Call for biofuel mandate to be scrapped in NSW and Queensland
A Productivity Commission report is calling for the scrapping of a biofuel mandate in NSW and Queensland.
A RECENT Productivity Commission report in the Regulation of Australian Agriculture has called for the scrapping of biofuel mandates in NSW and Queensland. According to the Productivity Commission, a minimum of 3% of non-premium fuels sold in Queensland need to be biofuel, while in NSW the target is 6%, this includes a 0.5% and 2% target for biodiesel sales in Queensland and NSW, respectively. The mandate was introduced in Queensland in January this year.
Despite such relatively low targets, the Productivity Commission claims a biofuels mandate can adversely affect the price of fuel “and may not help the environment”. The report stated:
“Assessments of the New South Wales biofuel mandate showed that:
- Retailers cut the supply of regular unleaded petrol to meet the biofuel sales target (hence the claim the cost of fuel is increasing as buyers are ‘forced’ to buy a ‘premium’ fuel because of an unavailability of Regular Unleaded; replaced by E10);
- The mandate reduced consumer choice and increased the price consumers paid for petrol because they substituted to premium fuels; and
- The mandate affected the competitive dynamic between retailers by reducing the availability of regular unleaded petrol at many retail sites (ACCC 2013b, sub. DR121; IPART 2015).”
In Australia there are only three ethanol producers, one in NSW and two in Queensland. Ethanol is blended with fuel to create biofuel. According to an Australian National Audit Office report, “improving the long‐term viability of the domestic ethanol industry, in 2014 only three domestic producers (up from two in 2002) were operating, and an expanded Australian ethanol industry based on market priced feedstock was considered unlikely to be commercially viable in the absence of the EPG rebate”.
Several key farming groups, from cotton growers to dairy farmers have demanded the biofuel mandate be dropped and the money being spent on the industry redistributed. Indeed, the Productivity Commission recommended the scrapping of the mandate by the end of 2018.
However, the Queensland Renewable Fuels Association (QRFA) has hit back at the Productivity Commission report with its managing director, Larissa Rose saying the comments made by the Productivity Commission do not represent facts.
“In making these claims the Productivity Commission has drawn flawed conclusions from poor evidence. Suggesting that agribusiness will suffer from biofuel mandates when it is a key diversification market for agriculture, is completely inaccurate.”
“In fact the opposite is true – it is the very products these (agricultural) businesses produce that are the feedstock for biofuels – creating sales, supporting business and boosting jobs,” Ms Rose said.
“This is exactly what Australian’s biofuel refineries do – support our nation’s regional economy and provide us with low carbon fuel.
“It is misleading to state that biofuel mandates raise the price of petrol. E10 fuel is a 94RON fuel, a premium product in many respects that delivers lower emissions. The so-called higher cost is principally due to increasing -and frequently unnecessary – uptake of ‘premium’ 95 and 98 fuels. Now motorists are beginning to understand that you can get a higher octane fuel more cost-effectively with E10,” said Ms Rose.
Question: Not all car makers recommend E10 for use in their vehicles, so, do you think there should be a mandate on the volume sold, or are there alternative ways to lower the carbon footprint of cars and, should the government be supporting the ethanol industry or putting the money into electric vehicle incentives and charging stations?