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Date:
4 April 2012
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Sustainable Biofuel Bill — Second Reading

[Sitting date: 04 April 2012. Volume:679;Page:1675. Text is incorporated into the Bound Volume.]

Sustainable Biofuel Bill

Second Reading

Dr KENNEDY GRAHAM (Green) : I move, That the Sustainable Biofuel Bill be now read a second time. I took over the energy portfolio from Jeanette Fitzsimons, on her departure, and thus her Sustainable Biofuel Bill. That bill is now in my name. The bill was referred to the Local Government and Environment Committee—following its first reading in July 2009—which referred it to a subcommittee of three members: one National, one Labour, and one Green. Officials from the Ministry of Economic Development produced a report for our small and happy band, and then in a fit of contrition hastened back to the subcommittee with a request that large parts of their work be deleted, on grounds of confidentiality. Weird as that was, the majority in the subcommittee assented.

The Ministry of Economic Development’s verbal advice was threefold. First, the New Zealand proportion of biofuel consumption to total petrol and diesel was tiny. At 0.6 billion litres it was 0.5 percent of the total. Most was locally produced. Only Gull imported. This compared with 5 percent in the European Union and about 8 percent in the United States. In the case of the EU, when its production was low it had set mandatory targets for increasing renewable energy in the form of biofuels—5.25 percent in 2010 and 10 percent in 2020. This resulted in the EU importing, in haste, from many sources: South America, North America, and South-east Asia. That explained the EU’s interest, back in 2007, in developing importation standards.

Secondly, according to officials, most New Zealand companies voluntarily provided information on their fuel imports to the Ministry of Economic Development. Gull, for example, did so in respect of biofuels. Thirdly, developing legislation to introduce standards specifically for biofuels would be complex and time-consuming, usually taking about a year. Although Europe did it, that was because of the reasons I advanced earlier. In the New Zealand case, for those same reasons, it would not really be worth it.

Frankly, the Green Party did not find those reasons to be sufficient for not proceeding with the bill. In the subcommittee group, I explored with officials two things: first, whether the EU directive was initiated in the context of an anticipated increase in biofuel imports rather than as a reaction; and, second, what degree of confidence the public might have in a continued New Zealand voluntary regime. The answers of officials appeared to please, at least, the subcommittee chair. On my request the subcommittee explored the extent to which the New Zealand public might be assured that biofuel imports would be beyond reproach. I floated an additional possible requirement—that the Minister be required to report to the House annually, with the sign-off that no biofuel imports from an unsustainable source had been imported into New Zealand. This appeared to displease the subcommittee chair.

Not surprisingly, the Green Party maintained a different view from that of the Government on sustainable biofuels. The preference of the Government and of the biofuel industry was for a system of voluntary reporting. There was also the confidence of the Energy Efficiency and Conservation Authority that such a reporting system was meeting its purpose. In the Green view these considerations do not, in themselves, constitute a sufficient reason for New Zealand to confine itself to such a modest framework for biofuel production and importation.

Although biofuel use in New Zealand remains low, at 0.1 percent, it will, we think, be prudent to establish time-specified quantitative targets for increased imports and sustainability criteria under legislation. The EU standards had been introduced at a time when its imports were low. It would, we thought, be prudent to establish time-specified targets in anticipation of greater targeted levels. As part of New Zealand’s share in the global responsibility to combat climate change and preserve global fuel food integrity, we should follow suit, rather than wait and see whether the market for imports here might first increase. Such a laissez-faire approach to global climate change and sustainability would prove to be inadequate to the challenge that the international community confronts.

Finally, New Zealand’s international obligations under its free-trade agreements did not in themselves preclude the merit or the feasibility of introducing sustainable criteria for biofuel imports.

This bill, I suspect, will be voted down, but let the last word go to Jeanette Fitzsimons: “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 Green Party will, of course, be voting for this bill.

NICKY WAGNER (National—Christchurch Central) : It is very interesting to listen to Kennedy Graham talking about the Sustainable Biofuel Bill, because I was part of the small subcommittee of the Local Government and Environment Committee. In fact, I did chair it. I reflect on the excitement that people concerned about the environment had in terms of the idea of biofuels. It seemed to answer the twin problems of long-term sourcing of fossil fuels and a way to cut carbon emissions, in the face of climate change. As someone who is particularly interested in waste minimisation and recycling, there were also lots of exciting ideas of new technologies to turn waste products into energy sources.

Many countries embraced the development of biofuels. Some introduced subsidies to encourage the growth of biofuel feedstock, and some even passed laws to mandate the supply of biofuels. In fact, in 2008 Labour passed the Biofuel Bill, which placed an obligation on oil companies to sell biofuels as a set percentage of their sales. Biofuels can be made from a variety of biofuel feedstocks, including grain, palm oil, oil crops such as rape, and woody growth. Biofuels can also be made from some waste products, and the example that we see mostly in New Zealand is used cooking oil, or food waste, such as tallow.

There have been ongoing experiments in New Zealand concerning the growth of algae and very fast-growing feedstock in nutrient-rich environments. Those experiments have been happening in the Blenheim sewage plant, and although that work looks promising and they are working in partnership with some people in the US, it has not been commercialised yet. And that is one of the problems. Yes, we can use waste to make biofuels, but to get any economy of scale, specific crops need to be grown.

As the world learnt more about biofuels, we learnt that not all biofuels were good for the environment. We learnt that the cultivation and the growth of some crops used for biofuels, when we analysed their life cycles, were enormously hungry on fossil fuels during the growing process, so they did very little to lower carbon emissions.

Then we discovered that by subsidising the growing of crops, many farmers changed from growing food crops to growing fuel crops. The classic example there was the growing of grains in the US. The prices that grain farmers could get with a subsidy forced up the cost of food, and many low-income people could not afford to buy the foods that they had always relied on. In fact, the cost of tortillas in Mexico went up because of the US Government’s subsidy for biofuels.

Finally, we discovered that when encouraged by a Government subsidy, there was a loss of important biodiversity, the clear-felling of indigenous forests, and the destruction of valuable ecosystems to grow biofuel stocks, particularly palm oil. So the excitement about biofuels was tempered by these three major problems and, finally, the fact that we needed too much fossil fuel to grow some crops.

So the first problem was that we needed too much fossil fuel to grow the crops. The second problem was that growing biofuel stocks deprived people of food, which they could not afford. The third problem was that in some cases we were destroying the very environment we were looking to save by clearing land for growing feedstock, so much so that environmentalists became increasingly disappointed and worried about the consequences of increased biofuel production. They felt that subsidising biofuels, or placing an obligation on the sale of biofuels, such as Labour’s bill was doing in this country, would actually cause environmental damage.

In New Zealand, Jan Wright, the Parliamentary Commissioner for the Environment, was so concerned that she did an inquiry and wrote a report saying: “The Biofuel Bill currently before Parliament should not proceed in its current form. International concern about the sustainability of biofuels and their true environmental and economic impacts have heated up considerably in recent months—which signals a need for caution.” Jeanette Fitzsimons, the co-leader of the Greens at the time, introduced this bill. This bill was designed to ensure that biofuels imported into New Zealand to meet the obligation would need to pass a sustainability test, so that we would not be buying biofuels that could be doing environmental and social damage.

