Parliament needs independence from the executive

The standard theory of government is that we have three branches, executive, judiciary, and legislature, which are independent. In Aotearoa, we have a Westminster system, which means the executive is chosen from the legislature, and automatically dominates it (at least on confidence and supply) - but its worse than that. Because the part of our legislature which is meant to be independent - select committees - is in fact utterly dependent on the executive, relying on government agencies for basic tasks like analysing and summarising submissions. The New Zealand Council for Civil Liberties' submission on the review of Standing Orders raised this as an issue, and highlighted the inherent conflict of interest:

Public servants, who are subject to ministerial direction, who owe their primary duty to their Ministers, who are paid by the Executive, and whose managers’ performance assessments depend on getting the legislation through Parliament, cannot provide independent advice to Parliament...

...In doing the work needed to get a bill introduced, officials will have developed a belief in the correctness of their analysis of the problems and their proposals, so on a very human level they are disincentivised from agreeing to changes to something they have already worked long and hard on.

That's bad enough. But in its report on the Sustainable Biofuel Obligation Bill, released today, the Environment Committee highlighted another problem. The government decided last month to throw the biofuels obligation on the policy bonfire, fucking our long-term carbon budget in the process. And when they did that, they withdrew all support to the select committee, with the result that it just couldn't do its job anymore:

We had hoped that advisers would be able to provide a written analysis of submissions to summarise the feedback received for this bill. Some of us were disappointed that we did not receive support from officials after the Government’s announcement that it intended to withdraw the bill. Given that we had conducted a full submissions process before the announcement, we would have liked to be able to report back to the House with a summary of the written and oral submissions we received.

Effectively, if you were (like me) one of the 72 people and organisations who submitted on this bill, your submission didn't even get read. The government threw it in the rubbish bin. Oh, its on the Parliament website, but the executive deprived the committee of its standard analytical tools, and as a result it was unable to salvage anything useful from this debacle.

Which rather underlines the NZCCL's point. While the Environment Committee, like Parliament, has a Labour absolute majority, what if it didn't? Under MMP, our normal government is a coalition, and Parliament is more independent. While the government could withdraw a bill, under MMP its also conceivable (if unlikely) that a committee could recommend it proceed despite that decision. And it seems really inappropriate for the government to pre-empt that by simply disabling the committee by withdrawing administrative support.

The upshot of all this: it is crystal clear that Parliament's select committees need their own independent advisers on bills - people who work for them, rather than the Minister. Its part and parcel of being an independent legislature. And its something we should all support.

(Meanwhile, as someone who submitted on the bill, I feel that once again my hard work and good faith has been abused by the government. Which is a great way to burn people off participating, and give them the impression that their submissions are only invited to provide a veneer of legitimacy...)

Climate Change: Labour abandons the carbon budget

Hipkins held his expected bonfire of the policies today, ditching the RNZ/TVNZ merger, punting hate speech legislation to the Law Commission (which basicly means it will never happen), and dumping the "bougie dole" social insurance scheme. But along the way, he also shitcanned a key part of the government's emissions reduction programme: the biofuels obligation.

How important is this? The 2021 cabinet paper Sustainable biofuels mandate: final policy design noted that (p22):

The mandate is expected to reduce emissions by around 10 MtCO2-e by 2035; contributing about 1.2 – 1.3 MtCO2-e for the first emissions budget, 3.3 to 3.6 MtCO2-e for the second, and 4.6 – 5.8 MtCO2-e for the third.

In context, the transport sector emissions target is ~16.5 MT/year for the first (4 year budget), ~15 MT/year for the second, and ~11 MT/year for the third. So the biofuels obligation was expected to contribute ~45% of our second budget cuts, and ~20% of our annual third budget cuts. This is a significant emissions impact, which will have to be made up. It was also basicly our only policy to deal with heavy transport emissions. And now Labour has thrown it out the window. It will be very interesting to see what the Climate Commission says about it.

When quizzed at the press conference, Hipkins had no idea how he was going to compensate for the extra emissions he has just allowed, and he refused to commit to meeting our future carbon budgets. Which is disappointing. But sadly consistent with their habit of announcing big targets, then chickening out from the actual action required to meet them. But it shows that Labour cannot be relied upon to take climate change seriously, or prioritise emissions cuts over the interests of whiny polluters. For that, we need the Greens.

