Mixed views on ethanol as oil shock answer

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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.

“This is due to the need for ethanol-capable infrastructure throughout the entire supply chain, which would involve significant capital investment in new infrastructure, such as additional ethanol-ready storage tanks and bowsers,” a spokesman for Energy Minister Angus Taylor told AAP on Tuesday.

Nor is the federal government immediately backing the calls of Liberal premiers Dominic Perrottet, Steven Marshall and Peter Gutwein for cuts to the 44 cents per litre fuel excise.

In New Zealand, petrol excise duty and road user charges were cut for three months overnight to provide relief to households.

Petrol prices across the ditch had already topped $NZ3 ($A2.81) a litre, and threatened to race on to $NZ4.

The Morrison government says Australia’s state governments could cut vehicle registration fees.

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.

In the December 2021 quarter, that tax component – made up of GST and the flat rate of excise – was 36 per cent of the average retail price of petrol, the ACCC says.

Petrol prices have since surged past $2 a litre.

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.

The last time petrol prices were this high in Australia was in June 2008, when daily average prices hit 212.9 cents per litre in today’s dollars, ACCC data shows.

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.

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.

“You’re just realigning your food crops with your fuel,” Australia Institute energy expert Richard Merzian said.

“There’s a far more popular, commercially viable alternative right in front of us and that’s the electrification of transport, and making that fuel in our backyard.”

 

Marion Rae
(Australian Associated Press)

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