In 2009 the National Government repealed the biofuel legislation and the obligation for all companies to sell a percentage of biofuels. We repealed the Act in the face of the sustainability issues, and because we believed it would force up the price of fuel for consumers. Existing biofuel production continued, but it was from local feedstock and mostly waste products such as used cooking oil and tallow.

When the Sustainable Biofuel Bill came to the Local Government and Environment Committee and we heard the submissions on the bill, we concluded that the bill was unnecessary and impractical for several reasons. First, there was no available international standard by which to judge whether or not biofuels were sustainable. Secondly, as National had repealed the biofuels obligation there was no pressure to import unsustainable biofuels.

The amount of biofuels being used in the country was low and mostly made in New Zealand. All New Zealand - made biofuels were made from waste products—as I have said, from used cooking oil, tallow, whey, or non-edible seeds such as rape. Although there were small amounts of Brazilian sugar cane being imported, the sugar cane was sustainable.

The biofuel industry had a voluntary reporting scheme. Its argument was that people who were buying biofuels were doing it to show their environmental credentials and that the use of unsustainable biofuels would threaten that, so companies were very careful as to the sources of their biofuel, and, finally, we could already make regulations to cover any problems.

Sections 35 and 36 of the Energy (Fuels, Levies, and References) Act 1989 included regulation-making and information-gathering powers regarding producers and suppliers of engine fuel. These sections could be modified to discourage unsustainable biofuels in New Zealand if it was necessary in the future. Finally, we could not find any evidence of immediate concern of unsustainable biofuels being sold in New Zealand. We were pleased that the biofuel industry appeared to appreciate the importance of environmental sustainability, and that was part of people’s motivation for using biofuels. So we decided to recommend that the bill did not proceed.

I, like Jeanette Fitzsimons and so many others, was hopeful that biofuels could provide an answer to sourcing fossil fuels and cutting carbon emissions, but it seems that using sustainable biofuels is a bigger challenge than we first thought. I am still hopeful that biofuels made from waste products will become much more viable and useful in the future. I thank Jeanette Fitzsimons for this bill. It was an attempt to mitigate the environmental hazards of biofuels when we thought we would have an obligation in New Zealand, but as time has passed it has proved to be unnecessary. Thank you.

MOANA MACKEY (Labour) : What an extraordinarily bad speech from a member who claims to be environmentally friendly. What an extraordinary rewriting of history. I do not know whether Nicky Wagner actually believes what she just said, or whether she just decided to leave out quite a few key facts. And what an extraordinary contradiction in terms from a member who started off by saying that she did not support Labour’s Biofuel Bill because it did not have any sustainable standards in it, and that Jan Wright criticised the bill because of that. She left out the fact that, of course, that piece of work from Jan Wright was done before Labour made amendments to the bill to put sustainable standards in it. It was Labour’s bill that was amended to do that, alongside Jeanette Fitzsimons and Metiria Turei, who were on the Local Government and Environment Committee, which I chaired. But now she is saying: “Well, actually we do not need any sustainable standards in the legislation, because there are no biofuels in New Zealand.”

We on this side of the House actually think that it is a problem that the National Government has killed biofuel production in this country. We do not think it is good enough to say that we do not need environmental standards because they are so little and they will just self-regulate. When we see what happened with Cadbury’s and the use of palm oil, it was actually public protest that forced it to back down. It should not have to come to public protest to get good legislation in place to protect the environment and to support an industry that is going to be very important for the future of New Zealand, especially in terms of security of supply.

Labour will very proudly be supporting this piece of legislation, the Sustainable Biofuel Bill, which the National Government is going to vote down today. I want to take the member who has just resumed her seat back to what actually happened at the time. Labour put in place a biofuels obligation. For a long time the industry had been saying it was going to do it, and it did not happen. What we said was that over time, from 2008 to 2012, we would move from 0.5 percent of petrol and diesel sold on an energy equivalent basis up to 2.5 percent in 2012, and the industry would have to make sure that by 2012, 2.5 percent of the fuel it was selling was biofuel. We did this in a way that was very flexible. The industry could choose to do it through the petrol pumps, as Gull did and as Mobil then acted to do, or it could sell product directly to customers—for example, 100 percent bio-diesel—and meet its obligations that way. That was up to the industry.

It did two very important things. Firstly, it provided some certainty for the fledgling biofuel industry in New Zealand that there was going to be a market for its products. Based on that, the biofuel industry was able to invest in its companies because it knew the market would be there. That was a certainty that it had not had before. And do you know what was so great about it? It cost the Government nothing. No expensive subsidies—nothing. It was merely an obligation that provided certainty to a sector that needed that certainty, and the biofuels sector welcomed it.

When we chose what that level of obligation was going to be we were very cognisant of the amount of biofuel that was currently available in New Zealand. We did not want to force the oil companies to have to go offshore and bring in unsustainable biofuels. We knew that there was more than enough biofuel already in production in New Zealand, and we planned for production once the industry had that certainty to meet that 2.5 percent obligation. It could do it from sustainable sources in New Zealand.

The bill went to the Local Government and Environment Committee, and the Green Party quite rightly raised that we should do some work on sustainability standards for the legislation. I was chairing the Local Government and Environment Committee at that time, and I can tell you that we worked incredibly hard, both in the committee and outside the committee, with the Minister of Energy and Resources at the time, David Parker, to come up with some sustainability standards that could go into the core legislation. The guts of it would be done in regulation, but what the submitters told us was that there was enough of a steer in primary legislation to make it clear what was going to be acceptable and what was not going to be acceptable, once those regulations were put in place. The principles of those sustainability standards were around the fact that they actually had to produce less greenhouse gas than fossil fuel. There is no point saying: “You can have a biofuel, and that’s great because it’s a biofuel.”, when in fact it emits more greenhouse gas emissions than petrol does, so we put in some clear sustainability standards around that. The second point was that we did not want it to compete with food production. We did not want, when food should have been going towards feeding people, those farmers suddenly realising they could make more money out of biofuels because of the massive subsidies in some countries overseas. So we made it clear, in terms of downstream effects as well, that we did not want to see food production impacted by this. The third one was around biodiversity and ensuring that we were not using biofuels that have actually contributed to a decrease in biodiversity around the world.

Do not underestimate how much work went into getting those standards to a point where the Green Party was comfortable with them, the Labour Party was comfortable with them, and the select committee was comfortable with them. A lot of work went into that legislation. I think it was actually very, very good legislation, and I really want to commend the officials who worked on that piece of legislation, because they were absolutely fantastic. They were enthusiastic about drafting these sustainability standards. They said to us: “This is doable. We can have the regulations for these in place by the middle of 2009. That is not a problem. You’ve given us enough of a steer that we know it can be done.” We knew then that all the biofuels that would be used in New Zealand would meet those sustainability standards. As I said before, there is more than enough feedstock in New Zealand to meet that obligation—be it ethanol, as a waste product of the dairy industry, or tallow, again from the agricultural industry—more than enough that was going on in New Zealand.

