6 Jul 2010

Govt sweetens underused biofuel subsidy fund

6:01 am on 6 July 2010

The Government is trying to salvage its policy to promote biofuel. It wants better uptake of a multi-million dollar environmental fund, which has hardly been touched so far.

The Government says the $36 million scheme for subsidising biofuels has been largely ignored, so it's widening eligibility for the subsidy, which can be up to 42.5c a litre.

The move is being welcomed by Liquid Biofuel Group convenor Andre Hamman, who says he hopes it will help the industry to achieve 20 million litres of biofuel production a year.

Energy Minister Gerry Brownlee says the production and sales of biodiesel have been massively below expectations.

Restriction too low - minister

To qualify for the subsidy under the criteria up to now, no more than 20% of biodiesel could be used in a blend with ordinary diesel. That has been extended to include sales of blends with more than 20% biodiesel.

Mr Brownlee says the 20% restriction was too low. He says producers can now find customers who are prepared to take much bigger blends as a replacement for fossil-fuel diesel.