Parliamentary Commissioner for the Environment - Te Kaitiaki Taiao a Te Whare Pāremata

Lincoln Biofuels Forum

Biofuels – Some big questions

Speech to the Lincoln Biofuel Forum

NZ Institute of Agricultural and Horticultural Sciences

27 August 2008

Speaker: Parliamentary Commissioner for the Environment

In April this year, I recommended to a select committee of Parliament that the Biofuel Bill not proceed to become legislation. Biofuels are classed as a “renewable” form of energy.  So this recommendation by a Parliamentary Commissioner for the Environment was unexpected.

It was not a decision I took lightly, but it is where the analysis took me.

The Biofuel Bill is intended to establish a biofuels sales obligation. Under such an obligation, fuel companies would be required to ensure a certain percentage of their sales are biofuels.

The biofuels must be mixed in with conventional fuels – ethanol into petrol and

biodiesel into diesel.

The establishment of an obligation follows similar legislation in Europe. Such as the European Union’s biofuel directive and the United Kingdom’s biofuel obligation.

The intent of the bill is two-fold:

to reduce our net carbon dioxide emissions

and to increase the security of energy supply, particularly for transport.

So the potential effectiveness of the bill should be judged by its ability to achieve these two aims – carbon dioxide emissions and energy security.

So the first aim of reducing net carbon dioxide emissions.

The original version of the New Zealand bill allowed any bioethanol or biodiesel to qualify as “biofuel”, regardless of its source. But not all biofuels achieve a significant net greenhouse gas reduction. 

Lifecycle assessments show that the lifetime CO2 emissions of biofuels vary greatly by feedstock, by production method, and by country of origin. (I am using CO2 emissions as shorthand for greenhouse gases converted to their CO2 equivalent.)

For instance, bioethanol from US corn is a very poor performer with total CO2 emissions close to those of diesel.

On the other hand, biofuels made from wastes like whey, manure, and recycled plant oil can emit up to 80% less carbon dioxide than fossil fuels.

Clearly there is a need for a lifecycle CO2 reduction standard should the New Zealand Biofuel Bill become legislation. 

Now the second aim of increasing energy security.

The bill guards against supply failure by allowing the importation of biofuels.

It must.  You cannot require fuel companies to provide a certain percentage of biofuels and require these biofuels to all be produced in New Zealand.

Large-scale plantations of biofuel crops in countries like Malaysia and Indonesia have incentivised the felling of carbon-absorbing rain forests and driven up food prices.

Allowing the import of biofuels and avoiding these impacts offshore must generate high compliance costs.

Further, the importation of biofuels is inconsistent with the “clean green” branding

of New Zealand. If our lightly populated country with a workforce skilled in plant growth and processing cannot grow and produce its own biofuels, which country can?

The Local Government and Environment Committee has reported back to Parliament with a range of suggested amendments to the Biofuel Bill.  One amendment lowers the obligatory percentage by 2012 from 3.4% to 2.5%.

More significantly, it is proposed that three sustainability principles be added to the

Bill.

•  First, biofuels must achieve a net CO2 reduction of at least 35%.

•  Second, they must not use land of high value for food production.

•  Third, they must not reduce indigenous biodiversity.

A further amendment signals that certain feedstocks are considered acceptable – whey, tallow, oilseed crop grown on a rotational basis, and ethanol from sugarcane. This is because they are considered to be in accord with the three sustainability principles. 

I remain concerned about the practicality of implementing and enforcing sustainability standards, particularly overseas.

 In a former role as Chair of Land Transport New Zealand, I became very aware that we are able to confidently import vehicles into New Zealand. This is because the overseas manufacturers have a rigorous documented regime around the standards to which vehicles are manufactured.

No such regime of credible certification exists for biofuels.

The issue of second order effects would be a challenge for implementing the  sustainability standards. For instance, Brazilian sugar cane does not directly displace food crops. But other crops and pasture may shift further north as they are displaced by sugar cane.

My critique of the Biofuel Bill would have been surprising in large part because biofuels are classed as a renewable form of energy.

But biofuels illustrate the need to critically examine the “renewable / non-renewable” energy paradigm that has influenced much thinking about energy since the nineteen sixties.

The underlying concept of that energy paradigm is that of living within flows rather

than depleting stocks. Biofuels indeed trap the flow of solar energy, but we need to think about more when assessing the environmental footprint of an energy source.

We need to think about net greenhouse gas emissions, effects on soil fertility,  biodiversity, and landscape.

Renewable is good / Non-renewable is bad -- is too simplistic.

Now I want to step back from focusing on biofuels. To thinking about the problems that biofuels are intended to solve. 

The fundamental energy problem is a looming gap between supply and demand.  I have spent much of my working life researching how this gap can be closed in part by reducing demand as well as increasing supply.

The amended 2012 target for the biofuel obligation is 2.5% of petrol and diesel. To put this in perspective, it is only slightly larger than the growth in petrol and diesel consumption between 2006 and 2007. The scope for demand reduction – curbing consumption is not trivial. Whether it be through improved efficiency or behaviour change, 

In New Zealand there are two major energy supply challenges. Both have a strong connection to climate change.

One is transport energy.

The other is electricity, particularly peak electricity. Peak electricity is generated by burning coal and gas.

Hybrid plug-in cars, which can run on both electricity and liquid fuel, are one way in  which these two supply challenges might be connected in the next decade. Putting it simplistically, we could run cars on electricity in summer and on liquid fuel in winter.

Think about the possibility of real-time electricity pricing incentivising switching

between the two forms of energy. In such a system, the batteries in hybrid cars could become part of the national electricity storage system. They could act in effect as tiny hydro lakes.

We do not tend to think of firewood as a biofuel now, as we wait for commercial

conversion to ethanol to become viable.

But it is a biofuel now.

There is a decline in heating homes with wood.

There is a trend toward central heating and the number of heat pumps is rising

fast.

All these changes must increase peak power demand in winter. 

What is the best use for this most plentiful of biofuels?

Should we use wood in efficient burners to heat our homes, particularly those that are old and draughty?

Or should we burn wood in power stations to generate electricity to run heat pumps?

Or should we bank on being able to convert wood to ethanol?

Or maybe all three?

Conversion of agricultural byproducts like whey, tallow and manure to biofuels will certainly add greatly to our understanding of biofuel technologies. But these feedstocks are small.

There is a strong case for waiting for the second generation of biofuels – like wood to ethanol – before we get serious about them.

In contrast, we should not delay getting serious about curbing growth in our  consumption of transport energy.

Thank you.