Biofuels company ditches NZ 

Leading United Kingdom biofuel producer Argent Energy is shelving plans to invest more than $100 million in New Zealand.

Dickon Posnett, managing director of Argent Energy's NZ subsidiary, says New Zealand's proposed legislation in the Biofuels Bill makes the playing field too uneven.

"Ethanol gets a government-backed subsidy, through relief from excise duty, that amounts to 42c a litre," he says.

"Oil companies are being incentivised to import ethanol. That makes it utterly uneconomic to invest in the domestic biodiesel plant we were proposing to build."

Posnett says New Zealand policy development is being watched closely by investors internationally.

"While the Europeans praise the Biofuel Bill in general, they are scratching their heads as to why New Zealand is the only country to regulate against its own domestic industry in favour of imports."

The Government, through its Foundation for Research, Science and Technology, dished out $45.6 million to two companies researching potential biofuel sources late last month. Posnett says Argent Energy totally supports R&D, but it questions how the government can ignore a natural resource it already has in abundance.

"This government has consistently pointed to tallow (waste animal fat) as an immediate biofuel resource, yet when push comes to shove to get legislation through parliament it proposes to place domestic producers at severe disadvantage."

Posnett has spent nearly two years in New Zealand working on a feasibility study for the construction and operation of a plant that would use tallow and used cooking oil to produce biodiesel.

Argent Energy's plant in Scotland has been supplying oil majors in the UK and Europe for more than two years and trucks, buses and cars have successfully run on blends with its European standard biodiesel in all temperatures.

Posnett says the Biofuel Bill currently going through Parliament contains the right elements to ensure New Zealand gets sustainable biofuel and a reduction in greenhouse gas emissions from transport. However, he says it is unfortunate government officials and politicians have not appreciated the benefits of ensuring the viability of a domestic industry to utilise the country's natural resources.

"Some politicians and lobby groups have also seized on the fact it is election year to use biofuel as a political football. They are conveniently disregarding some facts and selectively using information from overseas that is not totally relevant to what biofuel manufacturers here have proposed. New Zealand is the loser in that game."

Posnett says Argent Energy would still consider investing in New Zealand, create about 60 jobs and help to contribute to some self-sufficiency of fuel supply for the country, if the government worked toward making all biofuel equal in terms of tax and subsidies.

"Argent Energy is not looking for a hand out," he says.

"But we find it difficult to invest where our competitors are awarded what amounts to penalty tries by the referee even before the game begins.

"New Zealand needs to stop talking about its need to add value to its resources and actually do it. Much of its tallow resource is likely to go offshore and be converted to biodiesel which will get sold back here at a much higher price. It is tantamount to selling frozen lamb or beef carcasses and letting the importers overseas make the real margins by selling the juicy cuts."

Posnett says biofuel is an entrenched part of fuel supply internationally and it is expected to grow with the development of new technology. But at the end of the day it success comes down to the cost of getting the fuel to the pump.

"Biodiesel production technology using tallow is proven now and the cost of making it in New Zealand would be more than competitive - if we had a level playing field," he says.