Argent Energy Plc, a UK-based operator of biodiesel plant, abandoned a NZD100 million project in 2008 to make the fuel in New Zealand citing the tax disadvantage against ethanol.
In February 2009, government-owned Biodiesel New Zealand Ltd. deferred work on a 15-million liter-a-year plant, citing the tax issue and weak prices.
The new grants will help get the industry established while also reducing transport emissions, Brownlee said.
Funds available for fuel subsidies will rise from NZD9 million this year to NZD15 million in the year ending June 2012.
