Mark Coultan, 15 July 2015

As Queensland considers mandating ethanol in petrol, the NSW government has commissioned a review of existing laws, with ­motorists continuing to shun the alternative fuel.

Before the last election, the NSW government secretly asked the Independent Regulatory and Pricing Tribunal to look at the issue.

NSW has mandated ethanol must make up 6 per cent of the fuel that service stations sell. But motorists have proved hard to convince. Latest statistics show ethanol makes up just over 3 per cent of the market.

The ethanol mandate has been a boost for farmers, as it is derived from agricultural waste, and for ethanol producers who are protected from overseas competition by trade barriers and tax exemptions.

The referral to IPART — without calling a public inquiry — has raised speculation about the government’s motives.

In 2012, IPART published a ­report that said the 6 per cent was unlikely ever to be met.

It required either removing ­exemptions, increasing penalties, or redefining the mandate.

One of the issues is that, although ethanol is cheaper, thanks to tax concessions, much of the savings are eaten up by greater fuel consumption.

In 2012, premier Barry O’Farrell ­announced regular unleaded would continue to be sold, amid concerns that motorists would be forced to pay for more expensive premium petrol.

Gavin Hughes, the chief executive of the Biofuels Association of Australia, said the simplest way to get to the 6 per cent was to ban regular unleaded.

Figures from Caltex, which says it is committed to ethanol, show sales of E10 drop from about 50 per cent to 20 per cent when motorists have the choice.

Mr Hughes said he was confident the government was committed to the 6 per cent mandate.

Labor energy spokesman Adam Searle said the secrecy surrounding the IPART report was concerning. “The report, whatever it says, should be in the public ­domain to make sure public ­debate is fully informed,’’ he said.

He said that when Labor was in power it enforced the mandate. “We were achieving close to the target. The Coalition has dropped the ball. What is the National Party doing?”

The legislation exempts small sellers from having to meet the 6 per cent mandate.

Mr Searle said this had been interpreted not just to exempt ­independent service stations, but also franchisees of the major oil companies.

According to IPART, this means that about 25 per cent of service stations do not have to meet the 6 per cent level.

The only NSW ethanol producer, the Manildra Group, is one of the largest political donors in Australia. Australian Electoral Commission records show it gave $452,000 in 2013-14, almost all to the Nationals and Liberal Party.

Extracted in full from The Australian.