Service station chain Z Energy is expecting a new push to replace some of its fossil fuels with renewables will be a struggle.
The company wants to revive a biofuel project in Auckland that earlier went bankrupt.
The fuel retailer says it could produce 20 million litres of biofuel annually, sourced from tallow, that could be used to make 400 thousand litres of diesel with a 5% biofuel blend.
Chief executive Mike Bennetts told a conference in Wellington his company must try to reduce its carbon footprint, but the supply of cheap shale oil and the lack of Government support will make it hard.
He says the tallow scheme has advanced to design work on a $15 million project and a decision will be made this month on whether to proceed.
He said the project earlier got to pilot level but the company then lost financing for it and the company was liquidated. Z Energy has now bought the intellectual property but Mr Bennetts doesn't think the plant can be built on its current location.
"We're actually completing the engineering design on both a new building and the plant itself. That work will be completed by the end of February and if it lines up with our original estimates we'll go ahead with the investment."
Mr Bennetts says $10 million of the investment would go on the plant and the rest on the supply chain.
Z Energy, owned by Infratil and the New Zealand Superannuation Fund, bought the Shell network of more than 200 service stations and 90 truckstops in 2010.