Addicted to secrecy

Back in July, Public Service Minister Chris Hipkins said he was concerned about the growing number of secrecy clauses excluding information from the coverage of the Official Information Act, and promised "safeguards" to limit their use in future. meanwhile, the government he is part of has just introduced another one, in its Sustainable Biofuel Obligation Bill.

Like many such clauses, the underlying justification is commercial sensitivity - fuel importers would be required to provide information on their activities to the EPA, and that information is obviously commercially sensitive. And like those other clauses, it is also completely unnecessary, as those interests are already protected by the OIA. That information is not absolute, and is subject to the public interest override. But that's appropriate - there are cases when accountability and transparency are more important than the commercial sensitivity of private companies (when they lie, for example. Or when the EPA doesn't do its job in prosecuting those lies). By proposing this clause, Labour - and by extension, Hipkins, who will have approved it at Cabinet - are saying that they do not trust the Ombudsman or the courts to interpret and apply the law correctly. And they're saying they'd rather have wrongdoing kept secret, rather than exposed and policed. You can see why a government of paranoid control-freaks and political arse-coverers would want that. But its absolutely not in the public interest. Hipkins needs to keep his promise, and ditch this clause.

Biofuels and incentives

Biofuels are likely to be a key means of reducing our transport emissions in the short-to-medium term, allowing immediate reductions by substituting some level of lower-carbon fuels. But Newsroom reports that business has its hand out for incentives to produce them:

In its submission, Refining NZ obligingly lays out six incentive options. Naomi James tells Newsroom that the first priority would be to support capital investment, but operational support would come close behind.

One of the options would be to fund the capital or operational support through a levy on individual passenger carbon emissions – for example, through the International Visitor Levy.

Obviously, rapidly establishing new production capacity in Aotearoa is going to cost money. But if business wants the government to provide that money, then the government should get equity in exchange. Because that's what happens in the real world when business ventures want capital from other people. And if they don't want to do that, then the government can and should just establish a business to produce the fuels itself, and drive them out of business.

But its also worth looking at what incentives fuel polluters will face to adopt biofuels, and what that adoption is worth to the government. On the first front, the proposed sustainable biofuels mandate would set fines of $300/ton of emissions where the requirements are not met. A litre of diesel produces 2.7 kg of carbon when burned, so that gives them an effective incentive of $0.81/L to comply (unfortunately, there's no bonus for overachievement). To that we can add the cost of avoided ETS credits - biofuels are not included in the ETS and so don't attract liability - which is currently $50/ton, or another $0.20/L. So under the proposed scheme they'll be facing an effective incentive of $1.01/L to produce biofuels, about two-thirds of the retail price, and three times the importer margin of fossil fuel. On the second front, the government internally prices carbon at $150/ton, so that tells us what biofuel is worth to it: $0.40/L times the effective efficiency of the fuel (the proposed mandate will be actually looking at net lifecycle efficiency, and setting a direct emissions reduction target rather than a volume target). So for biodiesel made from leftover cooking oil, at 50% efficiency, that means about $0.20/L; for biodiesel made from wood, its probably $0.30/L.

Of course, the actual number that matters here is production costs. On that from, in 2010 the Parliamentary Commissioner for the Environment estimated the cost of biodiesel from wood at $1.85/L (p. 37; note that this is 2010 wood prices). The cost to import a litre of diesel is currently $0.75, so even with that implied $1.01/L incentive, the government may still need to provide a subsidy to make it cost-competitive. Still, it seems that the amount required would be less than the cost of the emissions avoided, so the government would still be ahead in the long-term. Alternatively, it could just increase the fines for non-compliance with biofuels mandate to triple rather than double the internal carbon price, and then it all works out quite happily, with no subsidy needed.

Biofuels are back

A part of this morning's transport announcement which hasn't got a lot of attention yet: biofuels are back:

“Our Government has agreed in principle to mandate a lower emitting biofuel blend across the transport sector. Over time this will prevent hundreds of thousands of tonnes of emissions from cars, trucks, trains, ships and planes.

