Biofuel Demand and Consumption Hits Slump in Australia

(Consultancy Australia) Biofuel consumption in Australia is shrinking, challenging the country’s ambitions to move towards renewables. A new report from APAC Biofuel Consultants suggests that Australians don’t yet trust biofuel in their vehicles.

A joint venture between two Australian consultancies – energy advisory firm EnergyQuest and oil & gas consultancy Ecco Consulting – APAC Biofuel Consultants (ABC) is a biofuel-specialised advisory firm that has been releasing market reports on the segment every year since 2006.

This year’s report threw up the worrying figure that biofuel demand contracted by nearly 4% between 2019 and 2020, shrinking to less than 0.5% of the country’s transport liquid and gaseous fuel consumption. ABC acknowledged the role played here by Covid-19 and all its economic repercussions, but positioned mistrust or inertia among consumers as a notable factor as well.

Australia’s biofuel industry is sustained by two fuel types – ethanol and biodiesel. The latter is a petroleum substitute in itself, and represents a small share of the biofuels market. ABC reports that demand for biodiesel actually increased between 2019 and 2020, marking healthy development in the sub-segment. Dragging the numbers down is ethanol, which in Australia is largely consumed in the form of E10 – a blend of 90% petrol and 10% ethanol.

Some studies suggest that E10 could cause damage to vehicles – largely in older models – and many Australians are simply uncomfortable with the risk. The scenario speaks to the need for further developing E10, as well as the need to bring about a change in consumer attitudes. These changes become all the more urgent when considering Australia’s ambitions when it comes to biofuel, and renewable energy as a whole.

Demand is certainly a key issue to address, although ABC’s report reveals issues on the supply-side as well. In June this year, United Petroleum’s Dalby Bio-Refinery in Queensland closed down despite the government’s best efforts to keep it open. According to ABC, this alone wiped out 17% of Australia’s aggregate biofuel production.

On the plus side, there are efforts underway to build capacity as well – an example being Manildra’s recent move to allow for fuel ethanol production at its high capacity refinery. Even Biodiesel production went up significantly this year, although the segment remains too small to significantly affect the national biofuel numbers. READ MORE