Biodiesel plant mooted for North

By SIMON COLLINS

A British company wants to build a $50 million biodiesel plant in Northland - but only if diesel taxes, regulations or incentives change to make it worthwhile.

Argent Group Europe, which owns meat rendering plants in Britain and the Timaru tannery New Zealand Light Leathers, is due to complete a £15 million ($43 million) biodiesel plant in Scotland by the end of this year that will be the biggest of its type in the world.

The company got a €3.15 million ($6 million) European Union grant for the project to demonstrate the feasibility of making biodiesel from tallow (waste animal fat) and waste vegetable oil.

Managing director Andy Hunter, who visits New Zealand regularly as a NZ Light Leathers director, said the most likely location was near the existing Marsden Point oil refinery in Northland so that biodiesel could be blended with mineral diesel.

The plant would employ about 30 people directly and others indirectly.

But as biodiesel cost more to produce, the project would not be viable unless the Government either raised taxes on mineral diesel, regulated to force oil companies to include perhaps 5 per cent biodiesel in their diesel products or subsidised biofuels directly to cut global-warming gas emissions.

All biofuels count as zero net carbon dioxide emitters because the carbon they produce was taken out of the air in the first place either by crops such as canola or by grass eaten by animals.

As a signatory to the Kyoto Protocol on global warming, the Government has a target of diverting about 1 per cent (2 petajoules) of transport fuels from mineral oil to renewable fuels by 2012.

Mr Hunter said a $50 million plant producing 65,000 tonnes of biodiesel a year could meet that target by itself, using less than half the tallow available in the country and without any need to include ethanol or other biofuels in ordinary petrol.

This would replace about 3 per cent of current diesel consumption.

"To go ahead in New Zealand, we'd need to know that we were getting green lights on the political-economic criteria," he said.

"But as soon as we could see those green lights ... it would be quite plausible for New Zealand to have a significant biodiesel industry by mid-2007." A spokeswoman for Transport Minister Pete Hodgson confirmed that biofuel policies were being studied.

Argent Energy