Wednesday, February 14, 2007



Nick Smith and biofuels

Oh dear - it seems that Nick Smith has resorted to making shit up again in his quest to discredit the government's climate change policy. In his press release calling the government's increased biofuels sales obligation "too little, too late", he claims that

It is only since National announced its policy proposal on biofuels in our Bluegreen Vision for New Zealand last year that the Labour-led Government has got moving.

Really? The government announced its decision to set a sales target in law on August 30th, 2006 (and was presaged by a long series of cabinet papers and studies beforehand). Its biofuels sales obligation discussion document was released in mid-September (I blogged about it on the 13th). National's "Bluegreen" policy paper was released on October 6th. I think the facts speak for themselves.

As for the level of the target, there are significant limits on what the government can initially do in this area, due to both distribution infrastructure and the nature of the New Zealand vehicle fleet. We have large numbers of older Japanese imports which are not rated to run on biofuels, and maintaining the ability to provide them with pure fossil fuels requires extra tanks in service stations which simply do not exist at present. While I'd love to see a 10 or 20 percent biofuel obligation, the fact is we can't do it overnight. Instead, what we have is a path for getting there: a low initial target and clear policies to ensure that the car fleet moves towards being compatible with higher biofuel blends. There's also the fact that while the policy is studiously neutral about where the new biofuels can come from, it is really designed to push domestic production - so targets have been set at the upper limits of what is believed possible. And they're having the desired effect: Argent Energy and Shell have just announced their plans to produce enough biodiesel to meet 40% of the new 2012 target in one fell swoop. There are several other companies working on domestic production as well - Fonterra, AquaFlow and BioJoule (to name three) - and I think they will rise to meet the challenge and fill the newly-created market. If the policy works as expected, then around 2010 or so I expect the government to be announcing much stronger biofuels targets for post-2012, to further push the market. So, while we can't do it overnight, we will get there.

4 comments:

This Nick Smith? Unhinged springs to mind.
http://www.surfbreak.org.nz/modules/news/article.php?storyid=28

Posted by MERC : 2/14/2007 01:36:00 PM

I don't think your numbers are correct. NZ can't meet the mandate with biodiesel alone - the govt has just ensured that by going against the recommendation of officials. So ethanol is going to have to be about 30% of the solution but because ethanol has less energy, you have to signficiantly increase the volume you produce compared with biodiesel. So it is a sliding volume scale the more you rely on ethanol.

Now while that one plant might have the boiler plate number of 75kt a year, it is unlikely to be operating at capacity - things break down, maintenance is reqd etc - and it's highly unlikely that it will capture that volume of tallow in a competitive market in a cost effective way.

Remember tallow is not being dumped. It is sold overseas at a profit and Argent are going to have to match those prices at least. I believe the prices have risen as palm oil is expensive on increased biodiesel demand and the biodiesel subsidies in Aus make that a potential tallow market too. Also, about 20% of tallow can't be converted to biodiesel anyway.

Clark my have grand carbon free dreams (that are increasingly sounding like despotic five year plans) but the fact is no-one has had to shell out a cent yet and when they do, opinions and support might change.

We are playing around with numbers that countries with far more biofuel experience and significantly greater scale in this area are finding very hard to achieve. They've been at it for maybe 10 or 20 years and Parker and Clark seem to think that they can wish an industry into existence almost overnight.

Think about this, if ethanol were so great and so 'achievable' why at a time of high oil prices hasn't anyone got one single litre into the market even though it has a 50cent tax advantage over petrol?

Now the govt is saying we might have maize ethanol. Have they not looked at the relative returns on maize? Wouldn't farmers be planting it in large volumes already if there was a good return in it given US prices have doubled?

Clark and Parker must be in cloud cuckoo land if they think the farm industry will see much value in maize. If they do, what will happen to our dairy and meat exports? And what if the next year the farmers decide there is more money in broccolli?

And cellulosic ethanol is a fair way off to be cost competitive - despite Jim Wastson;s dreams. And that is Agresearch's view not mine.

The only way we will get there is through a massive transfer of wealth and overinvestment in an area that is marginal environmentally and incredibly costly compared to other efficiency measures.

Basically Clark and Parker appear to have been sold a whole lot of promises by manufacturers on the back of Helen's climate panic/polling who in return have been given a nice blank cheque signed on behalf of NZ consumers, because there is almost no risk to them and all the obligation is on the oil industry. For the biofuels producers the only way is up as the Govt has given them effectively a captive market. Sort of a modern muldoonist import licence.

Insider

Posted by Anonymous : 2/14/2007 06:50:00 PM

Think about this, if ethanol were so great and so 'achievable' why at a time of high oil prices hasn't anyone got one single litre into the market even though it has a 50cent tax advantage over petrol?

Similar reasons to why some government along the way sold Marsden Point to some corporation who wanted to make sure it wasn't supplying New Zealand with and alternative to imported petrolum based fuels.

I believe (though I am known to be wrong) one of the expansions to Marsden was to condense methane gas from the Maui natural gas fields into methanol with the intent of mixing that into our transport fuel supply. The new owners converted it into some other kind of refinery. Even worse when we went unleaded it meant we didn't have the capacity to metholate our fuel, so they now add imported benzen (an absolutely confirmed carcinogen) instead.

Basically Muldoon had a dream, it cost too much and Labour cleaned up the mess, then National sold whatever was left that might have benefited us.

Personally, if an alcohol based fuel was available, I'd be buying it, even if production cost and less taxes, meant it cost the same as petrol. It's got to have a better octane rating than the crap we're being abused with at the moment. "up to 91 octane fuel" Look for the fine print on the pumps, ask the attendant "What is the octane rating of this fuel?"

Posted by Bloodrage : 2/14/2007 11:41:00 PM

Bloodrage

This is one of the occassions you are wrong.

There was a syfuel plant built by Mobil and Petrocorp (?) to convert methanol to petrol in Taranaki. At the same time NZRC built a hydrocracker to convert heavy oils to fuel - most efficiently diesel and jet. That way we would have a balanced supply system and be more independent of external supplies.

Made sense at the time based on projected oil prices, but those turned around (a warning to current doomsayers) and it was cheaper to buy refined petrol than convert methanol, and the cost benefit of the refinery upgrade tanked - hence the need for a bailout.

"Similar reasons to why some government along the way sold Marsden Point to some corporation who wanted to make sure it wasn't supplying New Zealand with and alternative to imported petrolum based fuels."

Just what were those alternatives. There are and weren't any of any signficance both in terms of volume and cost comparison.


"Personally, if an alcohol based fuel was available, I'd be buying it, even if production cost and less taxes, meant it cost the same as petrol."

It doesn't/won't. Ethanol costs significantly more (like double) and it will not come down in price quickly due to supply/demand issues. I don't think your car will like 100% either - well not for long.

"It's got to have a better octane rating than the crap we're being abused with at the moment. "up to 91 octane fuel" Look for the fine print on the pumps, ask the attendant "What is the octane rating of this fuel?""

This is just conspiratorial nonsense. There is a minimum octane by law - 91 or 95 - and that gets tested regularly. A large proportion of "the crap we're being abused with at the moment" is the same as large numbers of people throughout SE Asia and Australia use, because we import about 40% of our petrol from there (see the above comments re synfuels). THe govt had to actually hold back on changing the NZ rules around petrol quality 2-3 years ago because the overseas refineries couldn't match the quality of Marsden Point output, and the rule change would have cut off most of those supplies. Med.govt.nz has the details on their site but you might not want to wade through

Insider

Posted by Anonymous : 2/15/2007 03:18:00 PM