Mixed Views on Ethanol as Oil Shock Answer

March 15, 2022

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by Marion Rae (Glouster Advocate) Australia's petrol and diesel taxes are already amongst the lowest in the world, potentially throttling efforts to curb price spikes and prompting some to propose ethanol as an option.

Biodiesel, bioethanol, and biocrude blends can be used as alternatives, with ethanol the most widely used biofuel in the world, the industry says.

A bio-based petrol mandate in Queensland already requires a minimum of four per cent of all regular unleaded petrol and ethanol blended petrol (E10 and E85) sales by fuel retailers to be ethanol.

The NSW government also has a petrol-ethanol blend requirement in place for service stations.

But the federal government does not support any move to a broader ethanol mandate across Australian fuel types, saying it would likely increase petrol prices for motorists and industry.

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Consumer watchdog chair Rod Sims says the world was already experiencing high crude oil prices, and the shocking events in Ukraine have forced prices even higher because Russia is a major supplier.

The Australian Competition and Consumer Commission's latest price report found daily average retail petrol prices hit eight-year highs in the five largest cities in February.

Australia is one of the lowest-taxing countries for both petrol and diesel, keeping its prices among the lowest for developed economies, according to OECD data.

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NRMA spokesman Peter Khoury said fuel excise was meant to be collected from motorists and put back into the road network.

"It's not meant to be a lever that you pull when prices go up."

Oil shocks often give rise to calls for mandating the blending of domestically-produced ethanol with petrol.

The Howard-era Biofuels Taskforce found further subsidies for ethanol were not warranted as there were cheaper ways to reduce greenhouse gas emissions.

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Echoing his father Bob Katter's advocacy for biofuels, Queensland MP Robbie Katter says Australian-made ethanol is the "biggest tool" for competing with major oil companies.

Nationally, ethanol blends made up about 12 per cent of petrol sold last year, with low market share attributed to a price gap of just a few cents and some consumer wariness about the alternative fuel.

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Current federal government efforts are on liquid hydrogen as a future fuel, after a fuel security review in 2019 found the economy will be reliant on liquid fuel for decades - particularly diesel and jet fuel.

Ethanol is mostly made from wheat and sugarcane in Australia, and corn starch in the United States. READ MORE