Hansard and Journals
Sustainable Biofuel Bill — First Reading
Sustainable Biofuel Bill
JEANETTE FITZSIMONS (Green) : I move, That the Sustainable Biofuel Bill be now read a first time. At the appropriate time I intend to move that this bill be referred to the Local Government and Environment Committee.
Biofuel made from a range of plant and animal materials has been hailed as our solution to peak oil and climate change, and condemned as the cause of mass starvation and the final destruction of natural ecosystems. Both are true, and neither is true. Both arguments are extremist and ignore the huge differences between fuels made from specially grown crops and fuels made from wastes or grown on land unsuitable for food production. The idea that it is OK to feed good human food, like grains, into motorcars while people are starving shows what happens when someone pursues a single-minded goal, excludes all other considerations, and totally loses sight of the big picture.
It also shows the abject failure of the market to allocate scarce goods when there are very big differences in ability to pay. There is only so much agricultural land available, so there is an absolute limit on how much grain can be produced in the world. We can increase yields with clever management, but we can never overcome the fact that there are limits. There will never be enough to feed all human mouths and all the world’s vehicles. When it comes to market competition between the fuel tanks of the wealthy nations and mouths of the hungry who cannot afford to pay much for food, it is obvious who will win. In this context, unrestricted biofuels can mean genocide.
The competition between vehicles and living space for orang-utans and other endangered wildlife is even more unequal. If we try to expand the area of available land to provide both food and fuels, what will give? It will be the few remaining wild areas, the areas of biodiversity and naturalness, with no votes and few to speak for them. Already we have lost so much old growth forest in South-east Asia and the Pacific because profits can be made from timber sales, from using the land to grow palm oil trees for biofuels, and from the palm kernel, which is used in our dairy industry as a supplementary feed on high-intensity farms. My colleague Catherine Delahunty has a bill waiting for its first reading that deals with the timber issue by prohibiting unsustainably logged timber from entering New Zealand and undercutting New Zealand foresters who log sustainably. This bill ensures that biofuel made from palm oil will not qualify for subsidy in New Zealand.
Yet we should not let those very serious risks blind us to the opportunities to make fuel from a range of agricultural and forestry wastes and low-value by-products. Sustainable options in New Zealand include tallow from meatworks, and ethanol from a range of agricultural and processing wastes including whey from the dairy industry. As technology matures in the future, fuels from our large quantity of wood waste would come from the forestry industry and from algae grown on sewage ponds with the double value of faster, better sewage treatment and fuel production.
The premier science journal Science has just published a year-long study by 11 specialists in technology, energy systems, climate, ecology, and policy development who resolved their initially differing positions and all agreed that “Biofuels can be produced in large quantities [in the US] and have multiple benefits, but only if they come from feedstocks produced with low life-cycle greenhouse gas emissions, as well as minimal competition with food production.” They list such feedstocks as including but not being limited to perennial plants grown on degraded land abandoned for agriculture, crop residues, sustainably harvested wood and forestry residues, double crops and mixed cropping systems of energy and food together, and municipal and industrial wastes.
That is why I indicated to the Labour Government last year that the Greens would not support its biofuel obligation legislation unless it contained clauses setting out criteria for sustainability. We worked together on the wording of those clauses and refined the bill at the select committee, and that wording was passed into law last year. The new Government does not support a mandatory obligation and it repealed the law, substituting a subsidy for biofuels. For ethanol, the subsidy is achieved by exempting those who produce ethanol from petrol excise tax, and for bio-diesel, which is most likely to be sold as a blend with petroleum fuels, there is a subsidy for the production of the fuel.
However, in repealing last year’s legislation, a new problem was created as sustainability criteria were repealed with it. Those involved in setting up a New Zealand industry are afraid that when they have committed the capital and have invested in doing the right thing, someone will undercut them by using soy beans, which could be feeding people, or palm oil grown by clearing tropical forests. I received a message from Lindsay Fergusson of Ecodiesel, a firm set up to make tallow and bio-diesel. He said “We feel there should be sustainability rules. It shouldn’t be left open to the industry how they feel about them. What is being proposed is perfectly reasonable, and the industry should have some standards around it.” I welcome his support. New Zealand’s clean, green reputation is too important to be besmirched by accusations that we are destroying forests and starving people, when we do not need to. Our big advantage is we have so much primary production self-generating the residues that can be used sustainably for fuel, although we must always remember that the quantity is not unlimited and we still need to take serious measures to use fuel more efficiently.
