The Federal Government’s recently announced ethanol initiatives fall seriously short of what is needed to build a large and viable ethanol industry in Australia.
Soaring petrol prices have finally pushed the Federal Government, after years of duckshoving, to look seriously at mandating E10 fuel in cars. E10 is a mixture of 90 per cent petrol and 10 per cent ethanol.
There are major benefits for Australia in using ethanol-blended fuels. The most obvious is that, at current prices, ethanol blends are actually cheaper than petrol. This provides benefits for motorists, and also helps the national economy by building a new major industry, by leaving more disposable income in consumers’ pockets and by reducing Australia’s foreign debt.
A second benefit of E10 fuel is that ethanol, derived from sugar cane or low-grade wheat, is a biofuel, and is therefore a renewable resource.
It will also underpin the viability of the Australian sugar industry, which has been devastated by deregulationist policies that have driven sugar prices down to levels imposed by subsidised exports from the European Union. Consequently, over the past two years, the Prime Minister has been forced to hand out two packages worth $594 million to the sugar industry to keep it afloat.
Significantly, the world’s largest ethanol exporter, Brazil, strongly supports the development of an Australian ethanol industry, as it will open up new export markets for Brazil in Asia.
Clean, green fuel
Less well known is that E10 burns at a slightly higher temperature as it contains more oxygen than straight petrol, and therefore burns more cleanly with fewer toxic particulate emissions. It is therefore a cheaper, greener fuel and its residues are safer.
A leading fuel researcher, Professor Harry Watson from the Department of Mechanical and Manufacturing Engineering at Melbourne University, told The Australian (September 23, 2005) that he would use E10 if it were available because of its health benefits.
“Research shows that E10 reduces the amounts of particles in vehicle exhausts by about 50 per cent, far more than one might expect from so small an addition,” Professor Watson said. “The use of E10 could prevent up to 3,400 deaths a year from particle-related conditions.”
Petrol contains a complex mixture of hydrocarbons, various impurities, including sulphur and nitrogen, and a range of additives which are used to clean the engine, prevent engine knocking, seal engines and deal with other engine problems.
Professor Watson, who is also president of the Society of Automotive Engineers, said the consensus of opinion in the scientific world was that E10 fuel had no detrimental effects on most modern cars.
The petroleum industry in Australia has opposed the use of E10 fuel, as it potentially reduces their profits. However, the use of ethanol-blend fuel has been strongly supported by the Australian Medical Association (AMA), the sugar cane and grains industry, the NRMA and National Party conferences.
Faced with widespread criticism over the Government’s inactivity in the face of surging petrol prices, and a report which indicated that the Government’s target for the development of an ethanol industry over the next five years would not be met, the Prime Minister responded with a range of limited initiatives.
Releasing the report of the Biofuels Taskforce, which examined the use of ethanol in fuel, he said the Government wanted to remove “unnecessary barriers preventing the development of an alternative fuels market in Australia”. However, he has not removed the 10 per cent cap on ethanol in fuel. While other countries are running flexi-fuel cars on 85-100 per cent ethanol – and even though Australia is exporting such cars – it is illegal to sell fuel containing more than 10 per cent ethanol in Australia.
He added: “In a climate where petrol prices are likely to remain high, it is important to encourage greater use of biofuels … The Government will work with the major oil companies to develop Industry Action Plans to underpin the achievement of the 350-megalitre biofuel target” by 2010.
But this figure represents less than one per cent ethanol in liquid fuel. It provides no incentive for new investment in an ethanol industry by new players, such as farmer co-operative ethanol mills, which are booming in the USA.
Mr Howard also confirmed what the AMA had stated: that there were significant air quality and health benefits from ethanol use.
The Government’s measures fall seriously short of a program to build a large and viable ethanol industry in Australia.
Such a plan must embrace:
- E10 fuel as the standard for motor vehicles (replacing unleaded petrol);
- financial incentives for the establishment of ethanol plants in sugar mills;
- importing Brazilian and US technology and technical expertise in ethanol production; and
- incentives to expand the use of ethanol as a feedstock for the chemical industry.
The new Federal Agriculture Minister, Peter McGauran, recently released the last round of assistance payments to cane farmers. He said it was the final package the sugar industry would get; they now have to stand on their own legs.
If the Prime Minister wants the sugar industry to survive and thrive, he needs to bite the bullet and back a large-scale ethanol industry. Such a policy would also help reverse the 30-year decline in Australia’s manufacturing industry, reduce Australia’s unhealthy reliance on imported petroleum, and address one of the causes of the spiralling foreign debt.
Australia needs a bold vision, not a grab-bag of band-aid solutions.
- Peter Westmore is national president of the National Civic Council.