Biodiesel: The Great Crash of Australia's 'Fish and Chip Cooking Oil' Renewable Fuel Industry

December 28, 2016

Print This Article Share it With Friends

by Emilia Terzon (ABC News) Former chef-cum-Darwin's "biodiesel warrior" Greg Henderson was elbow-deep in an industry of second-hand grease when the global price of crude oil started to tumble in 2014. Within weeks the humble entrepreneur was contemplating a price war with one of the world's biggest oil conglomerates.

"We lost two clients in one week," Mr Henderson said.

It is a common story in an Australian industry that, in the last few years, has faced business conditions described as "catastrophic" by one of the last remaining players.

...

This is a change of fortunes from a decade ago, when a small yet vibrant biodiesel industry was in its infancy, offering 4WD owners and transport companies a cheap and low-emission alternative to diesel fuel.

...

Mr Henderson initially sold the waste cooking oil to an Adelaide-based company, however after making a paltry $57.20 profit on a sale of 35,000L, started researching the process of refining vegetable oil into biodiesel.

...

By 2013 Mr Henderson was collecting and refining tens of thousands of litres of biodiesel a week, had contracts with trucking companies, and was selling direct to car owners dismayed by a decade of high diesel prices.

...

Then in 2014, the crude oil price tanked amid a sudden drop in global demand, reducing biodiesel's hip-pocket allure and sending the broader oil market into a tailspin.

...

At the bigger end of the market, there have also been tough times.

Early this year, one of the country's biggest biodiesel companies, Australian Renewable Fuels, collapsed into voluntary administration, halting production at three processing plants across the country.

As well as competitive oil prices, the ASX-listed company blamed its issues on a change in government support, citing "highly damaging" changes to the taxation of renewable fuels announced in the 2014 federal budget.

...

Doug Stuart, technical development manager of Queensland-based biodiesel plant EcoTech, said the industry was currently only paying a few cents a litre in excise but that was set to ramp up "significantly" by 2021.

...

Yet Mr Stuart said there was no single issue to blame for the downturn, with other factors including a hike in the price of tallow, the waste animal fat also refined into biodiesel by major processing facilities.

"The government backing of biofuels in Europe and United States has also put an upwards pressure on the tallow and raw materials," Mr Stuart said.

"Because those markets are being supportive, we're seeing Australia be a net exporter of those raw materials, rather than Australia value adding to the raw materials."

...

From January 1 2017, the Queensland Government is introducing a mandate which means biodiesel has to make up half a per cent of the diesel available for sale, with ethanol receiving a 3 per cent mandate for regular unleaded petrol sales.

Mr Stuart said the mandate will have a "huge benefit", but only if it is strictly enforced. READ MORE