Biodiesel Potential in New Zealand Andrew Smith Advisor Renewable Energy EECA 26 July 2006

Presentation outline Why Biodiesel? Production Feedstock Availability Costs of production Government involvment Biofuels Sales Obligation Future directions Summary

Why Biodiesel? Colonial fuel self sufficiency Agricultural support Renewability/Sustainability Carbon emissions/Climate change Security of supply

The real benefits Renewable Low net carbon emissions Numerous potential feedstock sources Reduced exhaust emissions Biodegradable and non toxic Better for engines Smells good

The real issues Cost? Low temperature properties Vehicle compatibility with higher blends Unusual vehicle fleet in New Zealand New Zealand is a long way behind many other countries

Production Oils or fats + methanol = biodiesel + glycerol

Feedstock

Feedstock availability Waste cooking oil – 4000 tonnes p/a Tallow –NZ produces roughly 150,000 tonnes p/a –Of that 30,000 tonnes are used domestically –120,000 tonnes are exported If 120,000 tonnes can be used to produce biodiesel this would be equivalent to 5% of current diesel use

Costs of production Best estimates are a production cost of approximatley NZ$0.70 a litre This makes biodiesel economic at oil prices of between US$45 – 50 bbl As of yesterday crude oil was US$75 bbl What will the price of oil be this time next year?

Government Involvement Since 2001 there has been an indicitive target of the use of 2 PJ (<1%) of biofuels in NZ by 2012 To date been in a classic ‘chicken & egg’ situation –Fuel users can’t buy biodiesel so there is very limited demand –Biodiesel manufacturers won’t invest without good demand Incentives aren’t really appropriate for something that is clearly economic currently Solution is to stimulate demand

Biofuels Sales Obligation In 2008 the government is proposing to introduce a biofuels sales obligation All oil companies will be required to sell a small percentage of their annual fuel turnover as biofuels The percentage will ramp up till 2012 Volume required will be tied to feedstock availability and ‘lumpiness’ of supply

Future directions Biodiesel from crops Biodiesel or synthetic fuel from algal oil Synthetic fuel from biomass

Summary Biodiesel a good option for supplementing mineral diesel supplies Economic now when produced from waste and by-products Close to being indroduced in New Zealand Good potential for increased production in the future Likely to be a subject of increasing R&D over the next 5-10 years