Watchdog criticises lignite-to-diesel bid

The country's environmental watchdog is taking aim at a state-owned coalminer's plans to turn lignite into diesel.

Parliamentary Commissioner for the Environment Dr Jan Wright said the Government should only support Solid Energy's plans for a large-scale synthetic-fuel facility in Mataura, Southland, after considering if wood could be used instead.

"Solid Energy is a state-owned enterprise and when it invests in infrastructure it pays a lower dividend, thus reducing Government revenue," Wright said in a report released yesterday.

"The responsible ministers should take a strong interest in any major long-term investment by Solid Energy, especially one with the potential to increase national greenhouse gas emissions."

Solid Energy chief executive Don Elder told The Press the company would take full responsibility for greenhouse gas emissions.

He said issues of affordability, security of supply and environmental sustainability were equally important.

Elder accused Wright of misinformation, saying her focus "risks cutting off valuable options".

"Solid Energy believes the Southland lignite resource is capable of producing a secure, affordable supply of transport fuel and we are committed to addressing environmental impacts."

State-owned Enterprises Minister Simon Power said he had not received a business case from Solid Energy for the large-scale production of synthetic fuel, adding: "We will discuss any proposal with them if and when required."

Wright's report, entitled Some Biofuels are Better than Others, said biofuels were better for the environment than petroleum-based alternatives, but their potential in New Zealand was limited.

Even if fuel made from whey, tallow, canola, algae and wood reached commercial-scale production, it would fulfil only a fraction of New Zealand's fuel demand, which was at more than eight billion litres a year, she said.

"There are just not enough biomass residues, b-products and wastes in New Zealand," she said.

Only New Zealand's 1.8 million hectares of plantation forests were big enough to produce biomass on the scale needed, she said.

Greater Government support would provide some much-needed public investment, she said.

Wright recommended Parliament reject the "unworkable" Sustainable Biofuel Bill, which, she said, would impose environmental standards on biofuel production and not on other land uses.

- © Fairfax NZ News