“There are economic opportunities for New Zealand in strengthening our clean green brand, encouraging innovation and creating jobs. It will also help our economic recovery. A biofuel mandate has the potential to create jobs and boost the economy through encouraging a local industry.

Transport Minister Michael Wood has confirmed that this is basicly the 2008 policy, which was repealed by National along with its gutting of climate change policy the moment they gained power. When they first put it up for consultation in 2006 I thought it was a pretty good policy. Since then the techhnological background has changed: EVs look like the transport solution, so biofuels are more going to be a bridge fuel on the way to electrification. But they'll likely have a longer future for heavy transport, and particularly for air and sea travel. Meanwhile, we've also got the benefit of an extra fifteen years of research on sustainability (which in NZ means making them out of trees), fifteen years for fossil fuel companies to understand the need, and some local adoption already (both Gull and Z already sell biodiesel). So reintroducing this looks to be an easy thing we can do, and the consultation should be largely a question of "how far can we move and how fast" rather than the "don't wanna, don't wanna" we had back in 2006.

Fallow on biofuels

Writing in the Herald, Brian Fallow examines the recent Greenpeace The Future is Here reports' claims on biofuels. The short version? The potential definitely exists - but getting there is problematic.

All in all, a daunting concatenation of commercial risks faces any potential investor in a biorefinery reliant on the harvest from the existing plantation forest estate.

It would be a struggle to muster enough private capital with a hearty enough risk appetite.

And would a future government be able to step out of the long, dark shadow of Think Big to put that much public money at risk?

But the solution to this problem isn't a simple choice between "leave it to the market" (which won't take such a risk) and "get the government to do it". There are policy options between total laissez faire and state control. And in this case in particular, we've already seen a good solution, in the form of Labour's (now repealed) biofuels obligation. This significantly reduces the risk to business by providing them with a guaranteed domestic market for their product. They still have to produce it cheaply enough to compete with imported biofuels - but one of the big variables, oil prices, basically drops out of the equation.

We've seen under National that subsidies and grants aren't enough. If we want to make this switch, we need to create a market. A biofuels obligation lets us do this, and gradually build our way to cleaner energy and energy independence.

Member's day

Today is a member's day, with another four bills up for first reading. First up is Jeanette Fitzsimons' Sustainable Biofuel Bill, which reinstates the sustainability standard for biofuels removed by National last year. National has said it supports it, so this one should go quickly. Then we have Meyt's Marine Animals Protection Law Reform Bill, which improves protection for dolphins and whales. Third we have Maryan Street's Customs and Excise (Prohibition of Imports Made by Slave Labour) Amendment Bill, which does exactly what it says on the label; I have no idea yet whether National will vote for it or vote it down as a "non-tarriff trade barrier". And finally, there is Rahui Katene's Te Rā o Matariki Bill/Matariki Day Bill, which would make Matariki a public holiday. Again I have no idea where the government stands on it (and their support is necessary for it to progress) - but the desire for good coalition relations with the Maori Party should at least see it sent to select committee.

With no local business to distract them, the House should get through the first three and make a start on the fourth - which means a ballot tomorrow for three bills.

For those interested in listening in, the slavery bill should be up around 20:00, with a vote around 21:00.

Sustainable biofuels

One of National's first acts on gaining the government benches was to reward their friends in the oil industry by abolishing the previous government's Biofuels Sales Obligation, which would have seen oil companies required to sell an increasing percentage of biofuels. Instead, they replaced it with a grants scheme, which would give token subsidies to New Zealand biodiesel producers, but not actually do anything to create a market or require oil companies to sell them. But the Greens have noticed a problem: most biofuels produced in New Zealand are sustainable, in that they have genuinely lower emissions, don't compete with food crops, and aren't gouged out of tropical rainforests. This is even more true of biodiesel, which tends to be made from waste or from meat byproducts like tallow. But under the government's scheme, these sustainably produced fuels could face competition from unsustainable imported fuels such as those based on palm oil.

Fortunately, the Greens also have a solution: a member's bill [PDF] setting a sustainability standard for all biofuel sold in New Zealand, whether locally produced or imported. It's a good idea, which protects the environment while encouraging local production, and it would be good to see it drawn from the ballot.

