Budget 2009: Gerry Brownlee - Biodiesel boost

A new grants programme for biodiesel production will kickstart the biodiesel industry in New Zealand, Energy and Resources Minister Gerry Brownlee announced today.

"By supporting biodiesel production in New Zealand, we can help get a new industry up and running, which can provide jobs for New Zealanders, at the same time as helping to reduce their greenhouse gas emissions," Mr Brownlee said.

As part of Budget 2009, $36 million will be allocated to the programme over three years. The grants will be available from July 1, 2009.

The grants will be available to domestic biodiesel producers selling their product for a range of end uses.

Some biodiesel is already produced in New Zealand from waste cooking oil, tallow (a by-product of meat processing) and oil seed rape. Present uses include vehicles, fishing fleets and boilers.

Gerry Brownlee said the initiative fulfilled the government's pre-election promise of providing incentives for biodiesel producers, in recognition of the advantage that bioethanol already enjoys.

According to industry analysis commissioned by the Energy Efficiency and Conservation Authority, biodiesel produced in New Zealand is expected to result in reductions of greenhouse gas emissions of between 50 and 90 percent compared to ordinary diesel, will not be produced on land of special environmental value and will not compete with food production.

Transport will be one sector to benefit from greater availability of biodiesel as a consequence of this initiative. "Blends of up to 5 percent biodiesel in diesel are widely accepted by the motor industry worldwide as long as the biodiesel meets fuel quality requirements," he said.

Questions and answers

How will the funding be allocated over the three years?

The programme will provide grants of up to $9 million in the first year, up to $12 million in the second year, and up to $15 million in the third year, at a maximum rate of 42.5 cents per litre of biodiesel.

Is the grant available to biodiesel producers who want to export?

No, the grant is only available to domestic biodiesel producers selling to New Zealand consumers.

What quality standards must the biodiesel meet?

To qualify for a grant, the biodiesel must meet the government's regulated fuel quality specifications that apply to all engine fuels.