Biodiesel Potential in New Zealand

Andrew SmithAdvisor 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

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

www.eeca.govt.nz