One of the oil companies, Mobil Oil, actually moved before the legislation came into place, because it saw that the writing was on the wall. It saw that there was a competitive advantage for it to get in there early and be able to say: “You know what? We got in there and we’re grabbing this with both hands. We’re not going to complain about it.” Mobil Oil started introducing ethanol into its petrol blends at its service stations. Some of the other oil companies, as I said before, indicated that they would probably just sell direct product to bulk customers, in order to meet their obligation that way. And it cost the taxpayers of New Zealand nothing—nothing. It was a simple way of getting some kind of scale in an industry that was fledgling, that was struggling to get on its feet, and that was very, very important to the future of New Zealand.

Then we had a change of Government, and what happened was that one of the very first pieces of legislation it repealed was the Biofuel Bill. What did National replace it with? At a time when there was no money, when it was slashing and burning and crying about how poor we were, it put in place a $36 million subsidy fund. So in place of what Labour was doing, which was free to the taxpayers of New Zealand, National put in a $36 million subsidy fund, which has been an absolute and utter failure—a total failure. It is not what the sector wanted. There has been no certainty for the sector. Because it is a year-by-year appropriation, the sector is not actually able to plan, because it does not know how much it is going to get. And, lo and behold, here we are with Minister Phil Heatley saying that the subsidy scheme is going. Basically, it is going because of low uptake. Well, the low uptake has been because it was a shambles from start to finish. It was not what the industry wanted. It is extraordinary that something was happening for free, then National wanted to put in subsidies in order to make it happen, and it did not work. So National repealed the legislation, and what was its reason for repealing that bill? Because there are not sustainability standard regulations yet. Well, there are not any at all now, and, by the way, there is also very little biofuel being produced in New Zealand, because of this Government’s complete inability to come up with any kind of coherent plan to ensure that the sector has the certainty that it needs to invest.

When Gerry Brownlee repealed that piece of legislation, a $10 million biofuel plant was mothballed on the basis of that decision, because it had thought the Government was going to provide it with that certainty. The plant had made investment decisions based on that, and Gerry Brownlee and National pulled the rug out from underneath it. That $10 million plant was mothballed, that gentleman lost money, and now we find ourselves in a situation where, finally, National has just admitted that it is not going to do anything about biofuels and that the subsidy scheme is going. For what there is, the National Party does not really care whether it is sustainable or not, so why do we need sustainability standards? But to stand up and try to argue that you are getting rid of a piece of legislation on environmental grounds is just so galling that it beggars belief—so galling that it beggars belief.

This is a good piece of legislation. When we have a Labour Government at the next election we will be acting on biofuels. We want them to be sustainable. We will be putting in place policy that actually supports the industry and does not undermine it and pay lip-service to it. I look forward to seeing this piece of legislation once again when we have a Labour Government, which takes its environmental commitments seriously and which takes its energy and security of supply commitments seriously. We will see these sustainable biofuel principles back.

It is a shame the bill is going to be voted down today, but can I please just implore National members: do not stand up and try to tell us that it is on environmental grounds that you are opposing this piece of legislation, because, frankly, it is painful to listen to. It is just embarrassing from members who claim to have environmental credibility, who claim to be Bluegreens. Please just be honest. This is actually about the fact that National does not think that the biofuel industry has any future in New Zealand and therefore is not prepared to support it.

MAGGIE BARRY (National—North Shore) : I rise to talk about the Sustainable Biofuel Bill and to debate it. Pain and embarrassment should be no strangers to my colleagues across the House; you should be well used to it by now. In doing some research on this bill I had a look at the history of it. Others have gone into it, in many ways. Labour passed the Biofuel Bill in 2008. We repealed it because it would bring uncertainty to consumers and push up the price of fuel. As members on the other side of the House do not like us bringing up environmental arguments, maybe they would look at the environmental arguments brought up by Dr Jan Wright in July 2010. The independent Parliamentary Commissioner for the Environment recommended that the bill should not proceed, because it was unworkable. That was fair. I read through the bill today. I agree with her entirely, and I think that some of the concerns that she raised about the unworkability of the bill will remain the reason why it will not get much further than this.

It has had a very patchy history and has been passed through many hands, the latest of which is in the name of its sponsor, Dr Kennedy Graham. He pointed out that there is a very low uptake of biofuels at the moment, 0.1 percent, and that single-minded goals do not always succeed. This bill will not succeed, because it just does not cut the mustard. It does not work, and it is not useful.

National is a party that does promote sustainable, clean technologies like biofuels and electric cars. I have driven one myself, for example—once we took off the road-user charges, that is. Our commitment to biofuel is part of a wider commitment, because we have a broader vision than the very narrow confines of the people who speak in favour of this bill. Biofuels must be sustainable through the existing provisions, but we do believe that this bill is unworkable and unnecessary, which is why we are speaking against it.

I think that using an unsustainable biofuel would ultimately harm a company’s environmental reputation. It is available in this country, it can be used, and it will be used, but it is not exactly something that needs to be done in the form that this bill provides. It is a flawed piece of legislation, which is why it has been batted about, backwards and forwards, for so long. There is not a whole lot more to be said, really. I take you back to what Dr Jan Wright said in her very well-researched piece of work that came through to the Local Government and Environment Committee, which apparently the people across the way were part of at that time, and remind them that biofuels are our oldest fuels. Since we have been burning wood and lighting tallow candles we have been using biofuels. Henry Ford’s original cars ran on ethanol made out of plants. These are not new and unusual things, but what must occur, if it is to be put through in a sustainable way, is a far better piece of well-thought legislation than this. It is poorly crafted and will not get us anywhere in a hurry.

I look at the dominance of petroleum and I do not see that anything much in this bill is going to encourage anybody to sway away from that. So, again, as I speak to this, the Sustainable Biofuel Bill, I hear what the others on the other side of the House have said, and I remain, as usual and often, unconvinced by their uncompelling arguments. Thank you.

GRANT ROBERTSON (Deputy Leader—Labour) : The commitment of National to the environment—I remember in my very first days in this House, in 2008, two of the first bills that the new National Government took on were to remove the biofuel obligation and to stop the renewable energy preference obligation. Two major issues of environmental policy, and the first thing National did was to get rid of them. We see National members stand up and hear them taking credit for things like renewable energy generation, when they opposed our target of 90 percent renewables, when we were in office. That was opposed by the National Party, and the blue-green rinse over there is trying to make a claim that they have got environmental credentials. That is ridiculous.

