Energy and Climate Change Minister David Parker says introducing lower emission biofuels means there will be ‘‘unavoidable'' costs for consumers - alongside other mounting consumer costs associated with climate change issues and policies.
BP New Zealand managing director Peter Griffiths told the local government and environment select committee yesterday that the Biofuel Bill before Parliament would see the company's costs ‘‘skyrocket''.
‘‘We will have no choice but to pass these on to our customers.''
The Bill requires oil companies to sell a minimum percentage of biofuels from July. Oil companies initially would be required to sell 0.53% of biofuels, rising to 3.4% in 2012.
‘‘While, on the face of it, 3.4% does not sound like a very high target, the way in which it is calculated [on energy content] and must be implemented means over 90% of petrol and 30% of diesel will need to contain a bio content in order to meet the mandate,'' Mr Griffiths said.
‘‘The infrastructure required, additional raw bio material product costs, implementation and compliance costs will see our overall costs skyrocket.''
It was one of the highest biofuels targets in the world and could not be delivered ‘‘at the moment'', he said.
‘‘In addition, the mandate is too high, too fast and fails to deliver any of the three main aims of the Bill: sustainability, security of supply and carbon reduction.''
Mr Parker was unavailable for an interview yesterday but emailed a brief response when
approached by the Otago Daily Times.
‘‘There is an infrastructure cost involved to the country that we face if we want to introduce biofuels into New Zealand. That cost is unavoidable,'' Mr Parker said.
A spokeswoman said on Mr Parker's behalf that he would not discuss issues before a select committee. She said the Government would consider all issues raised by BP.
In an interview on climate change policies last September, Mr Parker estimated petrol companies would pass on costs of 4c a litre, meaning they would get no carbon credits to help them out.
Speaking on a similar climate change theme at the time, regarding electricity generators putting prices up 5% in 2010 because of carbon emissions, Mr Parker was quoted saying such increases were ‘‘a small price to pay to combat global warming''.
BP yesterday proposed a biofuel target starting at 0.23% and rising to 3.23%, but added three years to the proposed target in biofuel delivery, from 2012 to 2015.
BP said its proposal would reduce compliance costs and allow time for more biofuel compatible cars to be introduced and for NZ biofuel production to develop. BP noted the average age of NZ vehicles was 12 years, making them less likely to be compatible with biofuels.
