Members of New Zealand's fledgling biofuel manufacturing sector say there are severe risks to its viability.
Seven companies planning to supply biodiesel or ethanol have formed the Biofuel Manufacturers Association to deal with issues confronting the sector.
Spokesman Dickon Posnett said last night that the group was concernedconsumers did not fully understand issues threatening the industry.
Three main challenges biofuel manufacturers here faced were:
* The import of cheap biofuels from the United States. Mr Posnett said subsidised B99 fuels from the US had decimated the European biodiesel industry and become the focus of an international trade complaint.
The New Zealand group was concerned the Ministry of Economic Development was recommending relaxing proposed regulations for biofuel quality standards, specifically to allow entry for the US product.
* The quality and type of biofuels to be used by oil companies to satisfy the proposed sales obligations in New Zealand.
Research showed some biofuels did not improve greenhouse gas emissions levels, Mr Posnett said.
And the use of food crops for fuel had caused a dramatic price rise for grains and oils.
* Dealing with the proposed fuel duty differential between ethanol and biodiesel.
The group believes that with ethanol not subject to fuel duty and biodiesel taxed through the road user charge, oil companies would be encouraged to import sugar cane ethanol from Brazil for economic advantage at taxpayers' expense.
"Without a level playing field being built into the proposed legislation to address these issues, there is little chance of a sustainable, renewable fuels sector being established here."
New Zealand would also remain reliant on imports for its security of fuel supply.
Initial members of the group are Argent Energy New Zealand, Biodiesel New Zealand, Biodiesel Oils NZ, Ecodiesel, Biodiesel Australasia, Flo-Dry Engineering and Aquaflow Bionomic.
