Almost $5 million is being spent on advertising to encourage NSW motorists to use the E10 ethanol blend, despite warnings that a state government scheme that forces petrol stations to sell the biofuel increases prices.

Documents tabled in the NSW Parliament also reveal that even though the campaign was launched in May, not one retailer has met a requirement under laws introduced this year that E10 must account for at least 60 per cent of all petrol sold.

On January 1, the NSW government introduced new rules that force a wider range of petrol stations to sell E10.

The government said the move was designed to “put downward pressure” on the price of E10 to provide a cheaper alternative for motorists.

In an embarrassing twist, in April the federal Productivity Commission recommended axing the so-called ethanol mandate scheme because it increases petrol prices and reduces competition.

But the following month the government launched an advertising campaign, E10 Fuel for Thought, which it says was designed to dispel “myths” about E10 and encourage its use.

Answers to budget estimates questions on notice to fair trading minister Matt Kean, tabled on Friday, reveal $2.9 million had been spent on the campaign by September 4.

They show the total remaining funding allocated to the campaign is $2.04 million.

The answers reveal that as at September 15, none of the 236 fuel retailers captured by the ethanol mandate scheme across 1091 service stations met the requirement.

In August official figures showed ethanol sales volumes had remained static during the first months of the regime.

Fairfax Media has previously reported that the new laws were introduced after a furious lobbying campaign and political donationsfrom ethanol producer Manildra.

NSW Greens energy spokesman Jeremy Buckingham branded the ethanol mandate “crony capitalism”.

“Almost $5 million of taxpayers’ money is being used to prop up a private company selling a product consumers clearly do not want,” he said.

“With the ethanol mandate failing it becomes more and more obvious that the political support for this policy is driven by political donations, not logic and facts.”

The Greens are calling on the Coalition government and Labor, which supports the scheme, to “end the ethanol rort”.

A spokeswoman from NSW Fair Trading said the ethanol target “may only be achieved with consumer education, increased consumer choice and ongoing industry support”.

She noted that in a 2015 report, the Independent Pricing and Regulatory Tribunal said there was “considerable consumer aversion towards ethanol-blended petrol that could be addressed by a consumer education campaign”.

“The E10 Fuel for Thought campaign is designed to tackle the myths around E10 and provide motorists with a better understanding of ethanol-blended fuel and its compatibility with most petrol-powered cars on the road today,” the spokeswoman said.

Extracted from Canberra Times.