Government policy

Currently, bioethanol is exempt from excise tax. This means that when bioethanol is blended with petrol, excise of 50.5 cents per litre is only paid on the petrol portion of the fuel, and no excise is paid on the bioethanol portion. Further information about biofuels and related government policy can be found at link).

What is biofuel?

Biofuel is a generic term for fuels that can be produced from or are made up of a renewable material of plant or animal origin. Often they are substitutes or partial substitutes for fossil or mineral fuels. Biofuels used in transport are typically bioethanol which is used as a petrol substitute and biodiesel which is used as a diesel substitute. These are the biofuels that are most likely to be used in New Zealand in the medium term. Biofuels have the major advantage of not contributing to overall greenhouse gas emissions.

What is biodiesel?

Biodiesel can be produced from any vegetable oil or animal fat and used as a substitute or partial substitute for mineral diesel. To produce biodiesel, these fats or oils are chemically converted to esters that have properties similar to mineral diesel. Biodiesel is often blended with mineral diesel and is available for retail sale in New Zealand in blends of up to 5 percent. Some commercial customers buying fuel in bulk may use higher blends of biodiesel. Blends of up to 5 percent in mineral diesel are suitable for use in diesel engines without modification. Higher blends may be used in dedicated fleets.

What is bioethanol?

Bioethanol is an alcohol made from sugar, starch and products containing sugars and starches, through a process of fermentation and distilling, and used as a substitute or partial substitute for petrol. Bioethanol has properties that are similar to petrol so it is often blended with petrol. In New Zealand bioethanol-blended petrol is available in blends of up to 10 percent, although it has also been introduced at a lower level blend i.e 3 to 5 percent in some petrol. Higher blends may be used in dedicated fleets.

What is the difference between first and second generation biofuels?

First generation biofuels are produced from sugars, starches, vegetable oils or animal fats from proven technology. Examples include bioethanol from whey and biodiesel from tallow.

'Second generation' biofuels generally refer to new methods of producing biofuels. They are not yet ready for commercial development but are the subject of extensive research and development internationally. Examples include the conversion of plant lignin and cellulose into fuels by enzymes and the gasification of biomass material followed by a "gas to liquid" Fischer-Tropsch process. Biomass that could be used in this process include all types of trees, grasses, agricultural plant wastes, straw and algae.

Can biodiesel and bioethanol be made in New Zealand?

Yes. New Zealand produces sufficient tallow, a by-product of the meat industry, which would, if converted to biodiesel, produce around 5 percent of our diesel fuel needs. Biodiesel can also be made from used cooking oil and rapeseed grown as a break crop. New Zealand currently produces bioethanol from whey, a by-product of the dairy industry. More bioethanol could be produced from whey or other waste and by-product sources. Maize is also a possible feedstock for bioethanol production in New Zealand.

What are the benefits of biofuels?

Using a biodiesel blend has a number of benefits, which are reduced net carbon dioxide emissions, reduced emissions of concern to air quality and human health, better fuel lubrication and reduced deposits in your diesel engine. Biodiesel is also non-toxic and biodegradable.

Using a bioethanol-petrol blend reduces net emissions of carbon dioxide and provides some air quality benefits. Bioethanol is also a relatively high octane fuel.

What countries currently use biofuels?

Biofuel blends are widely used around the world. The USA, Brazil, Canada, most European countries, Australia, China, India and Thailand all use biofuel blends and have done so for many years.

Can biofuels be used in all vehicles?

Modifications are not necessary for petrol or diesel vehicles using low level biofuel blends. Petrol engines tuned correctly for use on ordinary petrol would normally not exhibit any problems with using bioethanol-petrol blends of up to 10 percent ethanol. Diesel engines tuned correctly and regularly serviced would not normally exhibit any problems with using bio-diesel blends of up to 5 percent biodiesel. Most modern vehicles are compatible with higher biofuel blend levels.

Owners of new vehicles are able to find out whether a manufacturer supports the use of bioethanol in its new cars by asking their representative in New Zealand. A summary of relevant manufacturer's statements has been made available by the Motor Industry Association. It is available on the Motor Industry Association website(external link) or through the New Zealand Automobile Association(external link).

The Ministry has carried out corrosion testing on bioethanol blended petrol on aluminium engine components. These tests simulate the use of bioethanol blended petrol in vehicles previously used in Japan. Tests found that petrol blends containing bioethanol up to 10 percent do not cause corrosion in fuel systems of vehicles previously used in Japan.

Read the full test results here [PDF, 5.1 MB]