KEY POINTS:
Government policy-makers are being warned by the Automobile Association to drop any idea of penalising up to a million motorists whose cars may not be capable of running on biofuel.
A preamble to legislation introduced to Parliament this week raises the possibility of an increase in petrol excise of about 1c a litre by 2012, to recoup a tax exemption of at least 2c a litre on biofuel blends due to start flowing from service stations next year.
Although the paper describes such an increase as "a small amount", AA spokesman Simon Lambourne says it would be an unacceptable impost on top of other threatened petrol price rises such as under the Government's carbon emissions trading scheme and for accident compensation.
The carbon scheme is expected to add 4c to 6c a litre to petrol prices from 2009 - and possibly more - and the Accident Compensation Corporation is considering raising its levy by at least 2c next year to recover soaring costs from road smashes.
Legislation is also expected on the Government proposal for regional fuel taxes of up to 10c a litre to pay for roading and public transport, including Auckland rail electrification.
Mr Lambourne said yesterday that the AA supported the introduction of biofuels, but only if motorists were not hit in the pocket.
It would oppose any degree of "cross-subsidisation".
"Motorists are more than willing to play their part to reduce damage to the environment, but private motor vehicles only contribute 8 per cent of New Zealand's total greenhouse gas emissions," he said.
"Let's not unnecessarily demonise motorists."
He also called on the Government and the motor industry to work together on an engine-testing protocol to end uncertainty over which cars were capable of running on biofuel blends without risk of damage to their fuel systems.
Although the Government and used-vehicle importers are confident most cars can run safely on petrol with an ethanol content of 10 per cent - as is already being sold by Gull Petroleum in Auckland and Hamilton - manufacturers are more circumspect.
The Motor Industry Association, representing the manufacturers, is sticking to advice from Japan that vehicles built for that country's domestic market and shipped to New Zealand second-hand cannot be guaranteed suitable for fuel with more than 3 per cent ethanol.
There are about a million such vehicles on New Zealand roads, most of which run on 91-octane petrol rather than the super-charged 98-octane blend sold by Gull, which said yesterday it had received no adverse reports since introducing the fuel in August.
Energy Efficiency and Conservation Authority senior adviser Elizabeth Yeaman said the Government was "very likely" to commission independent tests to dispel any suggestion that blends of up to 10 per cent ethanol could damage fuel systems, even though it did not believe these were needed on technical grounds.
She said a 10 per cent ethanol blend known as E10 was cleared by tests in this country in the 1980s, and had been used for many years in countries in North and South America.
Ms Yeaman said her organisation was trying to get Japanese car manufacturers to agree to accept the results of a new set of tests.
Oil companies other than Gull have yet to disclose how they intend reaching a Government target for 3.4 per cent of combined petrol and diesel sales to be from biofuels by 2012.
But BP spokeswoman Diana Stretch confirmed yesterday that her company was considering starting with biodiesel, on which she said it had been conducting extensive trials on trucks and buses.
She said it could not be assumed that a tax exemption would make biofuel cheaper, given that there was not enough domestic feedstock to supply the entire New Zealand market, and there would have to be imports.
