The Government's promotion of biofuels will have negative consequences for the economy and the environment, according to climate change experts.
Prime Minister Helen Clark outlined the government's sustainability agenda last week, saying biofuels will be introduced to help reduce greenhouse gas emissions.
From April 2008 petrol and diesel will be combined with a percentage of biofuel. The biofuel component will be exempt from tax.
An expert reviewer for the United Nation's Intergovernmental Panel on Climate Change (IPCC), Dr Vincent Gray, of Wellington, said biofuels actually emit more "greenhouse gases" than fossil fuels.
But the Government regards them as "carbon neutral" because they are made from renewable resources.
But, he said, there was "simply no evidence that increases in greenhouse gases are harming the climate, or anything else".
He said environmentalism was the new form of religion and was distracting people from more important issues.
"It is time we get round to caring about our people instead of the environment," he said.
New Zealand Climate Science Coalition economics panel chairman Bryan Leyland said biofuels could be a risky venture.
"All the evidence points to the fact that growing crops to make biofuels is bad for the environment, deprives the local populations of much needed food and in most cases, does nothing to reduce carbon emissions.
"The only beneficiaries are those who grow rich on the billions of dollars in subsidies paid for biofuel production."
Mr Leyland, who is an energy consultant in Auckland, said New Zealand could help developing countries with hydropower development, improving efficiency of existing fossil fuel-fired power stations and making agriculture more energy efficient and environmentally friendly.
"If she [Helen Clark] really wants to make a difference, she should endorse nuclear power, promote electric cars and advise against biofuels. "
Climate Change Minister David Parker said biofuels would provide new business opportunities for the agriculture sector, because the majority of the country's biofuels are expected to be made in New Zealand.
Conversely, New Zealand Climate Science Coalition policy panel chairman Owen McShane said he had seen a report from the Government suggesting most of the biofuel will have to be imported, which would have serious economic implications.
Mr McShane, who is also the director of the Centre for Resource Management Studies, based in Kaiwaka, said Governments around the world were beginning to feel under pressure to react to growing public concern and powerful lobby groups.
"We seem to be leaping to solutions which appeal to our instincts without doing the hard work. That is not a good way to make policy," he said.
According to the Government, the biofuels most likely to be sold in NZ will be biodiesel and bioethanol.
The biodiesel will be made from vegetable oils and tallow (animal fats), while the bioethanol will be produced from fermented sugars and starches, such as maize, dairy whey, and wood waste.
Mr McShane said tallow was currently used to make many other products including leather goods and candles. Using this resource to produce biofuels would mean sacrificing one income stream for another, he warned.
More than one litre of oil is needed to make one litre of ethanol when inputs such as fertiliser, fuel for production machinery, and transport costs were tallied, he said.
Director of climate change website Celsias, Nick Gerristen, welcomed the Government's expression of interest in biofuels, saying it was "strategically important to New Zealand".
The former intellectual property lawyer said demand would be very high and many options would have to be explored, but using algae from sewerage ponds seemed the most sustainable choice.
"There are limitations around how far cropping can go," he said.
Business NZ Chief Executive Phil O'Reilly also welcomed the Prime Minister's comments, saying in a press release, there was no reason why economic and environmental policies could not work together.
"The main message from business is that we want the economy and the environment working together, not either at the expense of the other."
Biofuel blends are widely used around the world. The USA, Brazil, Canada, most European countries, Australia, China, India and Thailand all use biofuel blends.
The New Zealand Government hopes the total sales of biofuels will reach 3.4 percent of annual petrol and diesel sales by 2012.