Yes to biofuels, but only the right ones

OPINION: Biofuels can cut New Zealand's greenhouse gas emissions, aid energy security, and make it cleaner and greener, writes JAN WRIGHT.

Humans have been using biofuels since we first discovered we could burn wood for warmth. The first diesel engine was designed to run on peanut oil and the first four- stroke engine was designed to run on ethanol distilled from plants. Indeed, in 1925 Henry Ford said, "The fuel of the future is going to come from apples, weeds, sawdust - almost anything."

However, by the end of World War II the seemingly unlimited cheap oil from the Middle East dominated and the use of biofuels for transport was forgotten.

At least until the 1970s when the Organisation of Petroleum Exporting Countries started flexing its muscles with the resulting oil shocks of 1973 and 1979. You may recall carless days and the "Think Big" projects designed to aid our fuel security, but there was also great interest in biofuels such as ethanol produced from whey and biodiesel made from canola.

By the late 80s this interest in biofuels had cooled as New Zealand's fuel supply stabilised. But within a few years a new threat, climate change, had reared its head. It is clear that greenhouse gas emissions from human activity are changing our climate in dangerous ways. The majority of these emissions come from burning fossil fuels.

With this new threat has come new interest in biofuels. Although the emissions of burning a litre of biofuel are much the same as those produced by burning a litre of fossil fuel, the growing of biofuel feedstock takes greenhouse gases from the atmosphere. Thus there is scope for us to make a significant reduction in our greenhouse gas emissions by replacing some of our fossil fuel use with biofuels.

This is not to say all biofuels are good for the environment. For example, clearing rainforest to grow palm-oil feedstock results in biofuels with much worse life- cycle emissions than fossil fuels produce.

In contrast, innovative New Zealand biofuels made from algae are expected to have negative life- cycle emissions. Not only do algae consume carbon dioxide as they grow, the solid residue from fuel production is rich in nutrients such as nitrogen and phosphorus, and should be able to replace some carbon-intensive imported fertiliser.

Clearly some biofuels are good. Some are bad and some are downright ugly. As the title of my latest report, Some biofuels are better than others: Thinking strategically about biofuels suggests, we need to take a strategic approach to our biofuels policy if we are to sort the good from the bad and make sure we encourage the good.

In the report I take just such a strategic overview and it has led me to four main conclusions.

First, the kinds of biomass being used as feedstock for biofuels in New Zealand cannot take us very far. Most biofuel produced in New Zealand is made from byproducts - ethanol from whey and biodiesel from tallow.

Some more whey and tallow could become available, but the potential for growth is not great. A small amount of canola is grown for processing to biodiesel, but the amount of agricultural land available for growth is limited because other land uses are more valuable, certainly in the foreseeable future. In fact only wood could be grown in sufficient quantities to make biofuel mainstream, although algae could well play a valuable subsidiary role, especially if its use as a biofuel feedstock can provide the added benefit of improving water quality.

Second, the biofuels being produced in New Zealand can only be used to supplement conventional petrol and diesel. Ethanol can only be used in our current fleet in a blend of up to 10 per cent with petrol and biodiesel cannot be retailed in more than a 5 per cent blend with conventional diesel. If biofuels are to be major players in our energy future, they should be drop-in fuels, so called because they do not need to be blended with petroleum fuels.

Third, it makes sense to focus on biofuel substitutes for diesel rather than substitutes for petrol. We run our trucks, tractors and fishing boats on diesel, and, if we are concerned about energy security, diesel is more important than petrol. Most of our cars run on petrol, but, in contrast to the transport of freight and the cultivation of our land, there is much more flexibility in the demand for petrol. Electric cars appear to be coming into their own and many trips can be made by public transport, cycling and walking. The decrease in congestion on Auckland's motorways when the price of a litre of petrol rose above $2 in 2007 is testament to this flexibility.

Fourth, it makes no environmental sense at all, and indeed is unethical, for us to import "bad" fuels made from feedstocks such as palm oil. The Government has set up a Biodiesel Grants Scheme, under which New Zealand biodiesel manufacturers can obtain subsidies on a per litre basis. No company is making biodiesel from imported palm oil in New Zealand, but there is nothing to stop this happening. It is ironic that our commitment to free trade could lead to taxpayers subsidising the felling of rainforest in other countries.

In short, if biofuels are to play a significant role in our energy future, we should move towards developing drop-in biodiesel made from wood. While that is simply said, it will be a challenge to develop and commercialise wood- based drop-in diesel and other good biofuels in a practicable way that will significantly reduce our greenhouse gas emissions, improve our energy security, and genuinely make our country cleaner and greener.

* Jan Wright is the Parliamentary Commissioner for the Environment.

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