My colleague Moana Mackey traversed the history of this matter, and I think it is important, when we look at the report back from the Local Government and Environment Committee on the Sustainable Biofuel Bill, to note that it also decided to cover some of the history of biofuels in New Zealand. There is an interesting sentence on page 2 of the report: “[The committee was] advised that the likelihood of unsustainable biofuels being imported into New Zealand in the near future appears low, for three main reasons.” The first of these reasons is “there is a lack of demand for biofuels in the mainstream retail market and they are mainly used in niche markets, such as eco-tourism.”

Well, there is a reason for that. It is because the Government dismantled the obligation that would have helped establish the biofuels industry, and put in place a subsidy scheme that has been wholly unsuccessful—and, as Ms Mackey told us, it is now going to end—in actually helping to establish biofuels in this country. I want to go through some numbers in that regard. In the first year of operation of this grand $36 million scheme, around $300,000 was spent on the biofuels scheme. This increased enormously in the next year—up to $804,000—and up until the end of last year had got to another $417,000. So that is around about $1.5 million from the $36 million scheme.

In some reports I have been reading about this, great claim is made of the fact that at any one moment there have been up to six companies involved in the biofuels industry, sometimes three, and sometimes one. That is what the National Government has done to the biofuel industry in New Zealand—reduced it at various points in the last 3 years to one company being able to actually take up this scheme. The National Government has effectively destroyed the biofuels industry in New Zealand, and for members of National to stand up in this House today and say they are voting this bill down because of sustainability reasons is frankly ridiculous.

This bill is a very good bill, and added to the work that had been done in the previous Labour Government by David Parker and Jeanette Fitzsimons and others, we were moving to a position where biofuels could play a significant role in our fuel market. Yes, they should be sustainable biofuels. As Moana Mackey has said, there is plenty of evidence that domestic sources were going to be able to provide this. We do need sensible regulation around sustainable biofuels, as Moana Mackey said. There is no point in having a greater carbon impact than fossil fuels. Why would we make the conversion? But if we can make the conversion, if we can use domestic fuel sources, we should be doing that.

It is bizarre to be in this House tonight and hear the National members say that they are voting down this bill on the basis of environmental or sustainability reasons. It makes absolutely no sense, because the end result of National voting this bill down tonight and having repealed the biofuel obligation in its first few days means there are now no sustainability standards whatsoever for biofuels in New Zealand, and a dwindling biofuels industry. It simply makes no sense. It does not fit with the image and the brand that New Zealand wants to promote internationally for there to be a clean, green New Zealand that is at the cutting edge of new technologies.

The opportunity was there to help develop the sector. The goals were relatively modest, actually: to get ourselves to the point, after 5 years, that we would have a 2.5 percentage of biofuels within our fuels. That was actually a modest goal, but it was based on the fact that there was an industry wanting to get in behind that, wanting to do things to promote more sustainable fuels in New Zealand, wanting to decrease carbon emissions, and businesses that would invest. Then this National Government comes in, takes away that, puts in place a scheme that has been an unmitigated disaster, has brought no new players into the market, and has in fact systematically reduced those who were in the market, and now it is going to ditch the scheme and we will be left with a fairly much unregulated situation and no sustainability standards whatsoever.

The Green Party is to be congratulated on having brought this bill to the House. It was to build on some excellent work that had been done by the previous Labour Government to give us a more sustainable biofuels industry in New Zealand. I join with my colleague Moana Mackey in saying that a future Labour-led Government will encourage biofuels. There is a great deal of potential in sustainable biofuels from domestic sources in New Zealand. We should be exploiting that. But rather, we have a National Government that seems determined to destroy a sustainable biofuel industry with a pathetic grants scheme that is no longer going to exist and no real commitment to proper environmental standards, despite what Ms Wagner might have said.

RICHARD PROSSER (NZ First) : I rise to speak on the Sustainable Biofuel Bill on behalf of New Zealand First. New Zealand First opposes this bill, not because we are anti the environment, and not, in fact, because we disagree with the stated intention of the bill, but simply because we wish to illustrate the fact that the concept behind the bill is a simple nullity. New Zealand First does believe, and we do agree, that if we are going to use biofuels at all in New Zealand, then of course they should be sustainable. We do not, however, accept that this can be a possibility, especially if these biofuels are going to be imported.

The reasons that we hold the concept of biofuels being unsustainable are multifold. Essentially it comes down to the fact that any biofuels that we use, which we burn in place of fossil fuels, contain carbon and there are no free lunches in carbon-oxygen chemistry. Whether the source of carbon is a fossil fuel or whether it is a biofuel, in order to obtain an equivalent amount of energy in terms of, say, miles per gallon or kilowatts achieved through a generator, we need to break a certain number of carbon-oxygen bonds and remake new ones. If we are going to use a fuel that contains long-chain hydrocarbons, such as coal or heavy oil, then we will use proportionately a smaller amount of this particular material, as opposed to a biofuel that is generally lighter weight, say ethanol or methanol, but we will use more of it. In environmental terms, whether one accepts the concept of a carbon footprint and greenhouse gases or not, we cannot get away from the reality that in order to obtain a certain amount of energy we need to burn a certain amount of carbon, and the source of that carbon is largely irrelevant.

If we are going to import biofuels of any sort, be it palm oil, or ethanol that somebody else has made, obviously we have to put that fuel on a ship, and that ship has to be made out of steel, and the steel has to be made out of iron ore, which has to be mined somewhere and then refined. Well, the energy that goes into producing the steel to make that ship has to be taken into the equation. Also, we have to take into account the fact that that ship is going to run on marine diesel, and these things all have to be included. So, even if you look at a source that you can say comes from overseas and the fuel itself is being manufactured in a sustainable manner, we need to look at the entire big picture, and that big picture tells us that there is no way that we can take what should be ostensibly a low environmental impact fuel from overseas and import it to New Zealand without taking the extra energy that is required and the transportation into the equation. As I say, there are no free lunches in carbon-oxygen chemistry.

We agree with a lot of what the National Party says, but probably not for the same reasons. We do not oppose the concept of sustainable energy. We support the idea of a lower pollution footprint, certainly, for humanity. How this is best achieved, I think, can be determined by where we direct our energies. New Zealand First believes that biofuels are a nice idea, as some members on the Government side have said, but are probably not achievable. What I think we need to do is to look towards something that has a greater future, in terms of being an alternative to oil as a feedstock for energy for the Western World. There is a reality that change comes about in terms of human activity and industry quite often for reasons other than economic ones that are given at certain times. The Stone Age, for example, did not come to an end because we ran out of stone, and the steam age did not come to an end because we ran out of steam. The oil age will not come to an end because we have run out of oil. There is plenty of oil. It exists in different forms. There are economic arguments as to whether certain types of oil are economically extractable or not; as the world price of oil moves upwards we tend to find that alternative sources of that oil become more economic to recover. As I say, if we are going to use biofuels at all, yes, certainly we agree they should be sustainable, but this bill will focus on the use of biofuels as an alternative to putting energies into finding an alternative to oil itself, which biofuels do not do. There is one source of energy that is capable of replacing oil as a feedstock for humanity’s energy requirements, and that is hydrogen. Hydrogen, at the moment, is a long way off still, because we have to have the extraction technologies perfected, and we have to have storage and transportation perfected. But once those technologies are perfected, hydrogen will stand out as a possible replacement for oil.

