Fuel mandate costs avoided
The Motor Industry Association (MIA) is “relieved” the government’s mandatory biofuels sales obligation will no longer be implemented.
Chief executive David Crawford says biofuels will always be an option for some vehicle users, especially those in the heavy sector, as the country moves to a lower carbon dioxide (CO2) intensive transport system.
“However, a mandatory obligation with the stated purpose of reducing CO2 emissions isn’t needed as the transition to an ever-increasing electrified fleet is reducing emissions at a fast rate,” he adds.
“Sales of vehicles with some form of electrification to fully electric vehicles grew from 14 per cent in 2021 to 25 per cent in 2022.”
The increase in registrations of electrified vehicles last year led to a big reduction in the average sales-weighted CO2 emissions rate from the light-vehicle fleet dropping from 187.1 grams of CO2 per kilometre in 2021 to 167gCO2/km in 2022. That represented a 10.7 per cent drop in one year – the largest reduction “by far” since the MIA started tracking reductions in CO2 emissions back in 2006.
Crawford, pictured, says: “Biofuels are expensive to produce and the MIA welcomes the government’s decision to not proceed with a mandatory biofuel sales obligation. This will help to keep motoring costs down at a time when New Zealand is facing strong inflationary pressures across our economy.”
About biofuels & mandate
The Ministry of Transport’s website explains “biofuel” as a generic term for fuels that can be produced from or are made up of a renewable material of plant or animal origin. They are often substitutes or partial substitutes for fossil or mineral fuels.
New Zealand uses very little biofuels in transport and its usage has declined because they cost more than fossil fuels.
More than 60 countries have implemented biofuels mandates because they are a proven way to increase the uptake of biofuels and reduce transport emissions.
In January 2021, the government agreed – in principle – to implement a biofuels mandate as part of a range of measures to reduce CO2 emissions from transport to help New Zealand hit its 2050 carbon-neutral target.
At that time, officials were instructed to review the 2008 Biofuel Sales Obligation for reinstatement. It was repealed in 2008 before it came into effect by the fifth National government.
This mandate would have obliged suppliers of petrol or diesel in New Zealand to also supply a minimum proportion of biofuels. The biofuel proportion was initially 0.5 per cent of a liable supplier’s sales, rising to 2.5 per cent over four years.
The main current policy incentives for biofuels in New Zealand are the emissions trading scheme for which they are zero-rated, the excise tax exemption for bioethanol, and some research and development support to research institutions, such as Scion.
The most common biofuels are bioethanol, which can be blended with petrol for use in cars, and biodiesel, which can be blended with diesel.
Some of the advanced biofuels don’t need to be blended with fossil fuels to be used in conventional vehicles and fuel infrastructure because they are chemically almost identical to fossil fuels. These are “drop-in” biofuels.
When fossil fuels are used in internal combustion engines, they release all their ancient underground stored carbon into the atmosphere in the form of CO2. But when biofuels replace, some or all the fossil fuels, the net amount of CO2 emitted reduces.
When the biomass the fuels are made from grows, they absorb CO2. Roughly the same amount of CO2 is released when the fuels are burnt. This means the lifecycle emissions of sustainable biofuels are typically much lower than fossil fuels.
Biofuels are carbon neutral apart from emissions caused from producing and transporting them.
New Zealand’s use of biofuels is low by international standards and the country has developed little production capacity. Liquid biofuels make up less than 0.1 per cent of our total liquid-fuel sales compared to about four per cent globally.
