Mobil Oil NZ chairman Wayne Ellary said the shipment represented an important milestone that paved the way for more lower-emission fuels to enter the market.

“Reducing greenhouse gas emissions across the transportation sector requires multiple solutions, collaboration, and market-based approaches.”

Last year, it was also involved in delivering a shipment of Sustainable Aviation Fuel to Air New Zealand in Wellington.

While Allied Petroleum is the only commercial customer for now, Mobil is open to supplying additional commercial customers in future.

Game-changing solution

HW Richardson Group chief executive Anthony Jones said Allied Petroleum had allocated five of its own fuel tanker fleet for a trial period with the new fuel, with plans to expand it across its fleet once full commercialisation is complete.

Allied is currently developing an offer for its commercial customers, particularly those prioritising carbon reduction or in the civil construction sector.

Although Jones acknowledged that, as with any carbon reduction initiative, “new products result in higher operational costs initially until market demand grows”.

“The key issue in NZ is the regulations surrounding New Zealand’s Engine Fuel Specifications Regulations, the Government is currently working through the required changes.”

“Price will then obviously be set and be a choice for the consumer and end users to make. No different to any other future fuel and decarbonisation effort or decision.”

Jones said the product was currently more expensive than standard diesel but saw the cost coming down over time as it reached an economy of scale.

One of the largest users of diesel is in freight, particularly a company such as Mainfreight.

Mainfreight chief executive Don Braid said renewable fuels were certainly of interest to it.

“We are users of HVO (hydrotreated vegetable oil) in the Netherlands when we are able to get supply,” Braid said.

The business has used just over 25,000 litres so far in the Netherlands and has a small number of customers prepared to pay the difference for fewer emissions for the transport of their freight.

However, Braid shared that it does come at an additional cost, which some are not prepared to pay.

“Pricing will be important and supply constraints here in New Zealand. We don’t have any supply constraints in the Netherlands.”

Jones also said that in the absence of Government policy or subsidy initiatives, any public use of the fuel would be in the future.

“It’s worth noting that there have been previous attempts with Bio Diesel in the past where subsidies were available. However, once these were removed, demand weakened leading to the end of the trials.

“With renewed expectations of carbon reduction initiatives in general, having access to a product like RD now offers the consumer a credible option. With the added benefit of being able to utilise existing internal combustion engines.”

Energy Minister Simon Watts, who attended the launch of the renewable diesel, said the Government supported businesses and consumers having more choices in the fuels they use, including lower emission fuels in heavy transport.

“Renewable diesel is proven to reduce emissions, and the Government is updating regulations to enable greater renewable fuel use.

“Mbie is currently seeking feedback on Government proposals to update New Zealand’s engine fuel specifications to ensure they are fit-for-purpose. Since renewable diesel is so chemically similar to petroleum diesel, it can easily be used as a straight replacement for diesel in vehicles.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.