Subsidy extended to 100 per cent biodiesel

Higher proportions of biofuel mean reduced prices at the pump as it is spared Emissions Trading Scheme charges. Photo / Daily Post

The Government is boosting support for the growing number of biofuel makers by extending its subsidy scheme to 100 per cent pure biodiesel.

Under the present criteria, to qualify for a 42.5c-a-litre subsidy only up to 20 per cent of fuel sold can be biodiesel.

Energy and Resources Minister Gerry Brownlee said the change was expected to increase production and sales of biodiesel.

"By extending the eligibility to blends up to and including 100 per cent biodiesel (B100), we provide an incentive for those businesses and individuals who are willing and able to use these higher-level blends."

Soon after coming to office the Government copped flak when it repealed a law that would have required oil companies to have biofuels as 2.5 per cent of annual sales by 2012. Critics have also accused it of putting too much emphasis on the hunt for oil and gas, rather than exploring the alternatives to enhance New Zealand's transport fuel autonomy.

Brownlee said the grants scheme introduced a year ago was aimed at kickstarting biodiesel production, which remains just a fraction of the three billion litres used annually. There is funding of $36 million over three years to June 30, 2012.

So far six companies are registered with the scheme, allowing for the grants for producers who sell 10,000 or more litres of eligible biodiesel each month. Most biodiesel comes from recycled cooking oil.

"High-level biodiesel blends and 100 per cent biodiesel are appropriate for niche applications such as eco tourism. Several businesses have indicated they are keen to use higher-level blends and unblended fuel to reduce their greenhouse gas emissions as much as possible, and we don't want to discourage them," Brownlee said.

"Biofuels are a renewable transport fuel, and the higher the blend, the greater the environmental benefit."

Higher proportions of biofuel mean reduced prices at the pump as it is spared Emissions Trading Scheme charges.