WELLINGTON - NEW Zealand government moves to dismantle several environment-friendly energy policies adopted by the ousted government may cost jobs and kill a fledgling industry, a former Cabinet minister said on Friday.

The government's reversal of sustainable energy moves 'is just throwing away the environmental credentials that we (the former government) built through responsible conduct in this area in the past decade or so,' former Climate Change Minister David Parker said.

Mr Parker's criticism came after the new centre-right government announced it would scrap a law requiring that oil companies include a proportion of biofuel in gas sold at the pump.

Energy Minister Gerry Brownlee said Parliament next week will repeal the obligation for oil companies to sell 0.5 per cent biofuels in gasoline now and 2.5 per cent by 2012.

'Oil companies estimated it would add to the cost of fuel between 2 and 8 (New Zealand) cents a litre,' Mr Brownlee said.

Mr Brownlee earlier ended the former government's 10-year ban on building new carbon fuel power generation stations and suspended its emissions trading scheme, vowing to make it more 'friendly' to business and agriculture.

Mr Parker said the moves were steps in the wrong direction.

'New Zealand was bringing forward sustainable biofuels with strict sustainability criteria ... and these fledgling industries were clearly responding to the signal' before they were ditched by the new government, he told The Associated Press.

One company, Bio Diesel Oils NZ Ltd., would have to lay off 48 workers and expects to lose a US$5.4 million (S$8.07 million) investment in a plant making biodiesel from tallow, or animal fat, he said.

Former centre-right National Party president, public relations executive Sue Wood, said in a letter to Mr Parker on Friday that oil companies had 'never supported' the biofuels requirement, 'made no investment in infrastructure and have clearly succeeded in convincing the government that the product would be both costly to the consumer and unsustainable at source.'

Bioenergy Association executive officer Brian Cox said the biofuel law change would slow the nation's progress toward self-sufficiency in transport fuels and increase the Kyoto debt it faces for greenhouse gas emissions.

United Future Party leader Peter Dunne, a minister outside Cabinet, said the government's biofuel move would see domestic biofuel suppliers undercut by cheap, unsustainable imports, that eventually will force them out of the industry.

'There is (now) nothing to stop the importation of biofuel from cleared South-east Asian rain forests, from land that used to grow food for the poor people of the Third World - or from the United States' carbon-intensive ethanol market,' he said in a statement. -- AP