The member on the Labour side mentioned that there are some industrial wastes that we currently produce in New Zealand that can be used to produce biofuels—and that is true. But these wastes are already being used for other purposes. Tallow, for example, is a valuable product that already has a market. Ethanol that is produced from whey by Fonterra is already being used. It is the source for vodka and for ready-to-drinks. It is being sold already; it is a useful product. When we look at the proportion of energy that can be extracted from, say, a source like ethanol, Fonterra, just for example, produces about a million litres of ethanol a month, whereas New Zealand car drivers and truck drivers use diesel and petrol at a rate of 10 million litres a day. The simple mathematical comparison between what we can produce in ethanol terms from whey, and what we need to consume in terms of petrol and diesel, means that using a source such as whey to produce ethanol is, at best, an exercise in tokenism. We feel that concentrating efforts on producing biofuels in this manner removes our focus and our energies away from what should be the long-term alternative source, which, in our view, is hydrogen. For those reasons, we are opposed to the passage of this bill. We support the concept behind it, but it is distracting from what needs to be the real agenda. Thank you.

GARETH HUGHES (Green) : Kia ora. Ngā mihi nui ki a koutou. Kia ora. I rise to support this important bill, the Sustainable Biofuel Bill, in the House, which is raising this important issue. I would like to acknowledge the drafter of the bill, Jeanette Fitzsimons, and my colleague Dr Kennedy Graham, who has progressed it through the select committee consideration. It is disappointing that we are not seeing this bill proceed through the House. I challenge some of the older members to see where we have actually seen this House think ahead, act proactively, and legislate in advance of a problem.

Hon Clayton Cosgrove: I think we’re all older than you, mate.

GARETH HUGHES: So often we have seen, under successive Governments, Mr Cosgrove, that legislation responds to problems that we have seen in our community. It is reacting to problems. Here was a classic opportunity for this Parliament to think proactively and to set sustainable standards before we had a problem. What we know now is that we are going to wait until the Government uses its regulation powers after there is a problem. So it is disappointing we are not doing that.

This bill would have set sustainable standards for biofuels and futureproofed our legislation, it would have given industry a leg to stand on, and it would have given industry what it craves most, which is certainty around the standards. There is, of course, a serious issue of the sustainability of biofuels globally. We are seeing the last of the tropical rainforests in South-east Asia cut down for palm oil, in part for biofuels. Of course, we are importing a great percentage of it—in fact, the world’s largest percentage of palm kernel expeller—for our massive dairy expansion as well. We are seeing even jatropha oil—marketed as a wonder biofuel, not competing with food product, and used by Air New Zealand—in fact, provoke conflict in Kenya. What we are seeing there is land that otherwise would be used for food production used for jatropha. It highlights the most important issue we see with biofuels globally, which is when there is a competition between the fuel tanks of the rich world and the bellies of the poor world, it is the fuel tanks of the rich world that win out in that conflict. We acknowledge that there is a serious issue globally, and we think we will see these issues in the future in New Zealand, if we actually see some more biofuel used in New Zealand.

Like Labour, we lament the low amount of biofuels we are seeing in New Zealand. This is not a reflection of biofuels; it is a reflection of the National Government’s policies, its focus, and its drive, which is not prioritising biofuels at all. In fact, it is promoting drilling, mining, and digging up the lignite in Southland to convert to diesel. These are the National Government’s answers to the big issues.

This bill was needed. Essentially, it set three standards for sustainability. It would have asked the Minister through Order in Council to set a sustainability standard. Three principles are enumerated in the bill. Principle 1, “Less greenhouse”, states: “sustainable biofuels emit significantly less greenhouse gas over their life cycle …”. Principle 2, “Food production”, states: “sustainable biofuels do not compete with food production and are not grown on land of high value for food production.” Thirdly and lastly, principle 3, “Biodiversity and land with high conservation value”, states: “the production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value.” So there is one definition of sustainable fuels and three principles to guide it. What we would have seen is some proactive, smart legislation coming out of this House, but instead in a retrograde step we are seeing the National Government just voting against it, which is highly disappointing and is going to see a problem in the future that we could have remedied in 2012.

The bill would also reinstate the legal framework for selling biofuels in New Zealand that did not reach the World Trade Organization obligations. It would not distinguish between imported and locally produced biofuels, but would require both to meet a sustainability standard. We would not be discriminating against foreign-imported biofuels; we just want a sustainability discrimination standard.

We would like to thank the submitters who went to the Local Government and Environment Committee, the Parliamentary Commissioner for the Environment, and the officials at the select committee. The select committee found four things in its report, which I would like to address. The first was that there was no immediate concern for sustainability issues around biofuels. The select committee wanted to leave it up to the industry to voluntarily ensure the standards of sustainability for its fuels. The National members I have heard tonight said that they are sure these companies would have this issue paramount in their minds and not use unsustainable biofuels. But that is not what we have seen overseas, that is not what we have seen in the European Union, and it is not what we have seen in America. The National members provided no evidence that it is going to be any different in New Zealand if we actually saw our biofuel promotion schemes working.

The second reason was the report of the Parliamentary Commissioner for the Environment. I would like to acknowledge the amount of work that went into it, but let us not take this report out of context. What we are talking about is a big report, and all the commissioner said was there was no credible cost-effective means of monitoring. It was not a damning report of the whole bill that meant it should be thrown out. We could have addressed it in the select committee; we could have amended it. But the fact is the main problem that the Parliamentary Commissioner’s report highlighted was that we are going to have a double standard. We are going to have sustainable biofuels, but how on earth are we going to have sustainability standards for fossil fuels? Because what we know is that this is the greatest strategic risk to our economy, but also to our planet. We know we are seeing a temperature rise of 0.8 degrees. We have got dire warnings coming from the world’s top scientist in relation to climate change, and the fact is that it highlights how unsustainable our current oil addiction is in New Zealand. So I note, when you look at this report, the one recommendation that National took out of this pretty substantial report was the one recommendation that we should get rid of the bill. What about all the other recommendations that we have seen in this report? Why were they not adopted by the Government? I think that is a key question that I have not heard any of the National members address tonight.

The third issue identified in the select committee report was the lack of immediate biofuel take-up in New Zealand. We have heard that it is less than 1 percent. The Government scrapped Labour’s scheme. The Government budgeted $36 million towards supporting biofuel production. What we have seen today is that there is less than $3 million in pick-up. This does not say much about biofuels, but it says a lot about the National Government and its promotion of it. What we have seen is the Government delay the fuel levy, so the market signal has been skewed towards consuming more petrol and diesel in New Zealand by its decisions.

