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Biofuel pilot scheme faces winding road

Queenstown tourism operators are scrambling to establish a viable local biofuel industry before government assistance expires.The Queenstown Lakes Biodiesel Consortium's pilot scheme has been the beneficiary of a two-year government manufacturing sub

Nina Fowler
Fri, 23 Apr 2010

Queenstown tourism operators are scrambling to establish a viable local biofuel industry before government assistance expires.

The Queenstown Lakes Biodiesel Consortium’s pilot scheme has been the beneficiary of a two-year government manufacturing subsidy of 42.5c a litre, which has kept pump prices down to just one or two cents more than regular fuel.

Once the subsidy expires, prices will be pegged to the global oil market, and whether volumes can be improved sufficiently to entice major fuel companies in for a piece of market share.

Steve Henry, head of school at the Otago Polytechnic Centre for Sustainable Research, was confident that enthusiasm for the pilot scheme would continue to grow.

“Tourism operators are desperate for this stuff,” he told the annual EECA transport industry conference in Wellington on Wednesday, citing a 2009 Queenstown tourism agency survey indicating 85% of visitors expect visible reductions in emissions by transport operators.

Kiwi Discovery and Queenstown Rafting general manager Tim Barke agreed on the need to defend the “clean, green” brand.

“We’ve looked at what’s happening throughout the rest of world and there’s a strong potential for people’s focus to become more and more environmentally sustainable, not just economically sustainable.”

“We want to get ourselves ready earlier for that rather than later."

Sixteen vehicles have registered with the pilot scheme, drawn from across the 30 companies who signed up to become consortium members. More vehicles have been promised but vehicle manufacturer support and continued price competitiveness for biofuels remains crucial.

Mr Barke said he would be willing to absorb a price increase of up to five cents per litre but that the decision would require a “hard look.”

He believed other tourism operators could be likely to take a similar approach.

Certain companies might take on a price rise as a “feel good factor” marketing cost, he said, but the only way to get general public and marketplace acceptance was to offer biofuels at either a break even rate or as a cost advantage.

Kiwi Recovery has two vehicles currently in the scheme, from a fleet of over 30, and hopes to add all 10 of their ski buses by winter. The company is not willing to risk their bigger and more expensive tour coaches until manufacturing guarantees are extended to cover biofuel use.

Coach tours remain a major feature of local tourism, with up to 120 40- to 50-seater Volvo B-12s travelling daily to Milford Sound during peak season. Volvo guarantees the B-12 for an up to five percent B5 biofuel mix, but not the 20% B20 mix offered by the Queenstown consortium.

Clive Jones, national sales manager for Volvo Truck and Bus, told NBR  an extension to cover B20 grade fuel would require suppliers to gain European standard certification, and that the predominance of cooking fat used in locally produced biofuel would make certification difficult for local producers.

At this point, the success of the Queenstown biofuel project over the next two years appears to fit the chicken and egg scenario.

If sufficient vehicles enrol with the scheme, major fuel companies may be enticed into the market to supply certification-level biofuel, leading to a removal of manufacturer barriers, lower prices at the pump, and a further increase in demand.

Until this critical level of interest is reached, however, the Queenstown consortium looks set to remain reliant on local and national government subsidies to prove to themselves and wider industry that biofuels are a valid alternative to mineral fuels.

Nina Fowler
Fri, 23 Apr 2010
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Biofuel pilot scheme faces winding road
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