"Kickstarting biofuels"

The government has announced an industry grant program with the aim of kickstarting biodiesel production in New Zealand. Of course, we already had a perfectly good means of kickstarting biodiesel production - and more importantly, getting the oil industry to upgrade its infrastructure to cope with an additional fuel blend - in the form of the biofuels sales obligation. But one of the first things National did on gaining power was repeal it. So instead of a clear, transparent market-based mechanism which set targets for the industry as a whole, but didn't favour any particular players, we now have straight-out industry pork propping up specific companies. It certainly shows the lie behind National's "more market" rhetoric...

This is not the policy of a party interested in promoting the widespread adoption of biofuels. It is instead the policy of a party wanting to use them solely as greenwash. The result will be that we are slow to adopt, meaning in turn both higher greenhouse gas emissions, and greater vulnerability to potential disruptions in fossil fuel supply. It is simply bad, shortsighted policy.

Climate change: the cost of abandoning biofuels

One of National's first acts on gaining the government benches was to abandon the previous government's Biofuels Sales Obligation, which would have seen oil companies required to sell an increasing percentage of biofuels as a way of pushing a change in transport infrastructure. The move cost jobs as existing biofuels producers shut their doors, but it also cost us in higher transport emissions. The release of the Net position report quantifies that loss: 1.1 million tons over CP1. At current carbon prices, that works out to be $27.6 million. With the government scraping for every penny, the decision looks more stupid by the day.

Climate change: still waiting

Another week, and once again the Climate Change (Emissions Trading and Renewable Preference) Bill is notably absent from the Business Statement. So, interestingly, is the other centrepiece of climate change policy, the Biofuel Bill. is the government ever going to try and pass this stuff, or is it just full of hot air?

Reported back

The Local Government and Environment Committee has reported back [PDF] on the government's Biofuel Bill, and recommended that it be passed. The bill will effectively create a tradable permits regime obliging oil companies to collectively sell an increasing amount of biofuels each year. While the levels are low, the bill plays a long game, and is really aimed at establishing a domestic biofuels industry which can grow in the long-term.

The big debate around this bill has been around sustainability, with concerns that some biofuels (primarily those produced in America by energy-intensive US agricultural methods) are not particularly energy efficient, and that they may be grown at the expense of food crops. The committee has addressed this by requiring all biofuels to be sustainable, and requiring the Minister to create a regulatory standard defining sustainability as quickly as possible (because it must be able to respond quickly to scientific evidence, regulation is the right policy tool here). It also sets down some principles the Minister must obey in formulating that standard. Sustainable biofuels

• must emit significantly less greenhouse gas over their lifecycles than fossil fuels
• must not compete with food production or be produced using land of high value for food production
• their production must not reduce indigenous biodiversity or adversely affect land with high conservation values.

The Minister will have to specify methodologies for assessing lifecycle emissions, but in order to qualify, fuels will have to produce an improvement of at least 35%. So, no American bioethanol. The farmers of Iowa will be heartbroken (if they even knew this bill existed).

Other changes include greater powers to demand information (so that sustainability can be verified), tweaking around the penalties regime, pushing back the start date to account for delays in the bill, and a reduction in the final target from 3.4 to 2.5 percent. The latter sounds bad, but the targets have been set so they can be met by anticipated domestic production; it had been raised in response to promised investment, but that has now fallen through, so its back to where it started. Again, though, this bill is really about forcing oil companies to install the required infrastructure and create a domestic market, which can be grown (particularly when second-generation biofuels come online in a few years' time).

Meanwhile, National's minority report is a stunning exercise in dishonesty. With the ETS bill they simply pretended that the committee had not amended the bill or addressed the concerns they raised, confident that the media would be obliged in the name of balance to repeat their talking points regardless, and they use that same tactic here. They're also claiming that oil companies need to know the sustainability standard - how fuel is produced, not what it is - before they can invest in infrastructure, which is simply bullshit. But it would let Shell, Mobil, Caltex and the others get away with doing nothing for a while longer (and I'm sure a National Minister of Energy would oblige them by dragging their feet). It's all a little odd, coming from a party which just last year was claiming to have invented the biofuels policy, and that the government wasn't moving fast enough in implementing it. Now we're getting the same free-market, non-intervention, "the ETS (which we oppose) will sort it all out" mantra which resulted in no policy in the 90's. What changed?

