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Transport biofuel producers yesterday rushed to assure Parliament's environmental watchdog that oil substitution requirements could be met without tarnishing New Zealand's clean and green image.
They warned that the Government's emissions reduction programme would be damaged by ditching a requirement for oil companies to supply 0.53 per cent of land transport fuels from biomass from July 1, rising to 3.4 per cent in 2012.
Two producers issued figures to the Weekend Herald indicating they could supply enough biodiesel between them to meet the targets for at least the early years of the proposed mandate, which faces opposition from National, New Zealand First and United Future.
That opposition was reinforced on Thursday by a recommendation from Parliamentary Commissioner for the Environment Jan Wright to a select committee that the Biofuels Bill should be scrapped because of a likelihood it would lead to imports of biofuel threatening to displace food crops and rainforests.
Although biodiesel is already being produced in New Zealand from tallow from animal fats and oilseed rape crops, oil companies such as BP say they will also have to import bioethanol for petrol substitution as it could take many years before local industries can be established.
But Auckland-based Biodiesel Oils NZ said yesterday it would be able to supply almost half of the initial sales obligation from a plant capable of producing 10 million litres of diesel substitute at East Tamaki, from which BP and Shell had been buying stocks for bus and truck trials since 2004.
That would be increased to 60 million litres of tallow from a new plant due to open in December near Matamata, managing director Tom McNicholl said.
A subsidiary of Government-owned coal-producer Solid Energy said it was growing enough oilseed rape to supply 15 million tonnes of biodiesel from next summer's harvest, rising to 70 million litres in three years.
Biodiesel NZ general manager Paul Quinn said an independent assessment had shown such crops emitted about half as much carbon dioxide over their life cycle as mineral diesel - exceeding a 35 per cent reduction target proposed by Dr Wright - while fixing nitrogen for rotating food crops in subsequent years.
A third industry player, British biofuels pioneer Argent Energy, said it would be unable to proceed with a $70 million production plant in the North Island in the absence of a mandatory sales requirement.
The head of its New Zealand operation, Dickon Posnett, said it would have to move abroad from where it would probably end up by importing tallow from New Zealand.
Mr Posnett said it was unnecessary to delay or scrap the legislation as rules already adopted by Britain and the European Commission could be used to ensure any imported biofuels met sustainability targets over time.
Mr Posnett acknowledged that sustainability targets could take some time to establish, saying the priority for the first year or so would be to require oil companies to report on their import sources, rating levels of environmental acceptability and carbon reduction.
Those reports could then be used to establish sustainability targets which the companies would have to meet to fulfil sales obligations.
