Alicia Wood, 23 December 2015
A CONTROVERSIAL and uncosted state government plan to force service stations to sell ethanol will only lift the use of ethanol sold by 1-2 percentage points over 10 years.
An Independent Pricing and Regulatory Tribunal (IPART) report on the ethanol policy is scathing, saying it will cost small businesses and taxpayers.
Premier Mike Baird’s Cabinet signed off on the plan last week, arguing it would allow the state to meet the ethanol mandate, where 6 per cent of fuel sold by oil companies has to be ethanol.
Industry warned the move would slug consumers an extra $150 a year at the bowser. The fuel is not always popular with motorists.
Grace Janson, 21, from Redfern said she did not often use ethanol-infused petrol as she was not sure it was good for her car, despite the cheaper price. “All I know is that you can’t use it in all cars, maybe if you could I would use it more,” she said.
Ethanol sales now make up 2.5 per cent of the market and, according to IPART’s analysis, the government plan to force compliance, regulate the price of ethanol and run a public information campaign would only increase the market share to 3.3-4.3 per cent by 2024-25.
The devastating report says “most options to increase ethanol uptake would increase the cost of an already expensive policy, with little economic gain for the NSW community”.
It also warns small service station owners would bear the cost of increasing ethanol uptake and they “would ultimately pass these additional costs on to consumers through higher prices”.
IPART also said that, in Sweden, measures to increase biofuels sold at service stations “correlated with an increase in the number of stations that went out of business” and “resulted in severe economic strain for owners who had to finance their capital cost”.
IPART estimates it would cost service stations between $12,500 and $200,000 per tank to convert to ethanol use. The Australasian Convenience and Petroleum Marketers Association (ACPMA) estimates this would cost stations $900,000.
The report also confirms the greatest beneficiary will be the only ethanol producer in NSW, Manildra, which is also one of the biggest political donors in Australia.
Cammeray service station owner Abraham Jevaherjian has spent $1.5 million upgrading his site and estimates he will have to pay an extra $200,000 to comply with the government policy.
“This should not be enforceable,” he said.
“It is against freedom and choice of selling. It means I have to sell this product that I sell less of because people are not willing to take it up.”
A spokesman for Fair Trading Minister Victor Dominello said the changes support regional jobs and have good results for consumers.
The spokesman said some small businesses would be exempted “where appropriate”.
“An online fuel price board will be established, which will require all service stations to report their current retail fuel prices in real time. This will help ensure reductions are being passed to consumers,” he said.
Extracted in full from the Daily Telegraph.