This bill amends the Energy (Fuels, Levies, and References) Act 1989 by adding the sustainability clauses with appropriate amendments that were law last year. Firstly, it requires that biofuels must show a substantial—not less than 35 percent—reduction in greenhouse gases compared with petroleum fuels. There is no reason we would go to all this trouble and expense to subsidise a fuel that leaves us hardly better off in terms of our greenhouse gas emissions. Fonterra raised the point with me that the whey used to make ethanol and sold to Gull Petroleum as a petrol extender may struggle at some times of the year to achieve that 35 percent reduction, depending on how much of the life cycle cost of milk production one attributes to the whey. I am very open to discussing at select committee whether fuels made from genuine waste products, which would create a disposal problem if not used for fuel, should have that condition relaxed. It was intended to stop scams like the US corn-to-ethanol industry, some of which creates more greenhouse gas to produce the ethanol than it saves in avoided petroleum.
The second requirement in the bill is that production of biofuel does not compete with food production. It specifies that by using a by-product from food production, such as tallow or whey, it does not contravene this provision and neither does oilseed grown in rotation with food crops. In this situation, the seedcake is used for animal feed so the competition with human food is minimal. Thirdly, the production of biofuel must not reduce biodiversity or adversely affect land of high conservation value.
It is not possible to specify in legislation a bright line to separate sustainable and unsustainable biofuels. The detail must be left to regulations. The regulation-making provision is in clause 4, which inserts new section 34C. Regulations will specify how to assess life cycle carbon emissions, how to determine whether land is suitable for food production, and how to define land of high conservation value. We know that those regulations can be drafted quickly, because they were well under way when the Government repealed the previous legislation. The previous Minister of Energy, David Parker, and I met with officials from the Ministry of Economic Development and the Energy Efficiency and Conservation Authority to discuss international precedents for such regulations and how quickly they could be achieved. Those regulations would probably be in place now if the legislation had not been repealed and work stopped, but it was very good to hear from the Minister earlier today that it has started again in preparation for the passing of this bill. I commend this bill to the House and I thank the Government for its support.
Hon GERRY BROWNLEE (Minister of Energy and Resources) : The Government will support the Sustainable Biofuel Bill today. Work is going on in Government departments at the moment on what might be a voluntary scheme to establish proof that biofuels have been sustainably produced in New Zealand. It would then be a short step to look at how that may be prescribed in a regulation. I accept the call from the industry itself to protect what is effectively a domestic industry—and I do not like using that word too freely—to ensure that its integrity as a producer of sustainable biofuel is upheld.
I think it is worth noting that New Zealand consumes about 183,000 barrels of oil or fossil fuel every day. On a quick calculation, that means we are using about 280 million - odd litres of fossil fuel every day. This Sustainable Biofuel Bill becomes important in a very, very small sector of what might be fuel replacement for the future, because the programme that the Government introduced last year will see a subsidy becoming available for up to 60,000 litres a year by the time it reaches its final year of appropriation, and then the Government will need to make a decision about what happens from there.
My point is that 60,000 litres over a year compared with 280 million - odd litres being used a day means that this is very much a fledgling industry. In many ways it also encapsulates some of the points made by Jeanette Fitzsimons—that is, the amount of space that would be required to produce the sort of feedstock that we might get from vegetative material is, to say the least, enormous.
Why, then, encourage the industry? Second-generation biofuels present quite a different picture, and it will be a while before the world is at the point where those are easily produced. But I am very encouraged and impressed by what is happening with algae in the Nelson area of New Zealand, and a lot of work is being done internationally to look at what might be done with wood waste from forestry activities around the world, as well.
The other point I would make is that the fuel we currently use was at one point considered to be a bit of a waste product. For hundreds and hundreds of years no one really knew what to do with oil. It was something that one might burn to get a bit of heat out of it, but just 200 years ago the massive amount of use that we have for it at the moment was quite unheard of, and perhaps even unthought of. So we think that encouraging a biofuels industry in New Zealand at this point, as part of what will happen internationally, is worthwhile.
The standards that the bill puts up are pretty much the same requirements that were in the mandatory obligation bill that the Government repealed late last year. Our reason for repealing it at the time was that there were no sustainable standards in place. The idea was that they would be promulgated at around this time—in 2009, in the middle of the year—and at that point we could have consumed literally thousands of litres of biofuel that may well have come from unsustainable sources. Our other concern was that the cost of that to the economy would have been somewhere between 2c and 6c a litre, and it was not a cost that we were prepared to put upon motorists when there could be no certainty that the cost would do anything at all to improve the greenhouse gas emission levels from this country, let alone from any other country, particularly the countries where the biofuel might have come from. The three points that this bill wishes to insert into the consideration of our standards for biofuels will see New Zealand producers able to put a stamp on their product that guarantees the product is sustainably produced. In the long run that will, I think, be very good for the industry.
There are a few problems in the bill that I think I should give a bit of a heads-up on, not the least of which are some of the time lines that are in place. We would expect the select committee process to go on for some months and the bill then needs to come back to the House. Even though I expect the passage of this bill, when it does come back to the House, to be fairly quick, to have those sustainable standards effective from 1 January next year is a pretty big call. I hope that in conjunction with the consideration of this bill by the select committee there may be a work programme that can start with the officials in the Ministry for the Environment, the Ministry of Economic Development, and the Energy Efficiency and Conservation Authority to ensure that we are very, very close to meeting those dates. I know from discussions with the Green Party, with Jeanette Fitzsimons, that a collaborative approach will be possible on this issue.
