All in all, a daunting concatenation of commercial risks faces any potential investor in a biorefinery reliant on the harvest from the existing plantation forest estate. Can we look upon New Zealand's pine forests as inexhaustible potential sources of carbon-neutral transport fuels?

To do so would certainly be in the spirit of a report issued by Greenpeace this week, urging us to ride the wave of green energy and asserting that within 22 years New Zealand could be "virtually oil free" for road transport, savings billions of dollars a year in oil imports.

Unfortunately the report is perfunctory on this matter.

"With existing skills and technology it is technically and economically feasible to convert woody biomass into 90 petajoules per annum of liquid fuels by 2035," it says.


Current consumption of transport fuels is a little over 200PJ, of which just 1 per cent is biofuels.

"It has been calculated that these liquid fuels can be produced at costs cheaper than petroleum products before 2035."

Who did that calculation the Greenpeace report does not say.

One body which has looked into the potential for bioenergy from New Zealand's plantation forests is the Crown research institute Scion.

Before looking at what it has to say two points need to be made, however.

One is that any calculations about the economic feasibility of this option have a lot of moving parts:

How big is the available resource, and at what opportunity cost?

What will happen to oil prices, log prices, carbon prices and exchange rates over the decades ahead?

And is enough capital with the right combination of risk appetite and patience likely to be available?

The second point to bear in mind is that the technology in this space is advancing all the time.

To take one example, researchers at Berkeley in California reported in the scientific journal Nature last November on discoveries which improve a 100-year-old fermentation process, employed on an industrial scale in both world wars, and add some new catalysts, converting carbohydrates into petrol, diesel and jet fuel at yields close to their theoretical maxima.

That includes carbohydrates derived from ligno-cellulosic (wood) biomass.

The point is that economic modelling based on ethanol, which has its limitations as a fuel, may significantly underestimate the potential yields and value added.

Scion's three-year study into bioenergy options for New Zealand - your tax dollars at work - identified about 1.5 million hectares of marginal land which could be planted in trees for biofuels production at an acceptable opportunity cost, that is, alternatives foregone.

That would almost double the size of the plantation forest estate, but because of the time it takes trees to grow it would not contribute to energy supply for at least 25 years.

So Scion also looked at the potential contribution from the existing plantation forest estate.

It turns out that to make a substantial dent into national greenhouse gas emissions and oil imports would require committing most of the log harvest, half of which is exported as raw logs now and which is set to grow as the "wall of wood" comes on stream in the 2020s.

Throw in wood wastes, pulp logs (it notes a lack of investment in the country's two chemical pulp mills), wood chip exports, the wood currently going into medium density fibreboard and particle board, and sawn timber exports and Scion can see 40 million cubic metres per annum being potentially available for biofuel production by 2030.

That could deliver about 3 billion litres of transport fuels per annum by 2030 or around a third of projected demand.

Clearly, within that there is an opportunity cost curve - how much a biorefinery would have to pay to compete with alternative markets for its feedstock.

"In short there is sufficient volume of wood potentially available from New Zealand's existing forest estate to meet a substantial part of our road transport fuel demand from biomass to liquid fuels processing," it concludes.

"However this material is available at the expense of other industries, notably pulp and paper processing and log exports."

But it adds that "given the questions over the long-term viability of the pulp industry in New Zealand, the emergence of a bioenergy option for this feedstock should be regarded as an opportunity rather than a threat".

The trade statistics show that last year New Zealand earned $3.75 billion from forestry exports, while spending $8.35 billion on imports of oil and refined petroleum products.

The problem is not a lack of natural capital - the physical resource - but financial capital. Because biorefineries would need serious capital investments, running into billions of dollars.

Anyone contemplating such an investment faces a lot of risks. It is not just the opportunity cost of its raw material. What will happen to oil prices over the next 20 years?

Prices at the pump have doubled over the past 10 years, despite the exchange rate moving strongly in an import-friendly direction. And even a cursory look at where the global oil industry is having to go in search of new supply tells us prices will continue to climb: Central Asia (as far from the open sea as you can get), fracking oil shales (how long before there is a public health disaster?), mining Canadian tar sands, deeper and deeper offshore fields (with the risk of more Deepwater Horizon events) and the Arctic (oil rigs among ice floes?).

But while the trend direction for oil prices may be clearly upward, the rate of increase is not.

Another unknown is carbon prices.

Any remotely credible global response to climate change will have to include pricing carbon emissions.

But anyone in New Zealand who invested on the basis of official estimates of a $25 carbon price is currently facing a market in which emitters can (for the time being) buy imported carbon for about 25c a tonne.

And the volatility of the exchange rate is well known.

All in all, a daunting concatenation of commercial risks faces any potential investor in a biorefinery reliant on the harvest from the existing plantation forest estate.

It would be a struggle to muster enough private capital with a hearty enough risk appetite.

And would a future government be able to step out of the long, dark shadow of Think Big to put that much public money at risk?

But the overarching message of the Greenpeace report is that the risks involved in business-as-usual thinking are greater still.