A requirement for biofuel to be mixed with petrol and diesel has been dropped. Photo / Sotheany Ream

A requirement for biofuel to be mixed with petrol and diesel has been dropped. Photo / Sotheany Ream

A requirement for oil companies to mix petrol and diesel with biofuel has been dropped from law.

The Energy (Fuels, Levies and References) Biofuel Obligation Repeal Bill passed during urgency in Parliament this afternoon by a vote of 62 to 59.

National and ACT supported the legislation, which was opposed by all other parties.

It repeals obligations placed on oil companies to put biofuels into petrol and diesel, starting with 0.5 per cent and reaching a 2.5 per cent in 2012.

The obligation was introduced by the previous government to reduce New Zealand's greenhouse gas emissions.

Biodiesel Oils New Zealand managing director Tom McNicholl has described the move as "devastating". The company invested $10 million over the last eight years in research and equipment.

The company would stop work on a new plant in Waharoa in the Waikato, meaning 22-plus jobs would not be created. It had already built a plant in East Tamaki which employed 24 staff and that would be mothballed.

Energy Minister Gerry Brownlee sat through hours of criticism from the Opposition for not having read Mr McNicholl's letter when first sent to him or as part of the file on the bill.

Mr Brownlee said he did not get the letter but had read it now. However, Labour's Trevor Mallard said when bills were rushed through under urgency processes were more important.

"This minister (came) into the house with a piece of legislation that wrecks a family and wrecks an industry and tell us he hasn't even read their letter."

Mr Brownlee said an offer to discuss the matter with Mr McNicholl was rejected.

He said reaction to the decision and legislation to drop the requirement was hysterical and did agree dropping the obligations would hurt the industry. The Government was working on a tax incentive regime to encourage the production of sustainable biofuels in New Zealand.

"I think the biofuels industry in New Zealand has a very bright future indeed. What my party doesn't accept ... is that the only way New Zealanders will embrace biofuels is if the government insists that they must become the compulsory customers of certain companies inside New Zealand."