The fourth point raised in the select committee report was that the Government already has, under the Energy (Fuels, Levies, and References) Act, the ability to set standards through regulations on fuels, including biofuels. We acknowledge that point, but the question to the Government is whether it has any plan to actually enforce some standards using these regulations it has in its power. Because it is not. It is not thinking proactively. It is stuck in the “drill it” mind-set, and all it wants to see is New Zealanders keep on consuming oil and gas, because it lines the pockets of a few companies that are delivering hardly any jobs, hardly any profits, and hardly any taxes, because there are so many exemptions. All the profits flow offshore.

So at a time when the greatest strategic risk to our economy is, in fact, our oil dependence, when our single greatest import is imported fossil fuels from overseas, when for every US$1 price rise in a barrel of oil we are seeing $40 million to $60 million wiped off our GDP—with a US$1 increase—and when we are seeing fuel prices now at the highest rate they have been in 4 years, this Government is not doing enough to promote biofuels. It is not promoting certainty in the industry by passing this bill and allowing biofuels sustainability. It also comes with a massive opportunity cost, because as the Parliamentary Commissioner for the Environment, the select committee, and even Minister Brownlee have identified, biofuels are a tremendously exciting opportunity for New Zealand. The biofuels industry believes it could supply 30 percent of the country’s transport fuel needs from biofuel—from dairy waste product, forestry product, used cooking oils, and New Zealand - grown canola. The Bioenergy Association believes this could be a $6 billion industry here.

We are pioneering the science around cellulosic ethanol, around algae of the second-generation biofuels. This is what we should be exporting overseas, but instead the Government is stuck in the “drill it, mine it, sell it, cut it” mind-set. It is the only plan it has for the economy, which is benefiting very few and is actually harming our economic prospects. So we can have sustainable biofuels in New Zealand, we can be delivering cleaner fuels, we can be delivering jobs for Kiwis, we can be reducing our strategic dependence on oil, and we can kick that addiction, but we are not going to do it with the current mind-set of the National Government. Kia ora.

PAUL GOLDSMITH (National) : I rise to speak on the Sustainable Biofuel Bill, and I must say I do find it very interesting that the last speaker, Gareth Hughes from the Greens, is worried about New Zealand’s dependence on imported oil and how dangerous this is. Yet most of his time was spent trying to stop us from actually increasing the flow of our own indigenous oil, because he will not allow anything to happen or any risk to be taken. So there is a bit of a contradiction there. The best way that we can get ourselves free from a dependence on foreign oil is to be able to drill for some of our own.

The reality is that I am certainly not hearing a clamour in my neighbourhood, or anywhere I go, for more biofuels. I am not finding people running up to me on the street saying: “Where are more biofuels?”. Interestingly, I think there was a grand total of 10 people who queued up to submit on this Sustainable Biofuel Bill, so again, I do not think this is the No. 1 top issue on people’s minds. I think that the No. 1 issue on people’s minds is actually trying to make ends meet in difficult times, and trying to make ends meet in difficult times is about trying to make sure that the fuel bills are as low as they can be. That is why I am not surprised there is not a great deal of enthusiasm for well-meaning and well-intentioned schemes that ultimately put up the cost of petrol.

People want to get from A to B in the cheapest way possible. They want to get on with their lives and make a living, get their children to where they need to go, and run their businesses in the most efficient manner, and that is what we are focused on, rather than the priorities of the Greens in this regard. I am not surprised either that there has not been much enthusiasm for the Biodiesel Grants Scheme, again, because I do not think the public is clamouring for what we are talking about here. So I think it is very sensible that the Local Government and Environment Committee recommended that we do not proceed with this bill.

The debate involves quite a lot of hyperbole. I think Mr Graham referred to genocide. I think that might be a bit over the top with what we are dealing with here, but what the biofuel industry does demonstrate to me, I think, is a classic example of the law of unintended consequences through legislation’s good intentions. Trying to introduce biofuels and reduce carbon emissions has led to all sorts of problems all around the world, raising the price of grain, and leading to starvation.

What surprises me is that the solution that is proffered here is just a slightly cleverer new subsidy or set of interventions or distortions in the market, so somehow we will be able to get around it by ever more clever regulation, which is missing the point entirely. When you start to subsidise and distort the economy in this way, by trying to encourage some group that the market does not recognise, then you inevitably lead to these unintended consequences and greater economic costs for everybody to bear. So I am not at all surprised that the result of the great subsidies for biofuels in the United States has been a rotten one, and an unhelpful one. So I think we need to be a lot more circumspect about how we go about these things. If it does not stack up to use tallow as a biofuel in an economic sense—

Moana Mackey: It does stack up.

PAUL GOLDSMITH: Well, if it does stack up, they will be using it, and there must be some other more useful thing to do with this product than—[Interruption] Thank you very much. I do not think I will take that advice, Minister Coleman. If it makes sense, the market will reward it, and I think that is the point we need to recognise.

I do not have any great faith in the ability of the Green Party to work out exactly what people want in this area of biofuels. I think it would be far better placed to rely on what people want, and they want to get from A to B in their cars as cheaply as possible. I think that what we are doing here in our support for the existing provisions of the Energy (Fuels, Levies, and References) Act, which allow regulations to be set up if there was a great enthusiasm for biofuel, is something I am very comfortable with, and I am very comfortable with the regulations we have got in place.

I would not be at all surprised if, further down the line, there was a genuinely effective biofuel that was cheaper than the alternatives. Then it will take off, but I do not think this bill, in its attempt to try to perfect a distortion in the market, will solve any of the problems. So I am afraid I will have to oppose this bill.

Hon RUTH DYSON (Labour—Port Hills) : It has just become blindingly obvious to me why, when that member who has just resumed his seat, Paul Goldsmith, paraded up and down the streets of Epsom, saying “Please don’t vote for me; vote for John Banks.”, he had such a huge ability to persuade people. I think that would have been a very easy request when he said: “Don’t vote for me.” That speech has just confirmed the people of Epsom’s correctness in choosing that as an option. That was an extraordinary speech—really extraordinary. I am not quite sure what the member stands for or against; neither was clear from his speech. Does the member support sustainability? I think that is probably a no. Does he support the use of biofuels? Not clear, either. This is not a trick question, but listen to it carefully: does he support his own Government’s subsidy on biofuels? Oh, no, he is going to consider that. He is seeking advice from “The Maestro”, Jonathan Coleman, on that very point. Could I recommend that you ignore it? Like the rest of his colleagues do, ignore it.

I was very pleased, however, to see that member take a call, because I thought that National had given up. It put poor old Nicky Wagner and Maggie Barry up, and they really had to work hard to justify to their former so-called blue-green constituency how they could possibly be voting against sustainable biofuels legislation. How could they do that? Just amazing. Well, I am looking forward to the next Bluegreens conference, where they will be explaining it to the National Party members up and down the country who I know are saying “They are voting against what?”. They are truly voting against the Sustainable Biofuel Bill on the grounds of sustainability. Well, work that one out. I have listened to all those members’ speeches tonight. I have listened to all their speeches, and what the member who spoke earlier from the Green Party, Gareth Hughes, said is absolutely right. They are voting against it because it is a Green Party bill, not because they have any principles or values or any integrity in their voting. They are just voting against it because they could not bear to see a Green Party bill progress.

