The following is a press release from Energy and Resources Minister Megan Woods.
- Minimum onshore fuel-holding obligations, with additional Government-held diesel reserves
- Sustainable Biofuels Obligation postponed till 2024 to give sector more time to prepare, and reduce potential costs to consumers
- Regulatory option for Commerce Commission to set fair prices, if needed
The Government is strengthening New Zealand’s fuel sector through a suite of initiatives to increase supply resilience and sustainability, and to encourage more competition, the Energy and Resources Minister Dr Megan Woods has announced.
“These improvements will pave the way for a more stable, low-emissions fuel supply, greater choices for consumers, and a more competitive wholesale fuel market with the power for the Commerce Commission to regulate prices, if required,” Megan Woods said.
“We know many households are struggling with the increased cost of living, so we are pulling back on any potential extra costs on consumers as a result of the biofuels obligation.
“This supports a range of actions we have taken to ease the pressure on families, alongside the extension to our fuel tax cut, reduced road user charges and half price public transport until January 2023.
Improving our fuel supply resilience
“We are improving New Zealand’s fuel supply resilience with onshore fuel stocks obligations for the fuel sector as well as Government-procured diesel storage.
“The Government has agreed to a package of actions to ensure sufficient fuel stocks are held onshore to further improve our fuel supply resilience and economic security.
“Having a sufficient supply of onshore fuel stocks will help shield us from major disruptions to international oil and fuel markets, natural disasters and infrastructure failures. And while the risk of a major disruption to our fuel supply is very low, the impacts would be significant and felt across the economy,” Megan Woods said.
“Fuel importers and wholesalers with bulk storage facilities will be required to hold minimum levels of onshore stocks of petrol, jet fuel, and diesel. Minimum fuel stockholding levels for them will equate to approximately 28, 24 and 21 days’ worth of petrol, jet fuel and diesel respectively.
“The Government will also procure additional onshore storage of reserve diesel stocks of at least 70 million litres of diesel, providing approximately seven days’ cover.
“The focus on diesel for additional stockholding reflects the importance of diesel for the operation of critical services, such as emergency services and deliveries of food and essential goods. Transport fuels currently underpin the day-to-day running of our economy and it’s vital we manage our fuel resilience well.
“New Zealand’s fuel supply has always been reliant on imports, as the refinery was configured to refine imported heavier crude oil. The difference now is that we no longer import crude oil, instead we import refined fuel products from a range of overseas refineries. The additional onshore storage of diesel stocks will also boost our contingency supply,” Megan Woods said
An independent review of national fuel security was done when New Zealand’s refinery signalled it would transition to an import-only terminal for storing fully refined fuels.
The review found the refinery’s closure improved the overall resilience of our fuel supply chain in the sense that we no longer face the risk of a single point of failure associated with an unplanned refinery outage, and fuel companies now deliver fuels to New Zealand in more frequent shipments from more diverse sources.
Sustainable biofuels to help reduce emissions
“While we recognise fossil fuels will continue to play an important role in our transport system for some time, we are setting in motion other actions to help us reach our emissions budgets.
“The Sustainable Biofuels Obligation has a significant role in supporting this and delivering the Government’s Emissions Reduction Plan (ERP); it will prevent around one million tonnes of emissions from cars, trucks, trains and ships over the first two years and up to nine million tonnes by 2035.
“We are moving the start date for the obligation for fuel wholesalers to deploy biofuels into their fuel supply, out to 1 April 2024 instead of next year, to allow the sector more time to prepare. This will allow wholesalers to get the necessary infrastructure in place, and to source high quality feedstocks.
“It’s also reducing any extra potential costs consumers could face; while biofuels will account for a very small part of the overall fuel price, we recognise that motorists don’t need any extra costs in the current cost of living crisis.
“Fuel wholesalers will need to meet emissions intensity reduction targets of 2.4% for 2024 and 3.5% for 2025. Provisional targets will be set for 2026 and beyond, increasing up to 9.0% by 2035, with adjustments on the intensity targets in the intervening years to make up for the year’s delay in implementation.
“Biofuels are a great way to reduce emissions without replacing existing ICE vehicles. Biofuels alone won’t get us to net zero, but they are an important part of the toolkit to help us manage a fair, inclusive and equitable transition to a low-emissions future,” Megan Woods said.
Regulatory backstop to promote competition in the wholesale fuel market
“The Government has also agreed to give the Commerce Commission the power to step in and set fair prices if needed, to encourage more competitive wholesale pricing and bed in the changes we have already made.” Megan Woods said.
A terminal gate pricing regime was one of several changes brought in under the Fuel Industry Act 2020 to improve competition at the wholesale level and increase the transparency in fuel markets. The terminal gate pricing regime requires wholesale suppliers that sell from terminals to post a daily spot wholesale price (the terminal gate price). If requested, wholesale suppliers must supply the retailer with the requested amount at the terminal gate price. This improves access to the wholesale market and provides for transparent wholesale prices, which makes it easier for new participants to enter the market and for existing fuel sellers to expand into other regions.
The regulatory backstop measure was recommended by the Commerce Commission in 2019 as part of its fuel markets study which prompted the Act.
“While the Act is already facilitating a more competitive wholesale fuel market, there are some outstanding risks to the success of the terminal gate pricing regime,” Megan Woods said.
“For example, the increased price transparency helps competition, but there’s a risk that wholesalers could co-ordinate prices, due to the greater wholesale price transparency, unless there are some disincentives built into the system.