I have one other question, though, that just struck me while I was listening to the member Jeanette Fitzsimons’ speech. It was to do with the comment that palm oil, for example, could be used for biofuel feedstock and that the kernel then could be used in New Zealand for food for dairy herds, perhaps. I am a little bit struck by the fact that at the moment the emissions from our farming activities present a problem for New Zealand. Our farmers are very good and very efficient. Their husbandry and use of pasture means that emissions from our farm animals are far less intensive and damaging than emissions from many other types of farming operation. But I ask what happens if the cow consumes that palm kernel and then emits the gases that all animals emit. Are they still considered to be totally noxious, totally negative, and totally inappropriate, or is the sustainable nature of the palm kernel industry such that it may get a different consideration? If that is the case, then I ask why our grasslands in New Zealand would not be considered in the same way. I see that Ms Fitzsimons is smiling because she knows that I am trying not to say the words that might be more expressive. It is either that, or I am so completely off-track here—
Grant Robertson: That’s quite likely.
Hon GERRY BROWNLEE: The member says that is highly likely, but it does raise a very interesting question. The idea is that palm oil, effectively, can be made into biofuel and is carbon neutral. I presume that is the position Jeanette Fitzsimons would take.
Jeanette Fitzsimons: Destroys the orang-utans and the forests. That’s what we’ve got against it.
Hon GERRY BROWNLEE: Oh, the member is not in favour of those things.
Jeanette Fitzsimons: That’s why we’re not in favour.
Hon GERRY BROWNLEE: Well, OK, I apologise. I misunderstood. It had me terribly worried that there was something new going on that I had missed. Palm oil, as we all know, is one of the great evils. It is a problem that a certain chocolate maker in New Zealand currently has because of the imported nature of its product these days.
I do not want to take much more of the House’s time, other than to say that if New Zealand is to have sustainable standards, then I hope that those standards are easily achievable by the industry. I will give a commitment at this stage to ask those who are responsible for developing these standards to work with the biofuel industry in New Zealand to ensure that we get workable arrangements and do not end up with the sort of wild bureaucracy that causes people to cut corners and causes questions to be asked about the veracity of the scheme in the first place. This move will be positive for the industry here. The Government has supported the industry with funding of $36 million over the next 3 years. That means that bio-diesel, effectively, will be treated the same as bio-ethanol, with the 42.5c subsidy on that production. As I said earlier in the House today, I am delighted that five of the companies in New Zealand producing biofuels have signed up with the Energy Efficiency and Conservation Authority to receive some of that subsidy, meaning that we can expect some 50,000 to 60,000 litres of biofuel to be produced in New Zealand this year. I think that is extremely encouraging. I look forward to the easy passage of this bill through the House today, and then to a collaborative select committee process to ensure that, as we are determined to have these regulations, they are as workable as possible.
MOANA MACKEY (Labour) : I ask the Minister Gerry Brownlee, who has just resumed his seat, why, if he loves these standards so much, he voted to repeal them before Christmas. We had these standards in legislation, we worked long and hard at the Local Government and Environment Committee to develop them, we worked very hard to ensure that a process was set out whereby an Order in Council process would detail these standards, and we passed them into law. If this Government had not repealed the previous Government’s biofuel obligation—there was a date in that legislation of 1 July 2009, and our officials had told us that they could make that date—we would already be there.
Our officials told us that they would have to work hard but they said they believed it could be done, or if they needed more time it would be only a little bit more, and it was entirely appropriate that the Minister should have to come to the House to explain why it was taking longer than expected and what the new time frame would be. So we would already be there. It is a bit rich for National members to stand up now and go on about what a great bill this is—and I think it is a good bill—when this is the legislation they repealed before Christmas, saying it was the worst piece of law that they had ever seen.
Hon Georgina te Heuheu: We are entitled to take stock and decide where we want to go.
MOANA MACKEY: Georgina te Heuheu says that they have now taken stock and realised they were wrong. I thank the honourable Minister for admitting that the National Government was wrong in repealing this legislation in the first place. That is the first honest admission we have seen.
I want to thank the member Jeanette Fitzsimons for bringing this bill to the House. It is like seeing an old friend again because it was not that long ago that we were working at select committee to draw up these standards, and I want to acknowledge the role that the Green member on the committee, Metiria Turei, played in that process. An awful lot of work, not only at select committee but outside select committee hours, went into getting this legislation to a point where everyone was comfortable and felt that we were allowing only the sustainable forms of biofuel that were already being produced in New Zealand to go ahead. But at the same time, we were doing as much as possible to shut off the avenues to non-sustainable sources.