Well, I think we should be a little more mature in this Parliament. I think we should vote for bills if we think they are good and vote against them if we think they are bad, regardless of which party is introducing them. We have had MMP in this Parliament for quite a long time, and I would have thought that might be one of the lessons that could be learnt from our new voting system. Talking about MMP, I want to acknowledge the former co-leader of the Green Party Jeanette Fitzsimons and say what a huge contribution she made, clearly, not to progressing this issue but to getting the issue on the table in Parliament and arousing a huge amount of debate. My colleague Moana Mackey, who gave the most sensible contribution amongst the rabble from National, and was followed closely after by Grant Robertson and Gareth Hughes—thank goodness, some sense during this debate—outlined very clearly the issues that were raised during our introduction as a Labour-led Government of the biofuels issue, the contribution that Jeanette Fitzsimons made, the debate that happened at the select committee, and the changes that were made. Metiria Turei eventually became the lead spokesperson, I think, on that issue, and now Kennedy Graham has picked it up, so it has been around Parliament for a long time.

I suppose it is really quite odd to think that after all that thinking, all the contributions from the submitters, and the work that the Parliamentary Commissioner for the Environment did, and after the officials put in hours and hours of work to support a sustainable biofuels industry in New Zealand, here we are on Wednesday night in Parliament and National, ACT, and Peter Dunne, I suppose—and I do not know about the Māori Party; I have not heard its contribution yet—are going to vote it down. What is it about a sustainable biofuels industry in New Zealand that we do not want? I do not understand it.

Paul Goldsmith: We don’t want the price.

Hon RUTH DYSON: The member who did not want anyone to vote for him made an interjection. Fortunately, I did not hear it. I am really relieved, actually, that I did not. [Interruption] No, it is a he. It is whatever his name is, whom John Banks beat. It is the young man who wrote John Banks’ biography, then stood against him and asked people not to vote for him.

The biofuels industry itself has told us that it could provide us, as a nation, with 30 percent of our fuel needs. I think that sounds quite good. I think that that is something that most New Zealanders would aspire to. Most New Zealanders do not like our reliance on imported fuel, and we particularly do not like the price. What is it about New Zealand jobs that the National Party does not like? We had a huge amount of interest and commitment from the biofuels industry, which has subsequently cost hundreds and hundreds of jobs because National pulled it. That is why the industry was not interested in contributing to this legislation at these last stages: because National had made it clear it was going to vote it down, whereas previously it had been active and involved and contributing. We know the way that the industry could change the sustainability of our economy. [Interruption] That is true. The National Party has lost one of its leading environmental thinkers and contributors, with the resignation of Nick Smith. I am not going to dwell on that, other than to say that on issues like this he would have been the sole voice in Cabinet speaking any sense, and, by the sound of the contributions this evening, the sole voice in the caucus speaking sense on this issue. If the National Party is serious about a future for New Zealand that is better than it currently is, it needs to have a plan. It needs to look to the future and ask what sort of country and society we want to have. A critical part of that has to be sustainability, and the biofuels issue needs to be addressed.

I think it was really petty politics, actually, that caused National to just dump so hard on the work that the Labour-led Government had done previously with the package that been worked on so hard. As we heard already from previous speakers, we know that we would have reduced our greenhouse emissions, we would have had a security in New Zealand from knowing that any biofuels that we did import would not be at the cost of food production—and that is really important—and that we would not have had any threats to our biodiversity. Those were the three critical issues that the Local Government and Environment Committee has looked at and that have been discussed with us tonight.

These principles, the sustainability principles, which are outlined in this legislation that is now championed by Kennedy Graham, were originally in Labour’s Energy (Fuels, Levies, and References) Amendment Act. That was the legislation that was not just repealed by National but repealed under urgency by National. It has done that far too often, under urgency, without any consideration or input from the public about an issue that could really help us in the future, and make us not just a more sustainable country but a more envied country internationally—and that is what we should aspire to. We would have had the 60 million - litre biodiesel plant in the Bay of Plenty. Is there anyone who currently lives in the Bay of Plenty who says “No, thank you very much. We have got plenty of work up here. We don’t want a sustainable industry with high-quality, high-value, well-paid jobs in our area. Please just leave us as we are.”? I do not think that is true. That 60 million - litre plant was pulled after the National Government dumped our legislation. The Bay of Plenty members of Parliament in this House should hang their heads in shame.

It is a total disgrace that that huge opportunity for New Zealand was lost because of the National Government’s action. We had two production plants in Auckland and Waharoa. Both of them had plans to expand, had gone public on their plans to expand their biofuel production, and now they have said: “Well, they’re canned. They’re put on the side.” Nicky Wagner thinks that is fine. She probably says, like Gerry Brownlee does about the housing crisis in Christchurch, “Let’s just leave it to the market.” This is what happens when you do not support an industry that could do so much better for us as New Zealanders. They just say: “Well, we’re not going to expand. We’re not going to build our plants.” This is a huge opportunity lost. That is because National has no plan for the future. Between Labour and the Greens I think we had a really tidy package. There was a huge amount of effort and work put into it. This legislation deserves to be supported.

LOUISE UPSTON (National—Taupō) : I was proud to be a member of the Local Government and Environment Committee, which considered this Sustainable Biofuel Bill, so I find quite offensive some of the comments that have been made from that side of the House suggesting that the select committee members from this side of the House were not interested in exploring the concepts of the bill. It is fair to say that this Government very clearly supports clean energy, clean technology, and renewable energy, focusing on electric cars. In my own electorate of Taupō, last year in the Clean Energy Centre we saw an expo that was showing really exciting opportunities for development both in terms of biofuels and in terms of electric cars. So I am more interested in examples from my own electorate than in words that that side are spouting without anything to back them up.

If you actually look at the submissions—and one of the submissions, clearly, was from the Parliamentary Commissioner for the Environment—there was, in general, support for the intent, but the difficulty was that the intent was not going to be delivered by what was being described in this bill. I want to give a couple of specific examples, including one of the submitters, the Bioenergy Association of New Zealand. This is a group that you would assume would support the bill. Right? You would think it would have an interest in it. Right? [Interruption] Listen to what I have got to say. Its main objection was that it did not want to create barriers to new biofuels industries that were competing with long-term industry. It did not want to see barriers for entry for new biofuels to be developed. Those are not my words; those are the words of one of the submitters. It is concerned about the fact that it cannot see new technologies. It wanted to see new technologies being developed. I am directly quoting. I am directly quoting.

It is quite interesting. If you look at other examples, you will see that Air New Zealand has a significant interest in showing that it is sustainable, that it is changing the way it practises, and that it is using new technologies in its business. This is what it said. It agrees with the principles, but it does not believe in the need to legislate, and it said that the way the bill is drafted is too prescriptive. So this is not necessarily about the intent, and it is not about sustainable biofuels; it is about the actual bill and whether or not it was going to be able to deliver the intended outcome.

