As announced in the Herald, Z Energy is planning to build a biodiesel plant. The company has been looking at this option for quite some time, but they’re now at the stage where it’s looking pretty likely. As per the statement they released to the NZX:
While Z has publicly discussed the potential for this project in the past, the Z Board has approved the project, subject to the completion of regulatory and resource consenting – including approvals from competitor companies to construct a blending facility at the Wiri fuel terminal – and the finalisation of key contracts.
The company intends to build the plant over the next year or so, and it will produce 20 million litres of biodiesel a year, using tallow as a feedstock. Tallow is a waste product from meat processing, so it avoids one of the common concerns around biofuels – that they’re made from crops which would otherwise be used as food.According to the MBIE, New Zealand produces 7 million litres of biofuels a year – a drop in the bucket as far as transport energy is concerned, and with biodiesel production at just 1.4 million litres. The MBIE go on to note:
In New Zealand, biodiesel is currently produced from tallow, oilseed rape and used cooking oil, resulting in life-cycle greenhouse gas emissions 40 to 50% lower than those from fossil diesel. As tallow and used cooking oil are by-products of other industries and oilseed rape is grown as a break crop on grain fields to increase soil quality, current New Zealand biodiesel does not compete with food production or compromise biodiversity or soil quality.
We produce plenty of tallow in New Zealand, with one presentation suggesting that we could use it to produce around 150 million litres of biodiesel a year. At the moment, though, no one is really producing biodiesel on a major scale in New Zealand.
New Zealand uses about 4 billion litres of diesel a year, so 20 million litres is less than 1% of that supply – even a full 150 million litres would be less than 4%. No doubt there’ll be a lot of people watching to see how the Z plant turns out, or whether oil prices (or Emissions Trading Scheme charges) rise just that little bit extra to make biofuels more viable, but it seems unlikely that they’ll play more than a niche role given current technology and feedstocks. Of course, that’s not to say we shouldn’t be investing in it, and it’s good to see Z willing to make the first move.
The main reasons that biodiesel hasn’t taken off so far come down to dollars and cents. The short-lived Biodiesel Grants Scheme ran from 2009 to 2012, but hasn’t been renewed. Carbon charges under the Emissions Trading Scheme have fallen to the point where they’re pretty much negligible, so there’s not really much incentive to produce lower-emissions fuels. Biodiesel is a bit more expensive to produce than regular diesel – although Z reckon the difference is only a couple of cents a litre, given current oil prices. They hope to recover the higher costs through charging a slightly higher price to the customers who choose to use it. That would mainly be large-scale commercial clients who want to make it part of their sustainability story, although a 5% biodiesel blend is likely to be offered at Upper North Island petrol stations as well.