KEY POINTS:
A parliamentary select committee has watered down the Government's biofuels legislation, partly due to fears the planned 3.4 per cent sales obligation could damage the environment.
However, National Party members on the committee still oppose the bill, which they say will impose $240 million of costs on consumers
each year and potentially harm the environment.
The Biofuel Bill, as it was introduced to Parliament, requires oil companies to sell a minimum percentage of biofuels from July 1.
The mandatory requirement was set to start at 0.53 per cent of energy rising to 3.4 per cent in 2012.
However, Parliament's environment select committee which reported back on the bill today, recommended the obligation be cut to 2.5 per cent by 2012.
When the target was set at 3.4 per cent it was under the expectation New Zealand would be able to produce maize ethanol before 2012, but that no longer seemed likely.
The higher target would be hard for oil companies to meet, would impose high costs on motorists and could have forced the import of unsustainably produced biofuels undercutting the bill's aim of reducing emissions.
In a submission earlier this year Parliamentary Commissioner for the Environment Jan Wright called for the bill to be scrapped saying it could harm New Zealand's clean green reputation.
Dr Wright said the carbon footprint of many foreign-produced biofuels, when their whole lifecycle was taken into account, were worse than fossil fuels and they could also lead to deforestation to free up land and supplant food production, pushing up food prices for the world's poor.
The bill, as introduced, does not explicitly require biofuels to meet a sustainability standard.
The committee recommended three sustainability principles be inserted:
* Biofuels must have a lower life-cyle carbon footprint than fossil fuels;
* they must not compete with food production;
* their production must not reduce biodiversity or undercut conservation values.
The committee recommended the bill also require the Energy Minister to set out by order in council a sustainability criteria for qualifying biofuels that included:
* A methodology to assess life-cycle greenhouse gas emissions;
* a directive that they have at least 35 per cent less emissions than fossil fuels;
* a methodology for assessing the impact on food production.
National's environment spokesman Nick Smith said the public would only be prepared to accept the cost - estimated at between 1.5c and 8c a litre on petrol - if there were "real environmental benefits".
But he said the overwhelming evidence was the bill could do more harm than good especially if it was introduced before sustainability standards were in place. He expected that to take a year.
"Compelling New Zealanders from October 1 to buy biofuels which can quite legally be produced by destroying tropical rainforest, take food from the world's poorest and which take more emissions to produce than they save is madness."
Dr Smith said discrepancies in the tax treatment which favoured bio-ethanol over biodiesel also needed to be cleared up or there would be no investment in the latter.
- NZPA