofuels regime, the risks to motorists around the different fuel mixes, and, of course, the feasibility of the production timetable.

The bill introduces a mandatory biofuel sales obligation, which, assuming this bill is passed, becomes effective from 1 April 2008. That is an interesting date; it is April Fool’s Day. The obligation goes from 0.53 percent and increases to 3.4 percent by 2012. That is for ethanol in petrol, and biodiesel in diesel. Regulation does not require a mandatory blend but requires an overall flexible sales obligation that can be met by a mix of blends, as well as allowing trading between fuel companies. Those companies have already been named in this Chamber tonight. Biofuels are defined as deriving from biomass, so they have no net impact on atmospheric carbon dioxide concentrations, except for the energy expended in their manufacture. They are therefore said to mitigate against climate change. There is another question. The biofuel obligation is expected to reduce New Zealand’s greenhouse gas emissions by 1.1 million tonnes to 2012, but, again, at what cost?

It seems to be the view of this Government that we somehow caused climate change in the world, and somehow that it is our responsibility to fix it on behalf of the world. I wonder sometimes whether the Government has considered the impacts of its climate change policies on the consumers of New Zealand. I would cite the example of the Government’s air quality standards, which are still making their shaky way through regional councils, and of the Government’s seeming inability to recognise the impacts of air quality standards on the people who live in communities. Those people then have to conform to those standards, as prescribed by the Government, in what I view as sometimes being unreasonable time frames. I believe that it is unreasonable to expect citizens who live in parts of New Zealand where there are adverse snow, rain, and flood events to shut down the possibility of using wood fuel burners in favour of electricity generated heating supplies in a climate where we do not have surety of electricity supply.

So that is a climate change policy of this Government that I do not believe has been well-thought-through. Drinking-water standards is another example of a policy that this Government has brought through the House with very little consideration of the real impact. I am talking about the real impact on small communities and, in particular, on local government. On the one hand there has been a cry to keep down rates, but on the other hand this Government seems determined to bring through legislation that it does not really know the effects of, and which has impacts on people who have to conform to it.

We need to be careful that when producing biofuel we do not incur a greater environmental cost in doing so. There are questions over the greenhouse gas inputs required to produce the biofuels in the first place, and, of course, there are the flow-on effects on other commodities like food. That issue has been well canvassed in the House this evening because in trying to fix one problem we need to be very careful that we do not create another. The issue of the use of corn to produce ethanol has also been raised in the House. It brought to mind an issue that has been brought to me whereby in trying to fix a problem another problem is created. That has happened with pig farmers in Australia. As we all know, the cost of grain is going up because of the drought in Australia. Therefore, that has a flow-on effect to pig producers, and of course the cost of pork goes up. How does that relate to our pork farmers and their relativity to Australia? In trying to fix one problem one must very carefully examine the consequences of those policies. That is where I believe that a close examination and a good submission period will come in very useful.

It is very hard to predict what will happen in practice when fuel-mix changes are brought into New Zealand. Of course, that was discovered when lead was removed from a certain grade of petrol. What happened at the pump and in people’s vehicles was that the vehicles were not as efficient and their emissions were raised. The risk is that biofuels are not as clean as they might be, that vehicle engines will not run as well or as smoothly, and that as a result the reduction in emissions, which is desirable to all of us, may not take place, or it might be marginal.

I was reading newspapers online and I have to congratulate the Daily Post in Rotorua, which stated that the Biofuel Bill was introduced into Parliament on Tuesday. I read this before the bill was introduced, so well done to the Daily Post, but its article raised a lot of questions. I started this speech by saying that although the introduction of this biofuels regime is supported by National, it also raises a number of questions. This fine, pre-emptive article by the Daily Post notes that a Rotorua car importer says that the Government will struggle to achieve anything by introducing biofuels, which popular Japanese vehicles cannot take. I do not know whether popular Japanese vehicles cannot take these biofuels, and I do not know whether anybody else really knows until we hear the submissions and evidence from those people who will be directly affected by this. It is noted that cars that are able to take these biofuels are more expensive to buy, and that in the short term used-car owners—and this is a quote from a Mr Robinson—“will be punished for not being able to afford a car that meets emission standards.” That is a valid point that should be considered during the select committee process. He further goes on to note: “If you want to be clean and green, then it’s going to cost.” A lot of people in New Zealand own imported cars—I am one of them—and having to pay more just because they own an older car is patently unfair.

The Automobile Association of New Zealand put out a table on biofuel compatible cars, and notes some interesting things. The list applies only to cars sold brand new in New Zealand, and that raises the question of whether this biofuel will be of any use at all if it is only suitable for vehicles like an Aston Martin. Biofuel mix can be used for all Aston Martin vehicles post-2004. It is possible that our chardonnay-swilling socialists on the other side of the House might have an Aston Martin, a Bentley, or a Daihatsu Charade but the list of vehicles that can take biofuels is extremely restricted. I see that my aged Toyota Land Cruiser, which I drive around the gravel roads of the Otago mountain passes, will not be able to use biofuels.

This is a serious question that will need to be addressed in the select committee, and it will need to address the environmental benefits, the environmental cost of production of biofuels. There is a question over whether emissions from vehicles run on biofuels will be reduced to any degree. We also need to evaluate the cost-effectiveness of bringing in a biofuels regime—for example, the cost to the motorist. Will it be so unaffordable that it is not effective to do so?

• Bill read a first time.

• Bill referred to the Local Government and Environment Committee.