“Following consultation with the sector in 2020 we are now pushing through on development of the backstop regime, which would allow for terminal gate prices of one or more wholesale suppliers to be price regulated if excessive terminal gate prices are found to be offered. It is expected to come into effect in mid-2023.
“This suite of measures strengthens our fuel system to make it more secure, sustainable and affordable for all New Zealanders,” Megan Woods said
42 Comments
"We are moving the start date for the obligation for fuel wholesalers to deploy biofuels into their fuel supply, out to 1 April 2024"
...and if we have a car that can't run on biofuels or ethanol, like many 2010s, classics or other such vehicles (even if they are doing limited km) then what are our options for fueling those?
The average age of our vehicle fleet is 14 years old. So there's going to be a lot of cars out there that don't play well with E10 or whatever the standard ends up becoming.
Actually, older vehicles are more likely to be able to run biodiesel. Modern diesel engines are built with very tight tolerances, and require fuel with such exact properties that they can't use anything other than highly refined petrodiesel (at least not efficiently). Older diesel engines have looser tolerances and will accept a wider range of fuels.
Will there be a lot of cars out there? The UK Government for example has a check vehicle for E10 tool by Manufacturer.
https://www.gov.uk/check-vehicle-e10-petrol
Toyota
E10 petrol is cleared for use in all Toyota European petrol models made from January 1998, excluding:
- Avensis 2.0 litre with engine 1AZ-FSE made between July 2000 and October 2008.
- Avensis 2.4 litre with engine 2AZ-FSE made between June 2003 and October 2008.
Nissan
E10 petrol is cleared for use in all models with petrol engines from 1st January 2000. Older petrol models should continue to use E5.
Commerce Commission the power to step in and set fair prices
How is this supposed to work? How does ComCom ascertain "fair"?
Does this mean the fuel retailers have lost the independence to price their offerings? If a Z gas station chooses to sell 91 at a premium over competitors in the vicinity, could they be penalised for it?
Anyone awake out there...as to what is really going on with our wrong doings....Government wise..that is.
When you get a dyed in the wool lifelong stalwart of Labour like Chris Trotter openly criticizing them , you know Ardern's government are completely off the rails , completely uncontrolled , 100 % barking mad ...
... 12 more months of the daily insanity ... then we can boot these buffoons into the gutter ...
Yes, very.
That is the crux of the whole thing.
We use the energy which originated from the sun (and which we cannot replicate). Recently, we have been burning fossil acreage; historical sunlight. We are now entering a period of adjustment to living on real0time solar. Contrary to the techno-optimistic rave, collecting solar energy is an energy-demanding activity, and the further removed from source, the more the loss.
We are now witnessing the clash for solar acreage; CO2 offsetting, farming, fuel-production, biodiversity-needs, urban sprawl. And we've been living as if we had orders-of-magnitude more acres than exist real-time above ground.
Put that in front of a NZ journo, though, and it won't see the light of day.
Z canned their biofuel experiment, because the cost of tallow had risen so much . s o now we will export tallow , and import it back as Biofuel .
the government should set up a network for collection and rendering of animal waste . Currently a lo is going to landfill. also require fat traps on sewage lines form all food premises and collection. Then , the biofuel plant will be economic , but probably best not controlled by a oil company.
It's not clear exactly what the biofuels are going to be made from, just checked and they are not going to use palm oil which is widely used around the world as a cheap bio fuel.
I like the idea of using sewerage as biofuel, that makes a lot of sense to me, sewerage is also full nutrients that could be recycled into fertiliser if it was treated properly.
Actually, food nutrient needs to be recycled - needs the loop to be closed.
We've been running a linear/extractive food-production system. That was temporary, for obvious reasons.
https://www.taylorfrancis.com/books/edit/10.4324/9781315764375/creating…
Best book on the subject; Mike Rann appointed him 'thinker in chief' - an example of good governance.
Actually we used to go an collect it in a trailer a few months after it had sat about after being dredged from the shit ponds in Albany. It was like a black soil and apart from numerous condoms in it it was great for converting the pure clay you got left with in the bays.
... in actuality , not really ... they'll appoint a working group to assist the com com into a study of a complaint about high petrol prices ... in a year they'll come back with a finding ... meanwhile the barrel price of oil could've risen or fallen 50 % or more ...
I personally think....those Jetting around and around and around trying to look worth(While).....having are what we should be aiming at, not a car-less day...
Fueling the future of our Fair Country and zapping around 3 Water and gifting Money to buy votes off other individuals who might....just might Vote for our beloved Leader at the next election.....if Truth be Told???. is not what we actually need as a Nation with ......Pride.
2 million wasted on a "Subject"...is actually quite ....Subjective.......if ya get my drift.
Buying Votes is not what we are all about........no matter what colour you put on it...I belive it is called ...........Caroption....Sorry that was Corruption. A spell in clink in other Nations........but no matter what I say.....to fuel our economic Futures and get the right people voting, we will be left with.......a fiddler on the Roof, if not care-full.
Being blunt. Wake up New Zealand....you are being Fiddled with on a Daily Basis. Votes Count....even when bought.
Don'tcha Thunk. ...cos some...don't.
Yes, and the most ignorant vote-buying attempt today - unfortunately not challenged due to inept RNZ journalism - was Luxon on Morning Report.
Claiming we can use the ocean.
https://www.stats.govt.nz/indicators/ocean-acidification
There's the data - Where the F has he been?
Basic ignorance. Leadership material? Ah, no.
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