Solid Energy enters biodiesel market

9 May 2007

Solid Energy enters biodiesel market

Solid Energy has expanded its bioenergy business with the acquisition of biodiesel producer, Canterbury Biodiesel, and plans to increase annual production to 70 million litres within three years which will meet more than half the Government’s 2012 target for biofuels.

The business will operate as a division of Solid Energy New Zealand Ltd, trading as Biodiesel New Zealand. Paul Quinn, who founded Canterbury Biodiesel in 2005 and has 15 years experience in the automotive industry, has been appointed General Manager.

Solid Energy Chief Executive Officer, Dr Don Elder, says that entering the biofuels sector “is a logical, but significant step from our already established market position in bioenergy with our wood pellet business, Nature’s Flame. We identified some time ago that we wanted to build a diversified portfolio of energy businesses alongside our existing coal mining operations. This strategy, and our increasing presence in the bioenergy sector, support national objectives to increase energy security and affordability in future through utilisation of diverse indigenous energy resources while also increasing renewable energy and reducing energy-related emissions”.

Paul Quinn adds: “We’re really pleased that we’ve joined with Solid Energy to move this business to the next level – we share the same vision that biodiesel offers New Zealand a major opportunity to reduce emissions from transport fuels and at the same time produce a fuel which is easier on engines and the environment.”

Biodiesel New Zealand currently produces about 1 million litres of biodiesel a year from its plant in Addington, Christchurch, by converting used cooking oil collected from restaurants and other food processing businesses in the South Island and has expanded used oil collection into the North Island. The company is also investigating the potential for producing biodiesel from energy crops such as canola. Biodiesel’s current customers are operators of fleets, including bus, trucking and earthmoving companies which operate very high ratio blends made up of 60 to 100% biodiesel.

While the focus of the biodiesel expansion is on the external market, Solid Energy will also assess the use of biofuel in its own operations. In its existing coal and biomass businesses the company currently uses about 15 million litres of mineral diesel a year and our contractors an additional 25 million litres. In underground mines biodiesel also offers safety advantages over mineral diesel due to lower emissions.

New Zealand currently uses about 3,500 million litres of diesel a year. The Government has mandated that biofuels will form an increasing percentage of transport fuels from 1 April 2008, with a target rising to 3.4% of all fuel sold by (oil companies) by 2012. Solid Energy’s plan to increase production to 70 million litres per annum, at an estimated cost of $20 million, will equate to around 2% of the country’s total diesel use and more than half of the Government’s target for biofuel in 2012.

Dr Elder concludes: “Paul Quinn and his team have done a great job establishing this business and we believe that together we can grow the operation and at the same time support the New Zealand economy. New Zealand is one of the richest countries in the world in indigenous per capita energy resources. Increased use of biodiesel will offer greater energy security and, as imported oil prices continue to increase, better affordability while at the same time reducing environmental impacts. This was the principle behind our submission on the draft National Energy Strategy and one which we are putting into practice in our own business.”

ENDS

Notes
1. Solid Energy’s businesses now cover coal mining, bioenergy (biomass and biodiesel) and new energy uses for coal. Solid Energy is investing $100 million in clean coal technologies and alternative new energy sources including:
- Established in 2003 with the purchase of a Canterbury biomass business, Nature’s Flame produces pellet fuel from wood residues for the home and commercial heating markets. A second manufacturing plant was opened in Rotorua at the end of 2005 and Nature’s Flame is now moving into the installation and conversion of pellet boilers in light industrial, commercial and public buildings.
- Solid Energy is piloting the development of coal seam gas in the Waikato; extracting methane gas trapped in deep coal seams as a source of energy. This investigation is also being extended into Taranaki.

2. National Energy Strategy: Solid Energy’s submission on the draft National Energy strategy is available on request or on our website at www.coalnz.com. In summary we advocate that:
- New Zealand’s energy, climate change and land use management strategies should be considered together and aligned with the objectives of:
o Increasing security of supply;
o Ensuring the competitiveness of New Zealand’s economy and the availability of affordable energy
o Promoting environmental sustainability and combating climate change.

- Future scenarios for energy and climate change internationally are almost impossible to predict yet they will have a huge impact on New Zealand’s small economy, especially on our major primary and export businesses. It is in New Zealand’s best interests to align with the policies of our trading competitors, and not work in isolation.

- There will be financial implications for New Zealand if we have to pay for carbon above our main trade competitors. If the difference was NZ$5 per tonne of CO2 this would mean a 10 per cent increase in our relative cost of energy. This equates to a 1.5 per cent drop in competitiveness and a lagged decline in Gross Domestic Product of up to $600 million per annum.

- With a thousand years of secure, affordable, indigenous energy available from coal – that can create economic prosperity and increase our international competitiveness significantly – the challenge is not to achieve the transition to renewables as soon as possible. The real challenge is to maximise our short-term and long-term economic and social wellbeing while simultaneously managing a very long-term – 50 years – transition to renewables with minimum short-term effects on the physical environment.

- New Zealand should look to use its extensive coal and woody biomass sources, natural gas, wind, solar and other new energy options to act as a buffer against unknown future global costs of energy.

- Solid Energy believes that optimal strategies to meet national energy and climate change objectives will be best aligned if they support our large producer/exporters moving towards world best practice in efficient, even if energy and emissions intensive, value adding production.

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