31 July 2011

Biofuel plan stagnates while Government dithers

Work on a multi-million dollar plant to turn tallow into biodiesel is on hold while investors wait to see whether the Government will continue its biofuel subsidy.

Carbon News (www. carbonnews.co.nz) reports Ecodiesel and its backers say that the Onehunga plant could have been producing 20 million litres of biodiesel a year by now.

Instead, the plant is sitting half-built and overheads have been cut to a minimum as directors try to find out whether the Government intends extending the scheme beyond next year.

Independent chairman Lindsay Fergusson says that Ecodiesel’s patented process offers New Zealand a low-cost way to produce environmentally clean biodiesel, and the potential to sell the technology to other countries.

But, he told Carbon News, the country's specialist information service on the new carbon markets, that buyers from Asia and South America want to see the technology working first, and the New Zealand plant won’t be finished until the Government reveals whether the subsidy will continue.

“It’s extremely frustrating,” he said. “We have been to the Government with our investors, with a signed agreement conditional only on the scheme being extended.”

But, he said, the Government just won’t give an answer.

The Ecodiesel process was developed by CEO Gary Brockett, and differs from other systems because it works at a low pressure and temperature.

Fergusson says that this makes the process extremely cheap compared to other options. The Onehunga plant will cost $6m – half what it would cost if European technology was used.

The 20-million-litres-a-year capacity plant would be expanded to 40 million litres a year at a cost of $2 million, he said, and Ecodiesel would also build plants in the lower North Island and the South Island.

But those plans were developed under the Labour Government’s policy that required all diesel to be blended with biodiesel. That scheme was scrapped by the National Government and replaced with the biofuel subsidy.

Fergusson – a veteran of the oil industry and a former managing director of New Zealand Steel – says that the three-year time limit on the scheme was not enough to encourage investment.

Ecodiesel has received backing from Pacific Channel. Director Brent Ogilvie told Carbon News that it is the type of clean technology that New Zealand should be investing in, because it turns what is essentially waste (tallow from the meat industry) into a value-added product, and develops an exportable technology.

But it needs Government support, he says.

“There is no major jurisdiction globally that has a biodiesel industry that does not support it, either through a grant scheme or a subsidy, or through a purchaser or sales obligation.”

Acting Energy Minister Hekia Parata could not be contacted for comment.

Labour energy spokesman David Parker, who was Energy Minister when the biodiesel blending requirement was introduced, says that the policy would have seen the Ecodiesel plant in production by now.

The party has yet to announce its new policy on biodiesel.

ends

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