Wednesday, July 18, 2007

[PB] NZ: Biofuel decision may have to be made soon


The time is fast-approaching when New Zealand will have to make a
decision on taking farmland out of meat, wool and dairy production to
grow biofuel crops, energy research expert Professor Ralph Sims says.

Sims, the director of the Massey University Centre for Energy Research,
is a co- author of a just-released International Energy Agency report on
the global oil market. He said yesterday that the world faced a price
crunch in the next five years when demand from expanding Asian economies
would push world consumption from 84 million barrels a day to 95 to 100m

This was likely to have a big impact on New Zealand's agriculture
production as transport costs rose. It would prompt a closer look at

New Zealand had enough land to grow sufficient biofuels to fulfil all
its fuel needs but it would have to reduce its food exports to do so, he

"We're exporting milk, meat and wool to earn revenue to pay for our oil
imports. The time will come when there is a balance between our export
returns and the cost of growing our own biofuel."

He could not say when that would be but it was in the "foreseeable
future". Oil prices had doubled in the last three years to more than
$US70 ($NZ88.70) a barrel but would probably have to double again before
the use of "first generation" grain diesel would be profitable in New

"We will know more when analysis under way is complete," he said. "When
we have a better idea of when that crossover point will come, then we
can make investment decisions."

It would need similar vision to the Think Big projects of the 1970s,
which were triggered by an oil price shock.

"It's not a good example because a lot of money was spent and then oil
prices crashed. There's a risk involved this time, but there's a much
greater chance the oil price will stay high." This was because of
political uncertainty in the Middle East, increasing global demand and
international requirements to reduce greenhouse gases.

Although no big oil finds had been made lately there was more oil to be
extracted. As prices rose exploration would be stepped up and it would
become economic to tap into deep undersea beds.

But that was up to 20 years away and would not help when the anticipated
five-year crunch arrived. "New Zealand has this niche opportunity
because of our land, our agricultural industry and our climate. I am
convinced it is a decision we will have to make sooner or later."

Check for earlier Pacific Biofuel posts:

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