The member Nick Smith, who was on that committee, criticised us. He said there were no sustainability standards in it because they had not come into force, but the submitters who came to the select committee told us that as long as the committee gave them a clear steer so that they knew what they were going to be dealing with then that was fine—as long as they were given as much forewarning about what those standards were going to include. Let us be honest, what is in the legislation is extremely detailed. In fact a group of parliamentarians from the European Parliament came to look at what we had done because they were so impressed and thought we had found a really good way through. We gave a clear steer to industry about what would be expected of it once the Order in Council and the regulations were drafted, and that is what it asked for.
I have to say that it is good if we can get biofuel producers on board and the companies that produce bio-diesel. But those companies also supported the biofuel obligation that the previous Government put in, which did not cost taxpayers $36 million. That is what I find astounding, because every day in the House we hear from National members that they have no money to fund things like helping mums on the domestic purposes benefit get off the benefit and into work. They say they have no money for adult and community courses, and no money for new early childhood centres, but somehow there was $36 million for subsidies for biofuels to produce an outcome that the biofuel obligation did for free.
We had legislation in place, and let me point out that one oil company in New Zealand was already providing biofuel and had been doing so for a long time. Another oil company, when the legislation was introduced into the House, started putting biofuel into its mixes because of the legislation. It saw the writing on the wall, so it automatically did that voluntarily before the legislation came into place. So we had people moving down the path before the legislation was even passed. We looked at the target in the bill, and we dropped it down to the level at which we knew it could be supplied by New Zealand providers, from sustainable sources. We were very reasonable, but it was about producing a market for those companies and they were very grateful for that—and it did not cost the taxpayers $36 million.
I am astounded that National seems to think that subsidies for these companies, when we are in a recession and we are fighting over every scrap of money, is the most important way to go rather than keeping in place the biofuel obligation that was there, that provided a market, that the oil companies were already moving towards doing, and, most important, that cost the taxpayers of New Zealand nothing—zero. I look forward to the next National speaker explaining how National can justify $36 million in subsidies for something that was already happening for free under the previous Government.
CHRIS AUCHINVOLE (National—West Coast - Tasman) : I think I said last time I was speaking in the Chamber what a pleasure it is to follow Moana Mackey. It gives the opportunity to respond to the requests she makes for explanations for better understanding and that sort of thing. But I will speak about the bill that is before the House, the Sustainable Biofuel Bill. Moana Mackey spoke about a bill that was before the House when Labour was in Government and was then repealed. I did not hear her speak about the Sustainable Biofuel Bill, which is such a good bill.
I will speak about the Sustainable Biofuel Bill, which was submitted in the name of Jeanette Fitzsimmons. It was most interesting to hear its introduction.
Hon Member: Fitzsimons.
CHRIS AUCHINVOLE: Fitzsimons—exactly. I beg the member’s pardon. I thought there was a double “m” in her name; my apologies to the member. It is without doubt that biofuels will play a big role in our energy mix in the future. The Government is supporting the bill going to the select committee. I believe that it is important that this issue gets debated robustly and calmly, and that the select committee gets to hear expert opinions and can come up with some clear recommendations on that basis.
I listened to Moana Mackey’s speech and—oh, gosh—it was interesting, but, as I said, it reflected backwards and not forwards. It is time to get over it, I say to Moana. But I enjoyed hearing the introduction from Jeanette Fitzsimons and noted with interest—
Moana Mackey: What a waste of Parliament’s time and money passing the same law we repealed last year.
CHRIS AUCHINVOLE: I ask the member to just let me get to the point she asked about, and all will be revealed—her answers will be given. There really is an important difference between the two bills. The member knows there is an important difference and will probably like it not to be voiced, but I will voice it.
First of all, I will take up the point Jeanette made in relation to needing a balance between food production and fuel production, because it really can create, and already has created, distortions in the world. I still have a point of concern when I hear people saying we have so much available tallow at cheap prices. We do not, in my understanding of it—and I was involved in exporting for a long time—have a surplus of tallow anywhere. So if we start to use these products for different purposes from what they are currently being used for—it is a by-product, a waste product, and all the rest of it, but it currently makes a hang of a lot of soap in Third World countries and throughout the Pacific—we will be pushing up the price of those products. We simply cannot think that we will not have an effect by making changes.
I will outline a couple of points showing the good work this National-led Government has already done in the area of biofuels. Members of this House might remember—and certainly Moana Mackey remembers very clearly—that after the election this Government repealed the biofuel legislation that required fuel companies to progressively introduce biofuel blends into their fuel mix. We heard the warnings being given by Jeanette Fitzsimons on what happens when we introduce compulsion. One of the major reasons we repealed that legislation was that it mandated the introduction of biofuels. National believes that biofuels should be introduced through companies responding to commercial, environmental, and marketing considerations, not because the Government compels it to. One of the lessons Labour surely must learn is that if one tries to compel things all the time, one will lose the opportunity. Wow! And what is happening? People are taking up biofuels from a commercial point of view.
