Any analysis of alternative fuels policy in Australia at the moment will have most people scratching their heads. On the one hand, we have the NSW and Queensland Governments imposing biofuel mandates that deliver marginal community benefits and increase costs for fuel retailing businesses. On the other hand, the Australian Governments have essentially walked away from supporting LPG despite the fact that this fuel delivers superior community benefits and is supported by one of the world’s most comprehensive national refuelling networks.

The NSW Government is understood to be examining options for the strengthening of the biofuels mandate.

Introduced more than 8 years ago, NSW motorists have largely shunned E10 in recent years and this has seen the proportion of E10 sold fall well below the Government’s target of 6% of annual petrol sales.

Instead of acknowledging that the factors contributing to this decline are entirely market driven, the NSW Government is considering options to strengthen the existing legislation to force a greater proportion of NSW motorists to purchase E10. Some of these options, including the prohibition of RULP, will increase costs for the many small to medium fuel retailers that operate in NSW and ultimately the price of fuel for motorists.

The NSW Government’s justification for this latest action is that they should show leadership by requiring a greater proportion of motorists to a fuel that delivers environmental benefits, energy security benefits and regional economic benefits.

The same justification is being used in Queensland, where the Government of that State is preparing legislation for the operation of a biofuel mandate to operate from 1 July 2016.

“The argument of both state government’s appears to be that consumers don’t know what is good for them so we will force them to purchase biofuels”, said ACAPMA CEO Mark McKenzie.

Quite apart from the fact that recent surveys of fuel consumers in both states show that there is a majority of motorists who refuse to purchase this fuel, the environmental and economic arguments for biasing ethanol over other readily available alternative fuels simply don’t stack up.

“After more than a decade of research by the Federal Government – and more than $895M in taxpayers funds invested in developing the fledgling industry – biofuel has been shown to deliver negligible community benefits”, said Mark.

In fact, two major assessments conducted by the Australian Government’s Bureau of Regional and Energy Economics (http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/other/asssessment-ethanol-production-grants-program.pdf) and the Australian National Audit Office (http://www.anao.gov.au/Publications/Audit-Reports/2014-2015/The-Ethanol-Production-Grants-Program) show that the costs of investment in this fuel far outweigh the aggregate benefits.

While all this goes on, one fuel – LPG – has been left languishing. This is despite the fact that this fuel offers far greater potential for the realisation of environmental, energy security and employment benefits.

“If the goal of the NSW and QLD government is to genuinely deliver community benefits from greater use of alternative fuels then you have to ask why these governments are not supporting LPG instead of biofuels”, said Mark.

LPG is an abundant and indigenous fuel. Australia’s vast reserves of LPG mean that this fuel has far greater potential to deliver energy security benefits for the national community.

By contrast, State Governments have to construct complex legislation to shut out international biofuel producers when mandating biofuels owing to the fact that international bio-refineries in SE Asia can deliver these fuels at a far cheaper costs than they can be produced in Australia.

“When it comes to environmental benefits, numerous research studies have shown that ethanol blended petroleum delivers a maximum 3% saving in GHG emissions when considered at tailpipe level – but even this marginal benefit is fully eroded once the fuel is considered on a full life cycle basis”, said Mark.

Next generation LPG systems (i.e. multi-point sequential injection systems), such as the ones that have recently become available in Australia, deliver 10 to 12% GHG benefit when considered on a full life cycle basis.

In fact, these benefits are being realised today in Melbourne where 13CABS is operating over 1000 LPG powered hybrid Taxis and realising substantial environmental benefits, said Mark.

“When it comes to employment benefits, the Federal Government concluded that each job created by investment in biofuels cost the Australian taxpayer around $550,000”, said Mark.

By comparison, there are several thousand people employed in the LPG industry (i.e. vehicle conversion, LPG supply and LPG equipment provision segments), whose employment is being put in jeopardy by adverse government actions at both Federal and State level.

Perhaps the most compelling argument, however, is that the governments of many developed international economies are now aggressively promoting LPG vehicles as a result of past mixed success with biofuels mandates.
“Given Australia’s vast reserves of LPG, comprehensive LPG refuelling network and the market availability of next generation LPG conversion systems, you have to ask the question of Australian governments – Why not LPG?”, said Mark.

Further information about this initiative can be obtained by contacting the ACAPMA Secretariat on 1300 160 270.

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