If sustainability settings for the Government's fuel-blending requirements aren't tailored correctly, the scheme could accidentally increase global emissions, Marc Daalder reports
The Government is looking at options to ensure the biofuels imported to meet its new biofuel mandate will actually reduce global emissions.
Under the mandate announced last year, a fraction of fuel sold in New Zealand will need to be biofuel to help reduce emissions. The scheme is slated to start on April 1, 2023 and will progressively increase the biofuel blend needed over the next decade.
The first few years of requirements are expected to be met with biofuel imported from overseas while domestic manufacturing capacity is stood up. However, a proactively-released Cabinet paper shows the Government is considering hard limits on imports of less environmentally sustainable biofuels, like ethanol sourced from maize or biodiesel from palm oil.
In particular, the Government is mooting a cap on the use of food- or feed-based biofuels, rather than fuel made from animal and plant waste. Food- and feed-based biofuels are purpose-grown for fuel, often displacing prior food production. The demand for food could mean that a forest somewhere else is cut down to make room for that displaced production.
The biofuel industry globally has had significant concerns raised around the indirect land use change that it causes by displacing other food crops which then leads to agricultural land being expanded into forestry areas or peatlands," Oxfam Aotearoa campaigns lead Alex Johnston told Newsroom.
"It is hard to quantify but there are studies showing that when you factor in the indirect land use change, the effects of biofuels are actually quite polluting."
This indirect land use change as a result of biofuel production is difficult to measure, but could mean that New Zealand's biofuel scheme actually leads to an increase in global emissions rather than a reduction.
Cabinet is looking at a rule where only half of the biofuel used to meet the requirements could be food- or feed-based, like the European Union introduced alongside its own biofuel mandate more than a decade ago.
A spokesperson for Energy and Resources Minister Megan Woods said final decisions had not yet been made on the criteria. A discussion document was being assembled which would go out for consultation in the middle of the year.
Johnston said the European Union's rules had come under criticism, in part because some crops with questionable environmental integrity weren't counted under the food- or feed-based categories. But he agreed that some type of limit on unsustainable biofuel feedstocks was needed.
"The mandates just apply a single target across the whole transport sector, which means that fuel wholesalers will look for the lowest cost option to try and meet that mandate, which means they'll gear towards low-grade bioethanol which has both environmental integrity concerns and then social and human rights concerns," he said.
Some fuel retailers pushed for other rules which would incentivise the use of domestically-produced waste-based biofuel over ethanol imports during consultation on the mandate last year. Z Energy, for example, said the Government should allowed emissions reductions from domestic biofuels to be double counted to help give them a leg up.
Z Energy mothballed its own biodiesel plant in Wiri in 2020. The facility produced biodiesel from animal tallow which would otherwise go to waste, but wasn't cost-effective at the time.
Julian Hughes, the company's general manager for supply, said New Zealand had the opportunity to learn from international experience with biofuel mandates.
"Policies in many of these markets favour biofuels which are made from waste as they don’t have to compete for land use and have potential detrimental environmental effects," he said.
"Ultimately, Z believes that the proposed mandate needs to incentivise the right fuel for right use case. For example, without the right approach, [electricity] could be displaced by first generation, imported ethanol, which would run contra to the objectives laid out by the Climate Change Commission for rapid electrification of the light fleet."
This was a concern raised by Johnston as well, who said the cheapest biofuel would be used to reduce emissions from vehicles which would otherwise be electrified - one of the "unintended consequences" of the mandate.
"Rather than targeting hard-to-abate sectors like heavy freight and coastal shipping and that sort of thing, most of the biofuels will end up being directed into the light vehicle fleet where there are already good decarbonisation options," Johnston said.
