Monday, June 23, 2008

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?