A Taupo man charged with setting his car alight in central Wellington has been refused bail, despite his terminally ill mother agreeing to have him to stay for what she expects to be her last Christmas.

Christopher Charles Palenski, 40, unemployed, made his second appearance in Wellington District Court this afternoon without entering a plea to the count of arson, knowing danger to life was likely to ensue.

The charge has been laid under the Crimes Act and carries a maximum penalty of 14 years in jail.

Palenski allegedly set his car on fire in busy Cuba Mall last Saturday, the fire and explosion were captured on video and uploaded to social networking websites.

Lawyer Janine Bonifant told Judge Peter Hobbs there was "a strong likelihood'' the case would be defended.

Ms Bonifant said Palenski's parents were prepared to take him in. Palenski's mother was terminally ill and wanted her family around her for what could be her last Christmas.

It was also revealed in court that Palenski is due in the Taupo District Court within the next fortnight on two counts of threatening to kill.

He is accused of using a public telephone on November 22 to make bomb threats to Wellington staff at the Rural Bank and the New Zealand Stock Exchange.

"Now you have allegedly offended in a particularly serious way,'' Judge Hobbs told the defendant today.

While on bail, Palenski allegedly drove to Wellington, parked in the middle of busy Cuba Mall about 1.30pm, spray-painted a protest about the banking system on the vehicle, and walked around to the boot.

Ignoring passing pedestrians, Palenski allegedly lit flammable material inside the car and caused an explosion which threw him backward and shattered the windscreen.

Telling shocked bystanders that the car was full of petrol, he instructed them not to put the fire out.

A witness took a graphic video of the incident, which was screened on national television.

"The evidence against you because of that film seems overwhelming,'' Judge Hobbs told Palenski.

The "obvious and real concern'' of the police - who opposed bail - was that he might offend again.

"I cannot have any confidence at all that you will not act out in a similar way.''

He declined bail and remanded Palenski in custody until December 19.