Australia ethanol consumption to stay low on weak gov't support

20 September 2012 12:04  [Source: ICIS news]

BANGKOK (ICIS)--Australia's ethanol consumption will remain weak in the near term as the country "lost momentum" in its plans to boost local ethanol usage in fuel, a market consultant said on Thursday.

Ethanol programmes in Australia are still small despite serious feedstock advantages, said Tom McNeill of Green Pool Commodities at the third CBI Global Ethanol Focus in Bangkok.

Government support for ethanol-related biofuels has been lukewarm, with no national-level regulatory framework present to boost the programme, McNeill said.

"There are two levels of government control: the federal government rebates 38 cents/litre fuel excise on ethanol produced in Australia and regulates imports and exports, while the state governments operate separately, controling state fuel regulations and implementing mandates for blending," McNeill added.

New South Wales is Australia's only state that has implemented an E6 ethanol-blending mandate since 2007, but its efforts to push for an E10 has been met with unwillingness by motorists to make the switch, McNeill said.

Queensland has adopted a voluntary approach to its E5 blend, but supply was disrupted in early 2011, when Sucrogen's 60m litre/year unit in Sarina was forced to shut due to severe flooding.

There are two other active ethanol plants in Australia – United Petroleum's 90m litre/year unit in Dalby, Queensland; and the largest, Manildra Group's 300m litre/year unit in Manildra, New South Wales.

Several projects were put on hold following a severe drought in 2008-2009, which drove grain prices up.

Manildra's plans for a 300m litre/year expansion were shelved in March this year because of lack of government support, weak macroeconomics and water restrictions.

In addition, a 100m litre/year project in Victoria and a 300m litre/year unit in New South Wales were put on hold in 2007 and 2008, respectively for the same reasons.

By: Andrea Heng
+65 6780 4359

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