National fuel supply at risk due to AdBlue shortage, Australian defence expert warns
Australia’s national fuel supply could be disrupted due to a shortage of the diesel exhaust additive AdBlue, a defence expert has warned.
John Blackburn, former deputy chief of the Royal Australian air force and an expert on fuel security, said the vast majority of petrol and diesel in Australia is carried by trucks, rather than trains or coastal shipping tankers.
“So if this starts to impact trucks and logistics, it is then, in turn, going to impact the fuel supply,” Blackburn said.
AdBlue is required for most modern diesel engines to suppress emissions, but there are shortages because its key ingredient, urea, which is also used as a fertiliser, is running dangerously low after China restricted exports of the product. The shortage is also due to the price of gas, the main feedstock for urea.
The National Road Transport Association (NatRoad) says almost all fuel in Australia is transported by large road tankers.
A spokesperson for the association said it was more than likely that all of these fuel trucks would be part of the 1.5m trucks affected by the AdBlue shortage.
“The bigger the truck, the more modern and the more likely it is to be diesel-powered,” the spokesperson said.
As of January this year, there were 20.1m registered motor vehicles of which 15.6% (4.1m) were trucks. Diesel vehicles make up 26.4% of all vehicles, up from 20.9% in 2016 and almost all modern diesel engines (those made in the past 10 years) use AdBlue.
NatRoad’s estimate is that more than 40% of Australian freight trucks use AdBlue but the percentage would be higher for long-haul tankers.
The NatRoad spokesman said the shortage was hitting hardest and first in the bush.
“NatRoad is fielding calls from its members in regional areas, reporting that their supplies have dried up or that prices have soared,” he said.
“AdBlue was retailing for 70c a litre a few weeks ago and we’re receiving reports of $2 and $3 a litre at the pump in some areas. That points to a severe shortage of supply – or gouging.”
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The energy minister, Angus Taylor, has set up an AdBlue taskforce led by chair of Manufacturing Australia James Fazzino, with former chairman and chief executive of the Dow Chemical Company, Andrew Liveris, and Australia’s chief scientist, Dr Cathy Foley.
Taylor said the government was working closely with industry to ensure a sustainable, ongoing supply of the diesel exhaust fluid, including international supply options for refined urea, bolstering local manufacturing capabilities and technical options for vehicles.
It is understood there are seven weeks of AdBlue and refined urea supplies secured. In figures released on Wednesday, the latest October petroleum statistics show Australia held 98 days, including stocks coming to Australia, compared with an average of 81 days of stock in 2020.
Blackburn is chairman of the Institute for Integrated Economic Research Australia looking into critical supply chains and authored a 2014 report on Australia’s liquid fuel security for the NRMA.
He cited a more recent 2019 report by the environment and energy department into Australia’s liquid fuel security, which described Australia as an outlier in the global community when it comes to fuel security.
“When we consider countries of similar economies, most see fuel security as part of their strategic capability, and take steps to manage fuel security with that in mind,” that report said.
“Australia, by comparison, has chosen to apply minimal regulation or government intervention in pursuit of an efficient market that delivers fuel to Australians as cheaply as possible.”
The review highlighted a failure to understand the supply chain and suggested the current legislation is not “fit for purpose”, Blackburn said.
“The legislation will not allow the government to actually ration fuel fast enough to deal with the supply chain interruption when you’ve only got three weeks of stocks,” Blackburn said.
“So I would not be surprised to see exactly the same problem now. There wouldn’t be legislation there, potentially, to allow the government to act quickly enough to start rationing this stuff.”
Suppliers are already rationing AdBlue as the peak body for the transport industry, Trucking Industry Council, warned against tampering with the emissions systems, given all modern trucks are required to meet Australian Design Rule (ADR) requirements by law.
Mark Hammond, TIC chief technical engineer, said the vehicle emission regulations were in place to protect the health of all Australians .“Untreated exhaust emissions can cause breathing problems, including asthma, headaches, eye irritation, loss of appetite, corroded teeth, chronically reduced lung function and cancer,” Hammond said in a statement. “It is illegal to turn off the emission system of a truck; tampering with such a system should be condemned by all within the industry.”
President of Victorian Farmers Federation, Emma Germano, said while the government was aware of the issue and making headway in shoring up supply, Covid had demonstrated the fragility of our supply chains. AdBlue was “like the canary in the coalmine”.
“We need the supply of that product, as we don’t want to go backwards from an environmental impact perspective because of supply chain fragility,” Germano said.
It is just one of the shortages the agricultural industry have faced this year, which has included timber pallets, fertiliser, chemicals, shipping containers and workers.
“As an industry, we need to be calling for mapping supply chains, both inputs and outputs, to know what inputs are necessary for agriculture to be able to function,” Germano said.
“Australia needs to be aware of food security and have a plan,” she said.
Bev Andrews, the director of National Logistics, a small trucking operation based out of Victoria, was told by her supplier last week that there was a shortage.
She said with the Christmas rush to deliver goods, the shortage comes at an especially bad time, but that she is more concerned about what it means in terms of the long-term viability of her business.
Andrews has a 5,000 litre tank full of AdBlue at the moment that will see the 20 trucks she operates through until the end of December, but her current supplier had expressed uncertainty about securing future shipments.
She says the price for available AdBlue had skyrocketed from 45c a litre to $2.20 a litre in the space of a week.
Blackburn said the current shortages showed Australia’s analysis of supply chains was “incredibly rudimentary”.
“There seems to be this inbuilt belief, particularly in the incumbent government, about neoliberalism, that market forces will take care of everything, and they have certainly taken that path with fuel security – until the attempt to keep some refineries open,” Blackburn said.