Yesterday, Energy Minister David Parker, acting as climate change minister, and Associate Transport Minister Judith Tizard, released a discussion document outlining a proposed sales obligation for biofuels.

The proposal would require oil companies to sell a minimum percentage of biofuels in transport fuels, beginning with 0.25% of sales in 2008, rising to 2.25% by 2012.

“Diversifying into renewable transport fuels will reduce our dependence on imported oil. Using biofuels will also reduce vehicle emissions, greenhouse gas emissions and improve air quality,” the ministers said.

Although imported biofuels could be used, there was enough domestic feedstock from within the agricultural sector to produce the amount of biofuels needed to meet the minimum obligation, according to the discussion paper.

Parker said biofuels would move New Zealand towards a more sustainable energy future.

“If the proposed sales obligation is met, we will not need to account for over a million tonnes of carbon dioxide emissions under the Kyoto Protocol, due to the replacement of fossil fuels by biofuels,” he said.

This would represent more than $NZ16 million ($A13.5 million) saved by the Government in respect of the first Kyoto commitment period from 2008-2012.

Parker described the minimum as a starting point and said once necessary legislation and infrastructure was in place, biofuels could contribute to New Zealand’s transport fuels at levels higher than the mandated minimums.

But a Shell NZ spokesperson said major infrastructure modifications would be needed to meet the proposed biofuel sales requirements.

Conventional fuels, petrol and diesel, would increase in price as a result of the need to import biofuels or the country’s reliance on a small domestic manufacturing base, according to Shell. Petrol could increase by NZ5c per litre, the company said.

Submissions on the government’s proposals close on October 20.

In addition, Parker said there had been strong and wide-ranging interest in the development of the Government’s New Zealand Energy Strategy.

More than 140 people, representing the energy sector, industry, government and non-governmental organisations, attended a Wellington workshop last month. The Ministry of Economic Development also received 50 direct submissions on the issue.

“The feedback identified reducing greenhouse gas emissions, the role of carbon-intensive energy sources, transport options, renewable energy, energy efficiency, investment, and research and innovation as the key areas for action,” said Parker.

The Petroleum and Production Association of New Zealand made submissions on the draft energy strategy, with former executive officer Mike Patrick saying the Government needed to realise petroleum products would continue to be of critical importance to New Zealand and its economic wellbeing for several decades.