Sustainable biofuels in Germany

Robert Rapier details his visit to the Choren biomass-to-liquids plant in Germany. This basically takes waste wood, gasifies it (burns it under controlled circumstances to produce syngas (the carbon monoxide / hydrogen mix that used to be made in gas plants around the world), then uses the Fischer-Tropsch process beloved of coal-to-liquids enthusiasts to turn it into diesel. Result: diesel from trees, with carbon-neutral electricity as a byproduct. It's still small-scale, and relatively expensive, but OTOH it's a bit more flexible than standard fermentation, and it certainly beats using food.

(Hat-tip: Larvatus Prodeo)

Fixing biofuels

Over the past few weeks, a lot of concern has been expressed over the government's Biofuel Bill, which is currently before the Local Government and Environment Select Committee. The bill establishes a biofuels sales obligation on fuel companies, requiring them to sell an increasing percentage of biofuels, whether pure or blended in to other fuels. However, critics have pointed out that many biofuels are not produced in a sustainable manner, and may actually result in higher emissions, particularly if land is deforested to grow them, or they are produced by intensive farming practices in the United States. And now the Parliamentary Commissioner for the Environment has joined the chorus, arguing that the bill should not be passed in its current form and that a sustainability standard is needed.

I agree, but given the objectives of the bill, I think the changes needed are minor. First, we need to keep in mind that while it sets targets, the initial aim of the bill is to not to bring biofuels into widespread use, but to force fuel companies to establish the distribution infrastructure needed for their widespread use in the future. This will be a long-term investment, and if we want to have the option of using sustainable biofuels in five or ten years time, then we need to start making these changes sooner rather than later. We cannot afford to wait until the promise of ethanol from trees is fulfilled. Secondly, while the bill allows fuel companies to import biofuels (and Gull already imports biodiesel from Australia), it is also aimed at promoting domestic production by creating a market. On both fronts, its really about getting around the chicken and egg problem of "no market = no production/infrastructure = no market" - something we need to do as quickly as possible.

Given the low initial targets, we can afford to live with a little unsustainability in the first few years until a robust sustainability standard can be developed. But it is important that the bill includes provisions for such a standard to be imposed in the near future. The easiest way of doing this is to provide a general power for the Minister to set sustainability standards by Order In Council, along with a requirement that such standards be in place within two years of the bill coming into force. But delaying the bill at this stage will push back even further the date when we can have sustainable biofuels in wide use. And I don't think that's the most sustainable path in the long term.

Sustainable biofuels

There's been a lot of concern recently about the sustainability of biofuels - both the effects of forest clearance to make way for current biofuel crops such as sugarcane and corn, and the effective competition between food and fuel biofuels create, which threatens to starve the poor. However, it seems New Zealand has hit on another way of making biofuel which avoids these problems: we can use trees:

Results from a feasibility study have found that there are no significant technical or supply barriers to producing ethanol from New Zealand's softwood feedstocks, despite previous concerns that it was technically too difficult and too expensive to utilise this resource.

These findings are the outcome of an international collaboration between New Zealand's Crown Research Institutes Scion and AgResearch, New Zealand's largest pulp and paper producer Carter Holt Harvey and US-based cellulosic ethanol and specialty enzyme development company Verenium Corporation.

The recently completed study into the development of biofuels for New Zealand evaluated the infrastructure, technology and economics of a transportation biofuel facility using New Zealand softwood plantation forests as feedstocks. It also considered opportunities to utilise existing infrastructure from the pulp and paper industry and Verenium's proprietary enzymes to convert wood and wood residues into sugars which can be fermented and refined into ethanol.

The study found there is both sufficient wood and wood residues available in New Zealand to supply a commercial-scale ethanol refinery, and a domestic market large enough to support it.

Beyond that, they're suggesting we could potentially run our entire vehicle fleet on domestic bioethanol, if we planted more marginal land in forest. And it would be fully sustainable, with no competition with food crops, and result in a net carbon sink overall (as we would be significantly increasing overall forest area).

