Purpose

The purpose of the Bill is to ensure that biofuels that are supplied or sold in New Zealand from 1 May 2010 are sustainable biofuels (Part 1, Clause 4; Part 2, inserting New Part 3A into the Act, New Section 34A ("Purpose of this Part)).

Supply or sale of approved sustainable biofuels

The Bill provides that no one shall supply or sell any biofuel after 1 May 2010 unless it has been approved as a sustainable biofuel by the Governor-General by Order in Council. The Bill also gives the Governor-General power, by Order in Council made on the recommendation of the Minister, to approve a biofuel as a sustainable biofuel. The Minister must be satisfied before making such a recommendation that the biofuel complies with the principles in, and regulations made under, Clause 34B (i.e. the definition of "sustainable biofuel" - see below). The Bill provides that any person "supplying a biofuel in New Zealand prior to 1 May 2010 must notify the Minister in writing as to the composition and origin of the fuel and how it complies with the principles in section 34(B)" (Part 2, inserting New Part 3A into the Act, New Section 34C).

Definition of sustainable biofuels

The Bill requires the Minister to recommend the making of an Order in Council providing a definition of sustainable biofuels for the purposes of New Part 3A as soon as practicable after New Section 34B comes into force, but no later than 1 February 2010. Before making the recommendation, the Minister must be satisfied that the Order in Council will "be consistent with the principles of sustainable biofuels" (see below) and "appropriately consider the indirect effects of biofuel production" (Part 2, inserting New Part 3A into the Act, New Section 34B(1) and (2)).

Principles of sustainable biofuels

The Bill sets out the "principles of sustainable biofuels", which are as follows:

Principle 1: Less greenhouse

Sustainable biofuels emit significantly less greenhouse gas over their life cycle than other engine fuel. In relation to this principle, the Order in Council must:

• specify a methodology for life cycle assessment of greenhouse gas emissions from engine fuels which are not biofuels; and
• specify a methodology for life cycle assessment of greenhouse gas emissions from biofuels; and
• specify minimum levels of no less than 35% greenhouse gas emission reductions for sustainable biofuels in comparison to other engine fuels.

Principle 2: Food production

Sustainable biofuels do not compete with food production and are not grown on land of high value for food production. Without limitation, the following biofuels do not contravene this principle:

• by-products of food production described in the Order in Council;
• ethanol from sugarcane grown in circumstances and in areas described in the Order in Council;
• rotational oilseed crops grown not more than 12 months in any 24-month period on the same land or as otherwise specified in the Order in Council.

In relation to this principle, the Order in Council must:

• specify a methodology for assessing the effects of the production of a biofuel on food production and for assessing whether those effects amount to competition; and
• specify a mechanism for recognising particular land (including land outside New Zealand) as being land of high value for food production.

Principle 3 : Biodiversity and land with high conservation value

The production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value.

In relation to this principle, the Order in Council must:

• specify a mechanism for recognising particular land (including land outside New Zealand) as having high conservation value; and
• specify a methodology for assessing the effects of the production of a biofuel on indigenous biodiversity and land of high conservation value (Part 2, inserting New Part 3A into the Act, New Section 34B(3)).

Offences

• The Bill establishes the offence of supplying or selling biofuel in contravention of Clause 34C(1) by providing that every person commits an offence who, after 1 May 2010, supplies or sells biofuel that has not been approved as a sustainable biofuel under Clause 34C(2). It is also an offence to submit " ... an application for a biofuel to be approved as a sustainable biofuel that contains false information". Employers or principals are vicariously liable for offences committed by an employee or agent in the course of their employment or agency " if it is proved that the act or omission constituting the offence occurred with the employer's or principal's authority, permission, or consent" (Part 2, inserting New Part 3A into the Act, New Sections 34D and 34E)).

Regulations

• The Bill provides for detailed regulation-making powers (Part 2, inserting New Part 3A into the Act, Clause 6, amending Section 35 of the Act).

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