We have some concerns about the Sustainable Biofuel Bill. The bill requires an Order in Council to be made by 1 February 2010. That will be ahead of international consensus around biofuels sustainability, so New Zealand will be moving ahead of international developments. One problem with that is that there is no internationally agreed standard for what constitutes sustainability. We do not want to get back into the position of aspirational targets, such as the memorable target of the previous Government when it blithely said New Zealand would be carbon neutral, without actually working out how it might happen.
In essence, I believe that the bill should be moved to the select committee. The bill deals with important issues, which is why National supports it. Thank you.
CHARLES CHAUVEL (Labour) : It is clear that the world has to do something to end its doomed love affair with oil. It is a pervasive aspect of our society, from our cars to even bottled-water bottles. Petroleum products in vehicle engines contribute massively to carbon emissions and environmental degradation, at a time when we are all clear about the need to deal with that challenge through action both personally and as a country. We just do not know when oil is going to run out, but we do know that as it becomes more scarce, prices will rise, and that will affect all of us everywhere.
We need better alternatives to carbon-based energy, and one fantastic alternative is the use of biofuels, whereby energy is drawn from much more environmentally friendly sources than the petroleum we have allowed ourselves as a society to become hooked on. But we need to make sure that biofuels sources are environmentally sustainable. Biofuels are drawn from crops such as corn, which is used to produce ethanol, and there are problems with that in the US. We have seen massive price distortions as a result. But biofuels can also be drawn from other plant sources or animal sources to produce bio-diesel or biogas. They can even come from waste cooking oil from McDonald’s. But the crops and lands used for biofuels production are also used for food production, and the Sustainable Biofuel Bill addresses that problem.
Before the great global economic meltdown, the world experienced what The Economist magazine called a “silent tsunami”, with rising food prices and shortages. The race to get on to the biofuels bandwagon was a contributor to the “silent tsunami” that The Economist referred to. So we need biofuels that are sustainable and produced sustainably.
The problem we have here, however, is one that Moana Mackey alluded to: all this could have been in place already. It is very annoying and very frustrating for members on this side of the House—and it must also be frustrating for the sponsor of this bill, who negotiated hard to get the provisions in the repealed legislation—that this House is having to legislate twice, once to repeal legislation under urgency before Christmas, and now this bill, for which we have had to wait months, to replace it.
And what are we dealing with in terms of replacement proposals? As Moana Mackey said, it is a massive multimillion-dollar payment to industry, which is a total waste of scarce taxpayers’ money in the current recessionary environment. It was interesting to hear the previous speaker, Chris Auchinvole, talk about the market working. Well, if this is an example of the market working—because it gets a $36 million taxpayer subsidy—I am sure a whole lot of other parts of New Zealand would like to have a bit more market. But I do not think we will be seeing that sort of approach extended to those who really are in need.
In the meantime, while we have been waiting, this legislation could have been in place, as Moana Mackey said, on 1 July. Instead, we will have to wait until 1 May 2010. In the meantime, jobs have been lost—we have seen that as a matter of public record—in entities that were relying on the biofuels obligation to make producing biofuels onshore domestically sustainable.
Nevertheless, we are here, and, certainly, Labour members welcome the bill. We are committed to seeing its passage through all stages in the House, if the numbers required can be achieved. Although I heard Mr Brownlee say that the Government will support it being referred to a select committee, and the ambition then, as I understand it, is to merge the work being done by officials with submissions on this legislation, Labour is happy to commit to seeing this legislation pass through all its stages, if the numbers can be achieved. This is effectively, as Moana Mackey said, a re-enactment of legislation agreed between Labour and the Greens prior to the last election.
We need the bill, as I have said. It will be an important complementary measure to the emissions trading scheme, when that scheme finally is confirmed by this Parliament, in terms of the tool box that we need to reduce emissions. The bill will be an important part of making sure that we have a balance between food production and fuel production, and it will be a very important contributor to that vital principle in which we all believe: encouraging biodiversity. With those concluding comments, I welcome this bill.
RAHUI KATENE (Māori Party—Te Tai Tonga) : I am really pleased to be able to stand in support of the Sustainable Biofuel Bill, which amends the relevant legislation in order to ensure that biofuels supplied or sold in New Zealand from 1 May 2010 are sustainable. The Māori Party supported the Biofuel Bill that introduced the biofuel sales obligation, and we subsequently opposed the bill introduced in the early days of this Government to repeal that bill. In light of the repeal bill, we were really pleased when Minister Brownlee announced, as part of Budget 2009, that $36 million was available for a new grants programme for bio-diesel production. We saw this programme as a great opportunity for rural marae communities to showcase their ability to use their traditional social and industry systems to be key players in the emerging biofuels industry.
