Government announces end to biofuels mandate

Prime Minister Chris Hipkins earlier this week announced the biofuels mandate, which would have required carbon-neutral biofuels to be added to petrol, will not proceed.

The Government’s decision to scrap the biofuels mandate is a win for cash-short Kiwis, the Motor Trade Association says.

“The mandate would have increased the price of fuel, and given the pressure on households that’s not something I’m prepared to do,” Hipkins said in making the announcement.

The effect on households was an issue MTA foreshadowed in its submission on the Sustainable Biofuels Obligation Bill last month.

“The obligation, and its implications for the importation of biofuels, at least in the short to medium term, will increase the fuelling costs motorists face. Budget constrained households will be disproportionately affected,” MTA wrote in the submission.

“Such households are more likely to already experience higher fuelling costs as they predominantly own older, less fuel-efficient vehicles compared with the average age of New Zealand’s fleet.

“The obligation is estimated to increase fuel prices by 5 to 10 cents per litre – adding further strain to budget-constrained households.

“Reduced energy affordability diminishes New Zealand’s public ability – more specifically the ability of low-income and budget-constrained households, to participate in society, for instance, their ability to commute to work and school affordably.”

Notwithstanding the decision, MTA recognises the need for pragmatic action to address climate change and that the sector has a key role to play to achieve targets.

The mandate was estimated to prevent 1 million tonnes of emissions from entering the atmosphere within the first two years of its effect.

MTA wants to ensure the industry can innovate and diversify in a way that New Zealand can leverage all available low emission technologies and work towards a ‘net’ zero emissions future.