August 24, 2006

AUSTRALIA: New Ethanol Blending Mandate

Get ready for some aggressive RFPs from down under. Australia sees the need to diversify its energy portfolio to include ethanol.

Here is the complete story from Stuff, the award-winning* news and information website of Fairfax New Zealand Ltd..

NSW plans to make oil companies produce ethanol fuel
25 August 2006

SYDNEY: Australia's rising ethanol industry has received a boost from a plan by the country's main state to force oil firms to produce a 10 per cent ethanol fuel blend by 2011.

The move will further press the federal government of Prime Minister John Howard to legislate for compulsory ethanol fuel blends, after years of vacillation when faced with reluctant oil companies, industry analysts said.

"The industry is stalled at the moment ... this may be just enough momentum,", said Bob Gordon, executive director of industry lobby the Renewable Fuels Association.

Soaring oil prices have brought out dozens of new Australian ethanol producers, increasing planned production from 75.2 million litres (ML) in 2004/05 to a potential 1,000 ML by 2009/10. Production of biodiesel is also projected to rise from 15.5 ML to 524 ML by 2009/10.

The government of New South Wales, Australia's largest state in economic terms, this week outlined a plan to introduce a legislated mandate that oil companies blend 10 per cent ethanol with their fuel by 2011.

The government of adjoining Queensland state has also pledged to introduce a mandate for a 5 per cent ethanol blend by 2010.

Gordon pointed out that Australia's largest ethanol plant, Manildra, was located south of Sydney at Nowra, and was in the process of expanding to produce 100 ML a year.

This was enough to produce 1,000 ML of E10 (10 per cent ethanol blend), he said.

Other analysts, however, said that more plants would need to be built.

"Moving down this track is going to be a bit of a challenge for industry," said Rosemary Richards, executive director of the Australian Oilseeds Federation. This would be especially so on Australia's east coast where supplies of grain, a feedstock for ethanol, is tight, she added.

"It's a great opportunity," she said.

David Ginns, chief operating officer of grower body the Grain Council of Australia, said the plans were good for the industry but much more investment was needed and that feedstock supplies still remained to be assured.

"It's a positive signal for the market and its something that we would support," Ginns said.

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