I take a particular interest in the development of biofuels. One of my iwi, Ngāti Kōata, is in the process of establishing a biofuels plant. Our original intention was that we would sell the biofuels to users of static machinery such as school boilers. We started off looking for tallow but we realised that there are uncertainties around its supply, so we are now investigating other sources. Of course, we are not the only iwi who have invested in biofuel manufacturing infrastructure. Taharoa C Block incorporation came to the Emissions Trading Scheme Review Committee and shared their experience, including the development of the miscanthus species for biofuel production from marginal land, which they considered to be a very promising biofuel project. This bill, then, has the potential to make an important contribution to climate change initiatives to help provide options for employment and to express energy rangatiratanga.
We are very interested in being involved in the interpretation of what sustainable biofuel is, which the bill recommends should be made by regulation by 1 February 2010. The definition of exactly what we mean by sustainability is the crux of the issue. We all know that importing biofuels is problematic, given that fuel is required to transport the biofuel, in addition to the fuel required to create the biofuel. As the price of oil rises, so too does the relative price of energy alternatives. We are concerned that the word “sustainability” can be tossed around, perhaps carelessly, as though merely using the word is sufficient to create a sustainable society.
We have been interested in the view of Dr Albert Bartlett, head of physics at the University of Colorado at Boulder. Dr Bartlett’s analysis leads us to look again at the concept of sustainable growth, in the sense of endlessly increasing. Of course, because the resources are not unlimited, there is not an open-ended supply. The finite size of resources, ecosystems, the environment, and the Earth leads to the most fundamental truth of sustainability: that, in fact, the term “sustainable growth” is an oxymoron. So although we support this bill and the principles of sustainable biofuels, we must do much more than adjusting a regulation on paper; we must look anew at the way we approach environmental management, the efficient use of water, and the conservation of energy. The Māori Party has constantly promoted the importance of reducing our dependence on oil by strategies to reuse, recycle, repair, respect, replace, and trade locally. We must do all that we can to support the development of renewable and sustainable energy resources in order to protect and preserve limited resources such as oil, gas, and coal.
This bill is an important step along the journey, but we stress that it is only a small step. Biofuel energy production is not energy production. With or without biofuels, the critical fact is that we need to radically change how we live. A safe, environmentally sound, and economically viable energy pathway that will sustain human progress into the distant future must be the horizon we all seek to achieve, and we must start to do something about it now. In that spirit, we give our support to this bill and thank Jeanette Fitzsimons for her proactive initiative in putting it forward. Kia ora.
KEVIN HAGUE (Green) : I made my own biofuels sustainability decision in the last couple of weeks, which was to cease my consumption of Cadbury’s chocolate. Those who know me will know that that was quite a major step to take. Gerry Brownlee referred to Cadbury’s use of palm oil in its chocolate, and members on all sides in this debate have referred to the attendant risks around the displacement of forests, around biodiversity, and around food.
In a sense, this debate comes down to a core issue that is frequently the cause of disagreements in this House, and that is the question of how best to achieve a change to the goods and services we all use. There are three basic approaches: one is regulation, one is consumer choice, and one is a weighted consumer choice where we stack the odds through subsidies or other means, such as social marketing, to make one choice more attractive than another. The Green Party makes its selection in terms of the most appropriate of those approaches on an issue-by-issue basis.
Very frequently, the criterion for deciding on that is the relative balance of the public good and the personal good in the outcome of the change. The issue of country-of-origin labelling on foods, for example, is one where we have campaigned for consumer choice. We have said that there needs to be mandatory labelling on foods so that consumers are able to make that choice and so that we can achieve the outcome we are all seeking. Of course, there is a public interest aspect in that, but overwhelmingly that is less important than the personal interests of the consumer. So consumer choice is an appropriate approach in that case. On the other hand, an issue like the food that is for sale in schools is an issue where public interest clearly outweighs the personal interest, and it is important to take a regulatory approach, establishing rules and standards.
On the issue that is before us, we are facing a crisis in the world. The issue about the energy we use for transportation is but a small part of how we address that crisis. Members have already alluded to two aspects: climate change, where it is imperative that we do all that is in our power to reduce our greenhouse gas emissions; and the end of cheap oil, where it is incumbent upon us to find ways to make the best possible use of a scarce resource.
In this area of energy for transportation, people have talked for years about hydrogen cars as being our salvation. That talk seems to have dissipated somewhat, and now we are talking about electric cars. Certainly, there is a lot of value in electric cars, but they will take a long time to implement.
I want to talk about the choices before us now and how we can encourage change in goods and services in this particular area. The public interest in sustainability, in ensuring that we retain biodiversity, and in reducing our greenhouse gases to the maximum extent demand a regulatory approach. I commend members from the Government side for their change of heart on this front. It is great to see that there seems to be consensus in this House that this bill is a timely one, and I look forward to its passage.
