The phasing-in of E10 fuel runs into problems, writes Craig Duff Industry anger rises over federal tax plan
Canberra favours biofuel imports
ADOLLAR grab and a lack of supply have derailed the push to replace regular unleaded with ethanol-blended petrol.
The Federal Government’s plans to phase in an excise on locally produced ethanol — and cut the excise on imported product — have outraged the local biofuels industry and forced Queensland to postpone its moves to make motorists use the plant-based fuel additive.
The issue isn’t even on the agenda in Victoria and South Australia, leaving NSW as the only state to mandate that petrol blended with 10 per cent ethanol be sold at service stations.
And even NSW has scaled back — legislation to increase the amount of E10 sold from 4 per cent to 6 per cent of total petrol volumes by next month has been deferred, as was the plan to replace regular unleaded entirely with E10 from July.
The NSW Government cited the federal plan to cut the excise on imported ethanol from 38 cents a litre to 25 cents in July as a reason for the delay.
State-based motoring bodies have weighed in on both sides of the fence.
The NRMA has backed NSW’s move to E10, but the RACQ has been a vocal critic of the Queensland proposal, which would have meant regular 91RON fuel was no longer available.
The Federal Chamber of Automotive Industries backs the Queensland motoring body. Spokesman James Goodwin says the extra fuel used when switching to E10 will outweigh any pump price advantage. Also it will force people with cars that can’t run on ethanol to switch to the dearer 95RON.
‘‘It’s a move that disadvantages the most economically disadvantaged members of the community,’’ Goodwin says.
Another problem for the widespread introduction of E10 fuel is Australia can’t produce enough of i t to meet demand, which hasincreased by 34 per cent in the past year.
National ethanol production is now about 350 megalitres and, with only small-scale pilot projects being implemented in Victoria and Queensland, there is little scope to lift that output in the short term.
The carmakers are ahead of the game, led by Holden’s flex-fuel Commodore that can run on anything from pure petrol to an E85 blend.
Ford, Saab and Volvo also have flex-fuel cars and Caltex Australia has committed to supplying an E85 petrol at selected service stations nationally.
Biofuels Association of Australia chief executive Heather Brodie says the only economically viable way to increase production is for a government mandate on the use of ethanol fuel.
She is a vehement opponent of letting the providers of imported ethanol ‘‘double dip’’ on subsidies, which she says will ruin local producers.
‘‘The industry doesn’t have a problem paying an excise, though given the industry is only three years old, we think it’s far too early.
‘‘But we do have a problem with imported biofuels getting a subsidy in the country of production and then another subsidy from the Australian Government,’’ she says.
‘‘A Customs investigation has already shown biodiesel is being dumped here and that’s going to be the case with ethanol as well.
‘‘On that basis, how can local producers possibly compete?’’
LPG Australia chief executive Michael Carmody has criticised the Government’s focus on taxation, without considering the value of alternative fuels in terms of domestic energy security and the reduction of carbon emissions.