Costs hit home as local ethanol mandate falls short

Costs hit home as local ethanol mandate falls short


Business
Manildra Group's ethanol plant at Bomaderry, near Nowra.

Manildra Group's ethanol plant at Bomaderry, near Nowra.

Aa

OFFICIALLY NSW leads Australia in promoting ethanol production but Manildra Group is frustrated by the State's so-called fuel ethanol mandate.

Aa

OFFICIALLY NSW leads Australia in promoting ethanol production as a cleaner burning, home-grown fuel and for fuel security, but Manildra Group's John Honan is frustrated by the State's so-called fuel ethanol mandate.

While all sides of politics have previously promised to legislate to lift the mandatory ethanol content in NSW's total fuel sales to 10 per cent by 2011, the current target sits at 6pc.

Mr Honan, Manildra's managing director, said the real figure was probably more like 3pc because of multiple market exemptions available to oil companies.

His assumptions are backed by data from the federal Bureau of Resources and Energy Economics.

Figures from a September report show a 6pc fuel ethanol mandate should have equated to sales of about 28.21 million litres for the month.

In fact, NSW's total fuel ethanol sales were just 14.6m litres - 3.1pc of the 470.1m litres sold.

"We are disappointed by the lack of enforcement of this law to date," said Mr Honan, whose company specifically invested in new production capacity to meet the planned demand created by NSW's renewable fuel mandate.

Biofuels such as ethanol are mandated in about 60 countries including a 10pc ethanol mandate in the US.

"The US is a great example of how ethanol blended fuels are increasing fuel security, cleaning the air and breathing new life into rural communities" Mr Honan said.

In the US ethanol fuels were blended across all petrol grades at a minimum 10pc, including premium fuels.

Many European and Asian countries also had ethanol mandates.

In South America, particularly Brazil, ethanol was an integral part of the fuel supply with higher ethanol blends used widely.

In contrast, ethanol represented just 1.25pc of Australia's total fuel sales.

Supporters note that apart from ethanol fuel blends helping to cut air pollution and respiratory health costs caused by fossil fuel usage, Australia now spends $22.6 billion annually on oil-based fuel imports.

That figure was just $9b in 2009 and only $600m in 2001 according to Mr Honan, who questioned why Australia bought-in fuel when it could be grown.

"We see no reason, with proper government policy and industry support why the success of the US ethanol industry can't be replicated here in Australia," Mr Honan said.

He said Manildra boosted production capacity at its big Nowra ethanol plant to handle the ethanol mandate commitment.

The Nowra plant produces ethanol as a by-product of wheat starch production, but demand for the distilled fuel was still so weak some machinery imported specifically to cope with the expected ethanol mandate had never been installed.

"We've invested a large amount of money in rural communities to add value to wheat and other agricultural commodities," Mr Honan said.

"The NSW ethanol mandate was critical to our decision to make these investments.

"We look forward to working with the NSW government and oil majors to make this cleaner burning fuel available to motorists in the future."

The story Costs hit home as local ethanol mandate falls short first appeared on Farm Online.

Aa

From the front page

Sponsored by