NIKKI KAYE (National—Auckland Central) : I am pleased to support the Sustainable Biofuel Bill. I acknowledge what Kevin Hague said about consensus on this issue. One thing I am proud of is that this Government has been able to build relationships across the political spectrum, not only with the Greens but also with the Māori Party, ACT, and United Future. I want to take a moment to recognise the memorandum of understanding we have with the Green Party that covers home insulation, energy efficiency, and the regulation of natural health products. I also acknowledge the work Kevin Hague has done in terms of the cycleways to ensure that many New Zealanders will have the opportunity to ride them in the future.
The important question in this bill is, what is a sustainable biofuel? That is a debate I am glad we will be able to have in the select committee process, and that is why I am supporting this bill. It is important to talk a bit about the history. In 2008 the previous Government passed the Biofuel Bill. The bill required fuel companies to progressively introduce biofuel blends into the fuel mix in increasing incremental amounts to 2.5 percent of total energy by 2012. Many people called it a biofuels sales obligation. An important point about this legislation is that decisions about which type of biofuel was to be supplied, how much it was blended with fossil fuels, and where it came from would have been up to the industry.
Members opposite have asked for the reasons why we opposed that bill. We opposed it for three particular reasons. We opposed it firstly because we believed that it was mandating the introduction of biofuels, and that was a philosophical point. We did not believe that biofuels should be introduced because the Government was forcing people to do it, but because Governments were responding to commercial, environmental, and market considerations rather than that sense of compulsion. The other reason why we opposed it was we believed that the bill the previous Government put forward would have loaded uncertain costs on to consumers. The evidence from the oil companies that came to the Local Government and Environment Committee was that meeting the obligation, when fully implemented, would add anywhere from 2c to 8c a litre to the cost of fuel. That is why we opposed it.
One thing we are very proud of, and the Minister has talked a lot about it today, is the bio-diesel grants scheme. The key point that we signalled was that we were concerned about the unequal tax treatment between bio-ethanol and bio-diesel. National promised this at the election, and, along with the many good policies this Government has implemented, we have delivered on it. There is $36 million over 3 years to provide a 42.5c per litre grant to produce bio-diesel fuel. I am really pleased that five companies are set to take part. The companies are using a range of sustainable feedstocks to produce bio-diesel, such as tallow, used cooking oil, and rapeseed grown as a break crop. The important thing to note is that the scheme will help to increase the fuel choices available for New Zealand consumers and businesses.
The whole issue, and I acknowledge what members on the other side are saying, is that what we have in this legislation is a first start. I look forward to the select committee looking further at the principles that the Greens have put into this bill. I think it is a really important debate to have about what exactly is a sustainable biofuel, and I acknowledge Rahui Katene’s comments in that regard. We have to do better as a country, in terms of the environment. One good point that Kevin Hague made is that biofuels are part of the argument, but we also have to think more about things like electric cars. Yes, they will serve only a certain number of people, but I think public transport is an important part of this debate about reducing car usage. Biofuels are part of this debate, but so is our use of cars in New Zealand. We have to think more about that, and I am very proud that at the election I supported integrated ticketing. The other day the Government announced that the New Zealand Transport Agency is moving forward. We have seen some significant progress in the area of integrated ticketing, and I really hope that that can be delivered under this Government because we want to encourage more people to use public transport.
This bill is another step the Government is taking that will, in my view, lead to a better and cleaner New Zealand. I am very pleased to be supporting the Green Party. This is another example of the Government working with parties across the House.
Hon DAVID PARKER (Labour) : This debate would be laughable were it not so serious. I cannot believe the contribution we heard from the previous speaker, Nikki Kaye. She stood there and defended the fact—as if it was a good thing—that National is now voting for the same legislation it refused to support 8 months ago, and then 6 months ago repealed. The Sustainable Biofuel Bill is the very same legislation. There is no difference. It is an illustration of how absolutely incompetent Gerry Brownlee is as the Minister of Energy and Resources. All of these issues were pointed out to him and his Government when they repealed these very same provisions 6 months ago. These provisions are not different in some sort of minor but principled way; they are the same provisions.
During the last election Gerry Brownlee ran campaigns based on the nanny State. Somehow it was nanny State to tell oil companies that they had to incorporate sustainable biofuels in their fuel. Somehow it was better to subsidise it to the tune of $36 million, and not necessarily get the same outcome! Today in the House we heard Gerry Brownlee say that BioDiesel Oils (NZ) Ltd is one of the recipients of the new subsidy scheme. I tell members that I ran into Sue Wood on Monday of this very week as I flew into Wellington. Sue Wood, who is a former president of the National Party, was deeply ashamed that the National Party had ruined the business and effectively put at risk the life-savings of some very decent New Zealanders involved in these fledgling biofuels companies. One company was producing the world’s most sustainable biofuels, as measured by the UN according to sustainability of fuel stock, non-competition with food production, and low greenhouse gas emissions on a life-cycle basis. That company was brought to its knees by the Government’s decision to remove the mandatory obligation on oil companies.
