Biofuel death knell claimed

A Biodiesel manufacturer claims government moves to axe compulsory use of biofuels spells the end of the industry in New Zealand including his plans to employ 46 extra staff at a new plant.

Tom McNicholl, managing director of Auckland-based BioDiesel Oils NZ, said he would mothball a nearly-built Waikato plant that would have produced 60 million litres a year of tallow-based diesel after the Government confirmed it would scrap compulsory biofuel requirements next week.

Mr McNicholl said the new plant would have employed 46 people on top of the eight already working at a plant in East Tamaki, which has the capacity to produce 10 million litres a year.

"There will not be enough sales of biodiesel to warrant the capital investment or even sustain running a plant that's already built."

He had invested $10 million in the business, but scrapping the obligation would kill the local industry and he would be reduced to developing technology to sell overseas.

Energy Minister Gerry Brownlee announced the requirement for biofuels to make up 2.5 per cent of total petrol and diesel sales by 2012, would be scrapped under urgency.

He rejected Mr McNicholl's claims, and doubted there would be capacity to produce 70 million litres of biodiesel from next year.

He said the Government was motivated by concern that much of the fuel would be imported. There was also a lack of standards.

The Government was keen to encourage local production once specifications were set, and oil companies would have an incentive to use biodiesel through planned lower road user charges for mixed products. "We have not taken a stance against biofuels. We think biofuels will be important as part of the fuel mix in the future.

"We simply don't believe that a mandated obligation at a point where you are going to have to see literally millions of litres of biofuel imported into New Zealand for the mix when you haven't got an environmental standard is particularly smart."

Labour MP David Parker said the Government was scrapping the requirement so as to score political points, at the cost of jobs and missing a chance to make New Zealand more economically independent.

"National's move means the workers and investors are out of jobs and out of pocket. So much for going for growth."