The question the press release doesn't answer, though, is whether this can be done at a price competitive with that effectively set by expected oil prices and the Biofuels Sales Obligation. If it can be, then that green future might be closer than we think.

National Schizophrenic on biofuels

Today in Parliament, National's Gerry Brownlee attacked the government's biofuels sales obligation as imposing an excessive cost for emissions reduction compared to other options. Partly, this was based on bad numbers - Brownlee derived his cost by dividing the $125 million capital cost by the 1 million tons of CO₂ saved over the five year Kyoto First Commitment Period, which straps the chicken by completely ignoring future savings. But apart from that shoddy exercise, there's also the interesting fact that a biofuels obligation is official National Party policy [PDF], and that back in February, Nick Smith was complaining that the government wasn't implementing it fast enough!

It would be nice if the National Party would make up its mind where it stood on this issue. Does it support biofuels or not? Because it can't have it both ways - at least not if it wants to retain any credibility with the electorate.

Driving the market

Last year, the government announced that it would be imposing a biofuels sales obligation on New Zealand oil companies, requiring them to sell an escalating percentage of biofuels, starting at 0.25% next year and building up to 3.4% in 2012. The aim was to push the market in a greener direction. And it seems to be working. Argent Energy had already announced its interest in a tallow-biodiesel plant in Northland, and Solid Energy has just announced that it will be buying Canterbury Biodiesel and expanding it into producing biofuel from canola. Between them, these two companies will be able to meet 75% of New Zealand's 2012 target. With a number of other companies also working on biofuels (LanzaTech from flue waste gases, BioJoule from wood, AquaFlow from sewage, and Steve Tindall on corn ethanol) it looks like the targets will be met. The question in a couple of years time then will be how far and how fast they can be expanded.

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.

Pushing the market

How can we solve the problem of climate change? The broad answer is that we have to push the market towards lower carbon emissions, through a combination of price-setting and regulation. The carbon tax was one way of doing this, across the entire economy (except for the farmer's sacred cows). But while the government has abandoned the broad measure, it is moving ahead on the narrower front with the release of a biofuels sales obligation discussion document outlining its proposed biofuels policy.

The proposal is simple: every year from 2008, fuel companies such as BP, Mobil etc will be required to sell a certain percentage of biofuels. That percentage will be in terms of energy, rather than litres, and will start out as 0.25% in 2008, rising to 2.25% in 2011 and later years. Failing to meet the obligation will incur a penalty of $60 million per PetaJoule, but companies can both roll over the first two years obligation (because the government understands that the infrastructure isn't there yet), bank a limited amount of early overachievement for later use, and trade that obligation amongst themselves provided such trades and the sales they represent can be independently verified. The latter is basically a cap and trade scheme in reverse, similar to the Australian Renewable Energy Certificates, and sets an economic incentive for overachievement.

Another way of looking at this is that the government is planning to set a price of $60 million / PJ for biofuels, or about $1.40 / L for bioethanol and $2.10 / L for biodiesel. If it costs less than that to get to the pump, then it is worth selling, in order to avoid the penalty or onsell the overachievement. Given that biodiesel costs around $1 / L to make (an expensive estimate), this sets a fairly strong incentive.

The proposal is good. While the timelines look distant, it will take at least a year for this to move from being a discussion document to law. The biggest criticism is that there is no "stretch" in the targets - they have been set to be easily achievable based on potential domestic biodiesel production, rather than to encourage innovation and the development of new sources. But its a start, and if the targets continue to rise after 2012, we may be able to push the market even further.

Biodiesel on the way

One of the ways of reducing our greenhouse emissions is to start using biofuels - biodiesel made from vegetable oils or animal fat, or bioethanol from sugar or (ideally) fermented cellulose. I'd been expecting to see this introduced to New Zealand only after the government set a target to create a market. But someone seems to have jumped the gun. Gull Petroleum will be introducing a B20 blend of biodiesel by the end of the year. They already sell it in Australia, and it retails for up to three cents a litre cheaper than mineral diesel. I guess the market is providing after all.

On the downside, they make their biodiesel from palm oil, which depending on where they get it from, may be a very environmentally unfriendly source...