The Queensland Government wants to boost the proportion of sugarcane-derived ethanol in petrol sales from 1.2 per cent to 2 per cent by July 2016, as a catalyst to a $1.8 billion bio-refining industry.

It wants to progressively slowly grow the proportion of E10 fuels.

Katter’s Australian Party – which has long backed boosting ethanol sales – welcomed the government’s plan but wants urgent talks to quickly lift the proportion of ethanol sales to be 10 per cent.

KAP present Shane Paulger said an increase to two per cent did not go far enough, although the government suggests 2 per cent is a starting point from July 1, 2016.

“We are little bit disappointed at this stage at the percentage that the government is talking about,” Mr Paulger said.

“Our aim is for it to be 10 per cent,” he said.

“I would suggest that anything less than that is not realistic and I think we need to have further discussions with the government on that.”

Labor will also be battling Federal Government plans to increase excise duty on ethanol fuels, meaning E10 fuels will lose their price advantage by 2020 and the popularity of unleaded fuels.

Currently E10 fuels – which have been around for at least a decade – are about two cents a litre cheaper than unleaded fuels, according to fuel watch companies.

The added excise duty will add a further two cents to the price of E-10 fuels by 2020.

Ethanol is an alcohol – which is used as renewable energy source – made from sugar cane and sorghum, with a lower carbon content than conventional fuels.

Most ethanol is today sold in E10 fuel, which in 2013-14 amounted to about 10 per cent of all petrol sales, or around 350 megalitres of E10 petrol.

One megalitre is a million litres.

In order to boost the amount of ethanol used in petrol – up from 1.2 per cent to 2 per cent – the government would boost the amount of E10 petrol sales by 59ML per year, or 17 per cent.

Energy Minister Mark Bailey on Thursday released a discussion paper to generate debate about how to increase the market share of ethanol.

“Importantly, we want local industries to capture the market share to ensure that any ethanol sold in Queensland comes from Queensland,” Mr Bailey said.

“There’s also an opportunity to boost the use of biofuels like biodiesel blends to take advantage of the growing demand for diesel.”

Most motorists today still prefer to use unleaded petrol (ULP), rather than E10 ethanol blends, despite E-10 ethanol blend petrols being several cents a litre cheaper.

Mr Bailey on Thursday said two new biofuel production plants are now being considered for development to increase the amount of ethanol being produced.

“There are several bio plants on the drawing board in Queensland, including two plants in development, and strong interest from the private sector to explore opportunities,” Mr Bailey said.

Mr Paulger said biofuel plants were being considered in Dalby and Sarina.

A joint Deloitte Access Economics/QUT study predicts bio-refining in all its forms could generate more than $1.8 billion in gross state product to Queensland.

It could create up to 6,640 jobs over the next 20 years, the Access Economic/QUT study found.

Industry problems

1 – The Federal Government plans to increase fuel excise on ethanol fuels, which could increase ethanol prices by 1.25 centres per litre, making ethanol around the same price as the already popular unleaded petrol.

“With E10 currently retailing for approximately two cents per litre less than regular unleaded petrol, the application of excise, even at the discounted rate, could reduce any perceived price advantage of E10,” the discussion paper finds.

2- The paper also points out that continued production of molasses and sorghum can be limited during droughts and natural disasters.

3 – Only 345 petrol stations in Queensland sell ethanol-blended fuels and more than half of these are in Southeast Queensland.

Mr Paulger said increasing ethanol sales to two per cent “would not be worth the bother”.

However the discussion paper says gradual increases could be made after discussions with the Queensland Productivity Commission.

“This (2 per cent) target would provide time for industry to ramp up production while encouraging a smooth transition for the broader industry, particularly fuel retailers who may have to make changes to fuelling infrastructure,” the discussion paper says.

“A two per cent mandate would also ensure consumers retain choice at the petrol bowser.”

Extracted in full from The Age

SHARE THIS ARTICLE: