The Albanese Government this week announced a package of measures designed to safeguard Australia’s future Diesel Exhaust Fluid (DEF) supply – commonly known as ‘AdBlue’ – in the wake of ongoing national and international supply volatility.
DEF is an essential component in the operation of the emissions control system of modern diesel trucks, buses, mining equipment, agricultural machinery and some construction vehicles.
“The significant national risk associated with a shortage of DEF supply was demonstrated earlier this year when the majority import of DEF was severely impacted by ongoing global energy issues in Europe and an export ban in China – Australia’s principal supplier of the Technical Grade Urea (TGU) needed to produce DEF”, said ACAPMA CEO Mark McKenzie
“These issues were ultimately resolved as a result of Australian Government leadership – and comprehensive industry support – over the 2021 Christmas/New Year period, to ensure that scarce supplies of DEF were managed in such a way as to keep Australia’s diesel trucks and buses moving”, added Mark
The measures put in place by the Australian Government in January, were openly acknowledged as resolving DEF supply in the short term only. Since then, the Federal Government has been working with industry on potential longer-term solutions.
On Thursday, the Federal Minister for Energy and Climate Change (the Hon. Chris Bowen MP) announced that the Australian Government would invest $49.5M over four years to improve security of supply of DEF in Australia. This funding will be used to advance three core actions, namely:
- A government controlled strategic stockpile of 7500 tonnes of TGU providing an additional five weeks of supply beyond industry stock levels in case of a supply shortage.
- A competitive grants program to support sovereign capability and manufacturing projects that will look to produce TGU domestically.
- Collection of voluntary data provided by industry to provide market awareness of TGU and DEF domestic stocks.
“The Federal Government announcement is welcome and comes on the back of significant efforts by all of Australia’s DEF suppliers to increase their inventory as we again approach the northern hemisphere winter, with its’ inherent volatility in energy markets”, said Mark
At a practical level, there will be a need to understand the supply triggers for activation of access to the national stockpile to be controlled by the Government, outside of the normal market dynamic. This knowledge will be essential for the effective operation of what is essentially a commercial market, to ensure that the government measures do not discourage commercial suppliers from building their own inventories in the future.
A further consideration will be the nature of the industry information required to support market awareness of TGU and DEF stocks.
“Nonetheless, the government announcement – and the current strong commercial inventories of DEF suppliers – means that diesel vehicle operators can be confident about DEF availability as we approach the 2022 Christmas transport period and the 2022/23 agricultural harvest season”, concluded Mark.