Z responds to Government's latest fuel market policy changes

Z Energy (Z) supports the Government’s decision to delay the implementation of the Sustainable Biofuels Obligation by 12 months as the cost of living continues to concern New Zealanders. With fuel volumes down from 2019, this delay will allow for a more in-depth look into sustainable fuels that best meet New Zealand’s needs.  

“We support Government policy that sets a clear agenda for us and the wider industry on what we need to achieve and how to get there. Z is committed to a low carbon future and sees biofuels playing a valuable role in the transition, along with electrons and hydrogen, as the country looks to meet its future carbon emission reduction targets. This is a difficult journey and technology such as electrification continues to move more rapidly than predicted – presenting alternative fuel solutions that may be more cost effective or efficient to biofuels in some use cases, such as the light-vehicle fleet,” says Mike Bennetts, Z’s Chief Executive.   

Z has first-hand experience with the challenges of trying to develop low carbon transport fuels while protecting consumers from higher prices. The company recently made the decision to close its own biofuels manufacturing plant, Te Kora Hou, after the economics of producing a locally made biofuel rapidly deteriorated. It was clear the cost of domestically producing biofuels was no longer economically sustainable to Z or its customers. 

“We believe the role of biofuels will be to support decarbonisation of our heavy-fleet vehicles and the aviation sector. Our recent shipment of Sustainable Aviation Fuel (SAF) delivered to Air New Zealand is an example of how we are testing the New Zealand supply chain in order to scale up in the future.

“Z will continue to work with Government to determine what policy will see us deliver the best results for New Zealanders and allow for flexibility to ensure industry and consumers can decide which technology solution is right for them while at the same time allowing industry to focus investment in making this a reality,” says Mike.  

Today the Government also confirmed it would introduce minimum onshore fuel stockholding levels for the industry. Z looks forward to working with officials over the coming months to understand the requirement in more detail.

“It’s encouraging to see the independent review into national fuel security post the refinery closure confirm the shift to a fully import model improved fuel resilience by removing a single point of failure, in addition to a more diverse procurement process. We believe Z has a resilient fuel supply chain with a fuel cargo arriving approximately every five days.” says Mike.

Z also acknowledges the Government announcement providing additional powers to the Commerce Commission to step in if required within the wholesale fuel market. Since daily Terminal Gate Pricing (TGP) was implemented under the Fuel Industry Act 2020, Z continues to meet the requirements and offer daily spot TGP wholesale rates. While we recognise the intent of the additional powers, we believe given the highly competitive nature of the industry it is a backstop that should not be required.

Kiri Shannon, Acting External Communications Manager — kiri.shannon@z.co.nz 021 0234 4157.