Key Points:

Purpose-grown forests to produce biofuels could meet all New Zealand's transport fuel requirements within 40 years, according to a study by the Crown research institute Scion.

Chief executive Tom Richardson told the Herald yesterday that New Zealand was one of just a handful of places identified worldwide that was well placed to become carbon-neutral for transport, given advances in biofuel technology.

Dr Richardson said incentives for developing a biofuel industry out of forests included that New Zealand had plenty of suitable land and favourable tree-growing climate and soils.

New Zealand could be a world leader in the field and was already getting international attention because it could be self-sufficient given the ratio of vehicles to land available.

Dr Richardson said the study had found that if New Zealand were to start planting such purpose-grown forests and introduce a programme of managed harvesting and replanting, the resulting biomass could eventually be used to meet all the country's projected future needs for transport fuels and heat.

That could be achieved without threatening the important agricultural industry, as close to one million hectares of steep, marginal land had been identified as potentially available, he said.

"Unlike other biofuels it does not compromise food supplies. There is also the benefit that the trees would be beneficial in helping prevent erosion on the steep land."

Ancillary benefits included flood mitigation, improved water quality and carbon sequestration.

Dr Richardson said such a scheme would require a doubling of the current forest estate, which was now 1.8 million hectares, a conservative estimate which assumed no further improvements in technology.

He said about 2.5 million hectares of purpose-grown forests would have to be eventually grown and earmarked for biofuels to produce 110,000ha a year for harvesting to sustain such an industry.

Establishing such a forest resource would take about 25 years at an estimated cost of around $2-3 billion a year.

But some of the establishment costs and early cash flows could be offset by the emissions trading scheme, he said.

More investment in infrastructure such as roading would also be needed.

Dr Richardson said the country's vehicle fleet would need to "move on" to run on biofuels but that was necessary anyway and made more feasible as technology developed,

"New Zealand could be a world leader in transforming the vehicle fleet."

He said the technology for creating biofuels from trees such as pine and eucalyptus was being developed in New Zealand and there was private sector investment interest.

The findings were in a Bioenergy Options report, a collaboration between Scion, the National Institute of Water and Atmospheric Research and CRL Energy, with input from Landcare Research, Crop & Food Research, Waste Solutions and Process Developments.

Even the most conservative estimates showed NZ had at least 830,000ha of steep, erodable, low-producing grass and shrub lands that could be cost-effectively used for forestry.

Dr Richardson said purpose-grown energy forests of short, medium and long rotation could be established using only 37 per cent of the 8.7 million hectares of medium- and low-quality land available.

Another recent feasibility study has shown bioethanol produced from wood and wood residues is a feasible option for transport biofuels despite previous concerns that it was too expensive and too difficult to use that resource.

Dr Richardson said the studies highlighted the important role forestry and biomass could play in helping New Zealand meet the Government's targets of sustainable, carbon-neutral energy.

"The Government seeks carbon neutrality in the electricity sector by 2025, in the stationary energy sector by 2030 and in the transport sector by 2040," he said.

The Bioenergy Options report provided a viable plan of action and timeline for achieving those goals, particularly in heat and transport fuels.