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On the road with biofuels
An increasing proportion of cleaner-burning biofuels is to be sold here in New Zealand to cut greenhouse gas emissions and increase our energy security.
The Biofuels Sales Obligation announced by Prime Minister Helen Clark in her Speech to Parliament on 13 February, sets clear targets for renewable energy in the sale of fuel – by 2012 biofuels will make up 3.4 percent of the energy content of all diesel and petrol sold in New Zealand.
And this is just a starting point, explains Energy and Climate Change Minister David Parker. “Once the infrastructure is in place, biofuels are expected to make up a greater proportion of our transport fuel than these mandated minimum levels.”
This feature backgrounds the obligation and what it means to the industry and consumers, now and moving ahead. Plus we look at the biofuels most likely to be used – and produced – here.
From obligation into action
“The Biofuels Sales Obligation will see biofuels form part of New Zealand’s fuel mix as soon as is practically possible,” says Ministry of Transport’s Group Manager Environment David Crawford.
The Ministry of Economic Development (MED) will be developing the new legislation required for the Biofuels Sales Obligation. The MED will also be responsible for implementing the obligation and providing for the regulation of biofuels quality.
Assuming the legislation is ready in time, from 1 April 2008, companies importing petrol or diesel into New Zealand, either direct from overseas, or via the refinery, will be required to sell biofuels as a proportion of the energy content of their total annual sales. This will increase year-on-year to meet the Sales Obligation target of 3.4 percent by 2012.
‘A significant change for the oil industry’
Oil companies will be able to either buy locally manufactured biofuels or import them to meet their sales obligation. As New Zealand has significant low-cost resources for biofuel production, such as tallow, domestic biofuel production is expected to meet most of the obligation.
“The introduction of the Biofuels Sales Obligation is a significant change for the oil industry. The industry needs to be mindful of offering a competitively priced product or uptake will be low from the motorist and this will affect the company’s ability to meet obligations,” says Gull New Zealand’s General Manager Dave Bodger.
“The motorist can expect several new fuels to be available at the pump and these are likely to be brand specific.
“These new fuels will potentially change over time as oil companies look to respond to the motorist’s demand and the need to meet the obligation.”
The biofuels we’ll be buying
The biofuels most likely to be sold in New Zealand in the short term – the ‘first generation’ – are:
- biodiesel as a blend with diesel
- bioethanol as a blend with petrol.
Second generation biofuels are likely to be introduced further down the track. These are currently the subject of extensive research and development to create new production processes that give different products that are closer to mineral fuels. These may use new feedstock sources such as biomass from trees, grasses, agricultural plant wastes, straw and algae.
Biodiesel
Biodiesel is often blended with mineral diesel and blends of up to 5 percent in mineral diesel are suitable for use in diesel engines without modification. Higher blends may be used in dedicated fleets.
The most likely source for biodiesel in New Zealand is tallow, the animal fat by-product produced at meat processing facilities. We currently produce enough tallow to deliver around 5 percent of our current diesel fuel needs, if it was converted to biodiesel.
There are a number of companies investigating the production of biodiesel in New Zealand, from tallow and other products.
Bioethanol
The most likely sources for bioethanol in New Zealand are whey, a by-product of the milk processing industry, and maize (corn).
Bioethanol is likely to be introduced as a low-level blend in some petrol, likely between 3 percent and the current maximum allowed level of 10 percent.
On the road – quality conscious
Modifications are not necessary for petrol or diesel vehicles using low-level biofuels that meet the relevant quality standards. Only biofuels that meet these quality standards will be able to be used to meet the Biofuels Sales Obligation.
Until biofuel quality regulations are in place, EECA has developed a biofuel label to inform consumers about sales of biofuels that meet quality specifications. Only companies that make biofuels that meet relevant quality specifications will be issued the label. At this stage no companies have the label, although some are in the process of applying for it.
“The message to consumers for now is to only buy biofuels from established fuel retailers or independent producers if they have the EECA biofuel label displayed. Biofuels that don’t meet quality specifications may result in engine damage,” says EECA’s Elizabeth Yeaman.
On the road – the costs
It’s hard to predict how the obligation might influence prices at the pump. The relative price of ordinary petrol and diesel and of biofuels will vary depending on the price of oil, the cost of producing biofuels and the tax regime applied to them.
Ultimately it will be up to fuel producers and retailers to set the price of biofuel blends at the pump.
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From 2008, the Biofuels Sales Obligation will require oil companies that sell petrol or diesel into New Zealand to sell biofuels as well. These companies are currently BP, Caltex, Gull, Mobil and Shell.