I am very proud to be a Bluegreen. It is an incredibly important part of where this Government is going in terms of the balance between the environment and the economy. There are jobs being created in my electorate through clean energy, but we have to make sure that if we pass legislation it is good legislation. So the reason we are not able to support this is because it is actually not going to deliver the intent. The Parliamentary Commissioner for the Environment, whom I hold in very high regard, does not believe that this piece of legislation as it was drafted will deliver the intent. We took quite a lot of detail and time through the select committee deliberations, even to the extent of setting up a subcommittee to work on it further. We cannot support it.

  • Sitting suspended from 6 p.m. to 7.30 p.m.

ANDREW LITTLE (Labour) : It is a pleasure to be standing and speaking in support of the Sustainable Biofuel Bill. It is disappointing that, irrespective of the time that this bill has had to take to get to this point, it lacks the support of the Government. What is most disappointing is just how visionless and lacking in foresight the speeches from the Government members have been this afternoon and tonight. The thing is this: as somebody who comes from the capital of fossil fuels, and oil and gas, in Taranaki, and who has worked closely with many of the workers who work in that industry, and understanding the importance of that industry to our economy today, the truth is that our economy, like the world economy, is in transition. We are in transition because we have to be, moving from the oil-dominant, fossil fuel - dominant world to a world where our sources of energy are going to have to be renewable.

What this bill offered—or still offers, if there is any chance of a change of heart—is not only the chance of a source of energy of biofuels, but also a biofuels market that is sustainable, that is durable, and that has a long term. I do not think there is anybody who looks at this bill and the circumstances we are in at the moment and thinks it is perfect or that the solution that it offers up is perfect, but it is a start. It is a very important start—some might say a continuation, actually, of work that the previous Labour Government had started—to help us with that transition.

What is so disappointing is when you hear the speeches that say: “This won’t make a difference. We will just stick with what we’ve got. We don’t have to do anything.”, because we cannot continue to put our heads in the sand. We have to look out not 5 years, but 15, 20, 30-plus years, because that is going to be the future that those generations who come after us will have to face. We are failing in our responsibilities as today’s leaders—community leaders—if we are not looking forward and confronting those challenges, and preparing the way for the next generation to actually come up with some meaningful solutions. And this bill, addressing one of the most severe challenges of the modern world and the modern economy, which is about the future sources of fuels, is absolutely critical.

We are moving from the old economy. We are moving to the new economy. There are those who say: “Listen, we will never run out of oil.”, and it is probably true to say—almost certainly true to say—that there are plenty of oil deposits around the world, but the truth is they are getting harder and harder to exploit. The measure that is most important is the return on energy invested. The energy taken to exploit existing, predicted, or projected fossil fuel sources is going to be greater and greater, so that the real return is less.

What promoting and encouraging a market for biofuels does is start to provide us with the alternative. It starts to establish that market. It starts to create an environment in which investment is encouraged, promoted, and, ultimately, incentivised. That is the role of the Government. It is the Government that can use its power, its resources, its knowledge, and its information to look ahead multiple generations and to look ahead in the long term in a way that business, certainly big business, is being proven to be so incapable of doing. Business might be very good at looking at investment opportunities that will generate a return in the short term, but it is notoriously bad at looking at the extraordinary long-term investment horizons. The Government must play that role. When it comes to sources of energy, and when it comes to sources of fuel, then the Government has a critical role to play in that.

Labour has started. Labour started a very good programme with its biofuels programme and in supporting the biofuels industry. It played a role in starting and creating the opportunity to establish that market. This Government, so tragically and regrettably, shortly after it was elected took urgency to essentially scuttle that market. The prospect of investment in a new plant in the Bay of Plenty, a 60 million - litre biodiesel plant, is gone because this Government lacks the foresight and the vision to understand what those challenges will be in 20 or 30 years’ time.

We need to support that industry. As I say, this may not be the perfect solution, but it is a start. It is a start to getting that investment in place and a start to creating the industry and the jobs of the future, because that is fundamental too. Who wants, in 30 years’ time, when the next generation of leaders—young leaders and community leaders now—are grappling with the issue of sustainable sources of fuel, for them to look back and say that we had that opportunity? We had that opportunity, which the Labour Government took in its last term, and which was abandoned by this Government—the opportunity that this House has in 2012 to meet that challenge. They will look back on that in 30 years’ time and say that we had that opportunity and we let them down. Well, that is not a result that I particularly relish living with. If we are responsible, and if we are forward thinking, then we will accept that actually this bill offers something very important to the future of New Zealand.

So I celebrate and I acknowledge the great work of those who have started this legislation: Jeanette Fitzsimons, the Green Party members, and the Labour members who have sat on the Local Government and Environment Committee and heard the submissions, including from the Parliamentary Commissioner for the Environment, who raised issues of practicality, not issues of principle. I acknowledge and celebrate the work of those people and say at the very least let us respect that, and let us look seriously at the measures that this bill puts up, which are about encouraging a step towards the future. It is a future that will get harder and harder if we fail to grapple with these problems.

We need to be honest with those who are in the fossil fuels exploitation industry today—not only those who are making the investments, who are looking for a return straight away and a return ongoing for many years, but also those who are working in the industry—and start saying that we need to make this change. It is legislation like this that paves the way, that assists us, and that meets that important challenge for the future. So we need to support, and take whatever steps we can to support, the emerging biofuel industry.

The real impact of the abdication that this Government has taken in relation to this industry, the abandonment of its support for it, and its refusal to pass this legislation is that it misses the opportunity for a whole new area of investment that is so crucial to this country and to its future. We could be world leaders.

Hon Ruth Dyson: Acknowledge the Bay of Plenty.

ANDREW LITTLE: The Bay of Plenty, which has a representative in this House, could be a leader.

Hon Ruth Dyson: What does Simon Bridges say about it?

ANDREW LITTLE: What does Simon Bridges say? The rising star of the National Party has more at stake in this legislation than just about anyone, but he is willing to sit with his colleagues and abandon it. That is the shame of it and that is the disappointment of it. It is so disappointing. We will look back on this moment and Mr Bridges will look back on this moment some years hence, and he will kick himself—he will possibly do even more than that—and say he should have done more. The challenge for him is whether he will stare in the face those who will be let down by this, and those who will be deprived or short-changed by our failure to pass this legislation. Will he stand and look them in the face and say: “I could have done better; I should have done better.”?

It is not too late. It is not too late for the members on that side of the House to say that this is worthwhile. It is a drop in the ocean, but it is a start as we pave our way to a less fossil fuel - dominant world, which is so important.

A party vote was called for on the question, That the Sustainable Biofuel Bill be now read a second time.

Ayes 51 New Zealand Labour 34; Green Party 13; Māori Party 3; Mana 1.
Noes 69 New Zealand National 59; New Zealand First 8; ACT New Zealand 1; United Future 1.
Motion not agreed to.