Drivers favour biofuel if it saves money

Most New Zealanders would use biofuel if it saved them more than 10c a litre and almost a third would switch for a saving of less than 10c.

An online survey of 2851 people released by the Sustainable Business Council revealed most supported cutting tax on biofuels. But council chief executive Peter Neilson said people were being put off switching to biofuel because two-thirds did not know if their cars could take it.

A ShapeNZ online survey - conducted over three days last month and weighted by age, gender, income, ethnicity and voting habits - found 58 per cent of people supported making biofuels cheaper by cutting taxes.

The National Party said during the election campaign that it would reduce excise tax (for petrol) and road-user charges (for diesel) until a substantial proportion of people were using biofuels. It has already repealed compulsory sales targets for biofuels set by Labour.

But the new study suggests the Government would need to do more than cut excise tax on the biofuel component of a 10 per cent biofuel blend to get the majority of people to use it.

When they were asked how much cheaper biofuels would need to be before they would use them, 29 per cent said they would switch if biofuel was 10c a litre or less cheaper than ordinary fuel. That figure rose to 67 per cent if the saving was more than 10c a litre.

AA policy analyst Mark Stockdale said excise tax accounted for 52.57c of the cost of a litre of ordinary petrol.

That means a biofuel blend that is 10 per cent ethanol - such as that sold at Gull petrol stations - works out just over 5c a litre cheaper than ordinary fuel because the ethanol component is free of tax. Ten per cent is the highest concentration of biofuel the Ministry of Transport is confident most vehicles can tolerate.

According to the survey, a saving of 5c a litre would convince only 10 per cent of people to switch to biofuels.

And although a 5c saving is already available at some petrol stations, just 2 per cent of people said they were using biofuels.

Mr Neilson said the gap between the number of people who said they would switch for a 5c saving and the number who did was probably explained by the fact most people did not know if their vehicle could take biofuels. Sixty-six per cent did not know if the vehicle used most often could run on a 10 per cent biofuels blend.

Mr Neilson said people should be notified when they got a warrant of fitness or registration for their car whether their make and model of car was likely to be able to take biofuels.

The survey showed people who earned less tended to be more supportive of financial incentives for biofuels. Not surprisingly, given that 77 per cent of people ranked rising fuel prices as the most serious problem facing their family, just under three-quarters of people supported financial incentives to buy low-emission, fuel efficient vehicles. Very high earners were an exception. Just over half of people earning between $150,000 and $200,000 opposed or strongly opposed financial incentives, compared with 7 per cent of the general population.

Parliamentary Commissioner for the Environment Dr Jan Wright, who opposed compulsory sales targets for biofuels last year because there was no ability to stop them coming from environmentally damaging sources like palm oil in Indonesia, said encouraging a domestic biofuels industry using financial incentives was a different issue and should be considered on its merits.