Joe Aston

Let us return to the epic rort that is the NSW government’s biofuels mandate, introduced in 2007, requiring 6per cent of all fuel volume sold in the state be ethanol, criticised by NSW Treasury in 2012 (“beyond [the country’s major ethanol producer] Manildra it is difficult to identify a net benefit for any other segment of society”), by the ACCC in 2013 (it has “reduced consumer choice” and led to “significantly higher prices”) and even by (the late) Greens MP John Kaye last year (“there’s no evidence that requiring motorists to use ethanol-blended fuels has any net greenhouse gas gain or much in the way of air quality improvement”). Oh, and it’s never even been met.

Before the last state election in March 2015, Mike Baird committed the state’s Independent Pricing and Regulatory Tribunal to conducting a review of the mandate, given consumers had continued in droves to eschew ethanol-blended petrol.

IPART’s report lobbed on Baird’s desk in May 2015. It modelled the full gamut of potential measures that might lead to the achievement of the mandate, but found that “no option would achieve the 6 per cent mandate and result in a positive net benefit to the NSW community”.

Presumably that’s not the answer Baird was looking for, so the agency was sent away to model yet additional options (including forcing smaller petrol station operators, who are now exempt, to sell E10). This addendum was released in December last year, alongside the (by now six-month-old) original report. And the addendum found that broadening the mandate still wouldn’t deliver 6 per cent ethanol sales, would cost the community, particularly smaller service stations, and “would ultimately be passed on to consumers through higher prices”.

So what did Baird do? Announced in March that he’s broadening the mandate!

It sure ain’t green!

The cost of tank conversion at each servo site is estimated by IPART to be $144,000 but the industry association puts it at up to $900,00. Even conservatively, doing so will mean NSW drivers will pay 8¢ per litre more at the bowser, or petrol stations – particularly small operators in rural and regional areas (the ones Manildra’s wheat farmers fill up at) – will go bust. Or a bit of both.

And all to what end? For a fuel consumers don’t want in their cars, and that no serious science reckons is environmentally beneficial. Yes, it’s renewable – wheat being, unlike oil, an ostensibly infinite resource – but it sure ain’t green!

Because where does the ethanol come from? Manildra’s stinky plant in Bomaderry (which has breached its EPA licence more than 2,000 times) converts wheat into flour, separates flour into gluten and starch, then ferments starch to make ethanol. But the boilers that ultimately produce the ethanol are fired by coal, and the coal arrives on trucks (20 of them each day driving 285 kilometres from Wallerawang) powered by diesel!

And as a subsidy to one group of wheat farmers (in one state, who supply one processor), the mandate serves to skew production towards wheat against the natural forces of the market and of the land.

Meanwhile, a normal vehicle burns more of it than regular unleaded to drive the same distance.

The only explanation a sensible person apprised of all the facts could possibly reach, as Treasury did, is that Manildra and its suppliers are the mandate’s only beneficiary. And as Four Corners explored last month, Manildra has donated more than $4.3 million to the major political parties since 1998. And we thought Baird’s shtick was all about cleaning up NSW?

Extracted in full from the Financial Review.