I asked whether the subsidy fixed the problem and she said that they did not know. The reality is that it does not make the oil companies purchase biofuel. It is still a hassle for oil companies to blend biofuels in with their traditional fuel stocks, and they do not want to do it. So even with a $36 million subsidy, we may not be bringing forward the most sustainable biofuels that the world has, and that New Zealand has in a higher proportion to population than any other country in the world. Gerry Brownlee comes to the House and says that this is good policy. He says that wasting $36 million of Government money on this programme is good spending. It is ludicrous. We heard the prior speaker say that it would have cost between 2c and 8c per litre under the mandatory obligation. National members know that that is wrong. The advice from the officials and from biofuels producers is that the cost would have been about 1c per litre. They are making an eightfold exaggeration as to cost.
I return to the reasons that we need sustainability provisions. It is clear that not all biofuels are good, and it is clear that not all biofuels are bad. It is clear that biofuels are part of the solution to greenhouse gas emissions from transport, and that we should be bringing forward sustainable biofuels. Because the Government repealed the sustainability provisions in the law, we can currently import unsustainable biofuels. This legislation fixes that, and I thank Jeanette Fitzsimons for bringing it through. She has more patience with Gerry Brownlee than I have; they are the same arguments and it is the same legislation. I am somewhat surprised that we are seeing such a complete turn-round from Gerry Brownlee. It is a bit like saying we cannot have energy-efficient light bulbs because that is the nanny State. It is interesting that in the last month or so Consumer magazine has come out and said that we were exactly right and National was wrong.
New Zealand’s transport emissions are now on the way down. They went down 4 percent last year and they were static in the prior year partly because of public transport. We need biofuels to do even better. Electricity emissions are going down and deforestation emissions are down, yet National is saying that it is the be-all and end-all when it comes to climate change policy. This is another example of National’s incompetence. I am pleased, though, that this legislation is about to pass its first reading today.
JEANETTE FITZSIMONS (Green) : I would like to thank all of the members of the House who have spoken in support of the Sustainable Biofuel Bill. It is very satisfying that it appears that the bill may go through unanimously. The ACT Party has not spoken, but every other party has spoken in support of the bill and I thank them for that.
A couple of things came up in debate that I would like to set right. The claim was made by Chris Auchinvole, as has been made many times before, that the tallow in New Zealand is currently exported and made into soap in China, and that if we do not do that then soap will be made from less sustainable things. Well, I have good news for members: it is the glycerol in the tallow that is made into soap. The glycerol is a by-product from turning tallow into bio-diesel, so we can turn the tallow into bio-diesel here, be left with the glycerol, and export that to China to be made into soap. So it is a win-win solution, like most of the things that the Greens propose.
It was a concern that when the previous legislation was repealed, the officials adjusted New Zealand’s expected carbon emissions in 2020 upwards, to adjust for the fact that there would not be biofuels being used in New Zealand to reduce those emissions. I hope that the combination of this bill and the Government’s policy means that those emissions can be adjusted again.
We have heard tonight a debate mainly about the philosophical arguments between National and Labour about whether mandatory standards are better or worse than subsidies. That is a philosophical, political debate, and the parties have an absolute right to debate that. But what has happened, as has happened so often before, is that sustainability has once again slipped through the cracks of that argument between those on the right and on the left. I do not want members to get me wrong. I tell them the Greens do have a view on that issue, and it includes a concern that, as David Parker has said, even with a subsidy local producers may still find they do not have a stable market, because if oil prices continue to fluctuate wildly it will sometimes be economic to buy biofuel and sometimes not economic. That means that local producers may not be able to sell it stably, and therefore they may not invest in the industry. So we do have the problem that the measure might not be effective.
But that is not the issue here today. The issue is about how to make sure that any biofuels that we do use are sustainable, and on that we seem to have agreement right across the House. It is another issue where the Greens sold a policy to the Labour members last year, helped to develop it cooperatively with them, saw the legislation be repealed, then sold it to National after the election. I thank both parties for accepting the importance of the issue. We have actually brokered an agreement across the House without National or Labour ever having to talk to each other about it, and we now have general agreement that biofuels should be sustainable, in much the same way that we have brokered agreement between Labour and National that home insulation is worth investing in. We are pleased to play that role.
I thank everybody for their comments on the bill tonight. I look forward to getting it back as quickly as possible. I do not think the Local Government and Environment Committee will need to take very long to consider the bill, because it has already considered the exact wording that is in the bill, has helped to develop it, and is thoroughly familiar with it—or at least the members who are still on the committee are—and I am sure that it will not take the committee very long to decide it is a good thing to put the legislation back in force. I look forward to the bill coming back to the House and passing into law.
- Bill read a first time.
- Bill referred to the Local Government and Environment Committee.