Focus area 3: Supporting domestic alternatives
Investing in domestic fuel alternatives will help reduce long-term supply risks but faces barriers.
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Investing in low-carbon alternative fuels can be risky. The technology may not be mature or proven, the costs may be high or there may be uncertainty about whether there is a market for that fuel.
Alternative fuels include biofuels, hydrogen, and electricity. Conventional biofuels are already well established globally. Advanced biofuels, such as renewable diesel, are chemically identical to fossil fuels and can be used in existing vehicles and fuel infrastructure.
Producing some of these fuels domestically would improve our fuel security and support the economic prosperity objectives set out in Going for Growth
In New Zealand, production of these fuels – apart from electricity – is still in early stages, or not yet proven at a commercial scale.
We are providing an enabling regulatory environment to encourage domestic production of low-carbon alternative fuels. For example, we are making consenting for key infrastructure easier and faster through the Fast-track regime.
We are considering the role of Special Economic Zones (SEZs) in New Zealand. SEZs are areas where businesses can benefit from incentives that differ from the general business environment.
We are removing barriers to adopting low-carbon alternative fuels to help increase business and consumer choice. We are introducing a new fuel standard for renewable diesel. Through the Low Emissions Heavy Vehicle Fund, the Government provides grants to organisations to offset the additional cost of purchasing zero or low-emissions heavy vehicles.
Producing some of these [alternative] fuels domestically would improve our fuel security and support the economic prosperity objectives set out in Going for Growth.
Insufficient investment in public charging infrastructure can generate concerns around transitioning to electric vehicles, slowing the pace of their adoption. We are supporting public chargers through the Supercharging EV Infrastructure work programme.
Alternatives to aviation fuel are more challenging than petrol or diesel. Sustainable aviation fuel (SAF) is the only viable alternative to long-haul aviation. Short-distance flights can be electrified or use hydrogen.
We will continue to engage with industry to better understand the barriers and opportunities for greater uptake of SAF in New Zealand.
In the shipping sector, we are monitoring industry efforts to explore alternative fuel options to improve fuel security. The coming International Maritime Organization’s Net-Zero Framework will incentivize international shipping companies to adopt low-carbon fuels through a combination of shipping emissions targets and emissions pricing mechanisms. There is also increasing interest in developing international green shipping corridors. New Zealand ports will need to ensure their fuel supply infrastructure keeps up with the changes. We need to ensure our regulatory framework does not impede the development of supply chains and infrastructure for green shipping fuels.
Our actions
Underway
3.1 Explore the role of Special Economic Zones to facilitate projects that enhance fuel security.
3.2 Provide an enabling regulatory environment to encourage domestic production of low-carbon alternative fuels.
3.3 Support deployment of EV charging infrastructure through the Supercharging EV Infrastructure programme.
3.4 Support uptake of heavy goods vehicles which use alternative fuels.
3.5 Introduce a new standard for renewable diesel.
Planned
3.6 Investigate whether there are regulatory barriers impeding the use of alternative fuels in the aviation sector that improve fuel security.
3.7 Engage with industry and investigate regulatory barriers to the use of alternative shipping fuels that improve fuel security.