The Road Ahead : October November 2007
OCT/NOV 07 9 to clearly promote the "clear and defendable" security and health benefits of ethanol. BAA chairperson Neil Rae said the organisation did not want mandates and was aware of competing with food. "We have trials all over Australia in different marginal areas looking for alternatives to grains. Ultimately it won't be an issue -- it can't be," Mr Rae said. "We're in a real Catch 22. If ever yone is waiting for it to be per fect, and this applies to the feedstock cycle, all we are doing is playing into the hands of the fossil fuel industr y and not giving the benefits to people." Back at the pump, an average discount of 2 to 3 cents a litre for E10 appears generous, however it doesn't compensate for losses in fuel efficiency. The 2005 Biofuels Taskforce stated: "More E10 fuel is required than petrol to do the same work because ethanol has a lower energy density (68 percent compared to petrol in terms of MJ/kg)." It concluded that for "fuel-injected cars using E10 ULP, fuel consumption would increase in the order of 2 to 3 percent. Pricing strategies reflecting this would assist in encouraging uptake of ethanol- blended fuel." On that evidence, E10 petrol should be three percent cheaper, not 3 cents per litre. The 3 cpl only computes when petrol is $1. RACQ believes E10 ULP should be 4 cpl lower at current prices. Quar terly Australian Competition and Consumer Commission monitoring for 2007 shows an average 2.6 cpl discount on E10 prices in Brisbane and between 2.3 and 3.1 cpl in regions. Some proponents confuse fuel efficiency with combustion efficiency because ethanol has a higher oxygen content. The Biofuels Taskforce determined any improvement in combustion efficiency was of a second order compared to the relative change in energy content of the two fuels. Ethanol is an octane enhancer. And some companies such as Freedom, Neumann and United promote E10 on that basis. They add ethanol to a normal ULP or 95 Research Octane Number (RON) premium unleaded fuel and claim it lifts their octane ratings to the next level (ie 95 and 98 RON respectively). These 'premium' blends are cheap compared with straight premium fuels, however owners are advised to check with their manufacturer about a vehicle's minimum RON and Motor Octane Number (MON) requirements. Retailers we contacted said motorists were embracing ethanol-blended fuels. And Queenslanders are twice as likely as other Australians to use E10, IS ETHANOL A BETTER BUY? according to ANOP's 2007 sur vey for the Australian Automobile Association (Queensland 12 percent; Australia 6 percent). Suppor t for ethanol doubled in just two years. The latest poll showed six in 10 Queenslanders are happy to buy E10 based on price, environmental reasons and experience, while 37 percent of motorists have doubts (fears of damage and vehicle unsuitability the main reasons). Former State Development Minister John Mickel said the Queensland Government suppor ted ethanol to combat the declining availability of oil. "Because it takes so long to develop alternate and renewable fuel industries, we believe that encouraging the development of an ethanol industr y now, will position the state for the future, par ticularly as lignocellulosic technologies become available," Mr Mickel said. "Current ethanol production facilities are economical in Queensland and it is anticipated that new production plants will also be economical." He said the Government remained committed to a 5 percent ethanol mandate by 2010 and predicted fuel companies would principally retail a 10 percent blend. Shell rejects mandates warning they are more likely to raise, not lower, fuel prices in the shor t to medium term. The company said it believes the economics of biofuels are highly dependent on commodity prices. For ethanol production to prosper, both here and worldwide, governments have implemented subsidies, supply and use mandates, or both. Impor ted ethanol currently attracts a fuel excise and an impor t tariff, while domestic supplies are excise free until 2011. CSR's executive manager ethanol Gavin Hughes said the industr y was profitable despite old equipment, massive investment costs in a small market and discounts at the pump. Mr Hughes said the soaring cost of feedstocks was deterring refiner y investment, including CSR's plans for additional grain-based plants. The RACQ wants action on new fuel standards, cleaner engine technology and research into other fossil fuels with low GHG outputs. Motorists also need to drive economically or consider vehicle downsizing. The Club is suppor tive of E10 fuels that offer appropriate discounts but suggests motorists complain to their supplier if prices are too high. Motorists should also be aware that E10 discounts can var y substantially between like retailers or chains. The way E10 is marketed can also be confusing. Some companies adver tise the discounted E10 price on the highly visible forecour t sign instead of ULP. Others like Shell have chosen to substitute E10 pumps for 95 RON premium pumps, which forces owners of cars that need a premium fuel to buy a 98 RON fuel at added cost. BP has an unusual sales strategy for E10. Motorists need to ask for a free Biorewards card and produce it ever y time they fill up with E10 to obtain a 3 cpl discount. The company says customers suppor ted this option and denies Biorewards is confusing. A BP spokesperson said the program was simple, allowing motorists to join on the spot without needing to fill in any paper work, and was backed up by onsite signage, promotional material and trained staff to ensured the offer was always provided. Many independent ser vice stations of fer a range of ethanol-blended fuels.
December January 2008
August September 2007