Rotorua research institute Scion has struck a deal it says could have all New Zealand vehicles running on home-grown and manufactured biofuels in future.
Scion and AgResearch, another New Zealand Crown Research Institute, have developed a research programme with the United States-based Diversa Corporation to co-ordinate new biofuel technology developments.
%The trio have already completed a preliminary study in Rotorua and San Diego, where Diversa is headquartered, investigating the potential for applying enzymes to New Zealand-grown tree stocks to convert the wood into sugars.
That could then be fermented and refined into ethanol and other fuel products.
Positive results from the preliminary study prompted the organisations to further assess the technology and economics of setting up a transportation biofuel industry in New Zealand, Scion's chief executive Tom Richardson said.
More than half New Zealand's energy use is fossil fuel based, with the country consuming more than three billion litres of petrol annually.
The Ministry of Climate Change is finalising New Zealand's strategies to respond to climate change, decrease carbon emissions and develop and produce secure, clean energy at affordable prices.
Scion and its partners believe New Zealand's forestry industry has the potential to meet those goals.
Plantation forests make up 7 per cent of New Zealand's land mass.
Dr Richardson said Scion's expertise in forestry and forest products research would play a key role in the next phase.
"This particular project will look at how we might use some of this renewable resource to replace petrol in New Zealand cars," Dr Richardson said.
Diversa chief executive officer Edward Shonsey said New Zealand forests could be used to make ethanol and replace "a significant proportion" of imported petrol.
"This is one of the most exciting and profound projects I have ever been involved in," Mr Shonsey said.
"We are looking forward to ... [creating] new cocktails of enzymes to convert wood to ethanol cost-effectively," he added.
Scion embraces biofuel future
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