The driving force behind friendly fuel

AS early as the 1880s, Rudolf Diesel, the inventor of the diesel engine, created a modified design that ran on peanut and vegetable oil. When Henry Ford built his Model T, in 1908, the plan was to fuel it with ethanol.
Yet since the early 20th century, the focus on non-toxic, biodegradable and environmentally-friendly fuel has waned in favour of a plentiful and cheap supply of petroleum-based diesel fuel.
The transport sector, currently dependent on finite fossil fuels, is the third-largest emitter of greenhouse gasses in Australia, with the road division responsible for 85 per cent of transport emissions.
Fossil fuels make up 98 per cent of the energy used by the transport industry, which contributes to more than one quarter of the world’s greenhouse gas emissions.
In 2009, Australia consumed 19 gigalitres of petrol, of which more than 22 per cent was imported. Total diesel consumption was also 19GL, with 48 per cent of it imported. Bioethanol and biodiesel (petroleum and diesel replacements, respectively) burn cleaner than fossil fuels and are less harmful to the environment as they emit fewer greenhouse gasses. Unlike in other countries such as China, Australia’s production of biofuel doesn’t impact food supplies.
There are a number of biodiesel feedstocks under development across Australia, including Indian mustard seed and Pongamia pinnata (the Indian beech tree), but the source with the most potential is algae. The Biofuels Association of Australia (BAA), formed six years ago, is the peak representative body for the Australian biofuels industry, and aims to provide leadership and stability to an ever-expanding sector.
The BAA represents ethanol and biodiesel producers, feedstock suppliers, technology providers, independent and major oil companies, equipment manufacturers, and mining and construction companies.
BAA chief executive Heather Brodie said the association was created after the government and important industry bodies found it difficult to keep track of the biofuels industry.
“It was put together by the industry on the basis that they were being told by a number of the ministers and relevant federal bodies that they wanted to hear from an industry body rather than individual companies,” she said.
“The BAA was very much formed with the purpose in mind of being the peak industry body and the place that governments could go to without having to engage with too many different groups of people.”
According to Mrs Brodie, prior to the BAA, open conversation in the biofuels industry was long-winded and confusing, which contributed to a lack of momentum. The BAA’s members include a broad range of companies such as Shell, BP, Virgin and Ron Finemore Transport: all with the goal of working towards a sustainable future. “The BAA really fights above its weight. We’re the only group focussing on biofuels from an industry perspective and the
commercial side,” Mrs Brodie said. “It’s a very eclectic membership, but it’s one that reflects everyone in the supply chain and that’s really important.” The BAA’s most vital work is with the federal and state governments in developing
fuel quality standards.
“We operate at a lot of different levels and try to encourage relationship building,” Mrs Brodie said.
“We try to encourage the end-users [and] the retailers who sell the products. The BAA gets involved at every element along the supply chain.”
The BAA and fuel standards According to Mrs Brodie, the biofuels industry found itself in a very tough position during the past few years. She said that until 10 months ago, the industry was in a position of uncertainty. Now, as a result of the BAA’s persistence, fuel quality standards are in place.
Mrs Brodie said that quality standards for biofuels meant the difference between a consumer purchasing the fuel and supporting the industry, or not trusting the fuel and refusing to fill their tank with it. She added that industry bodies had worked hard to obtain biofuels quality standards certification.
“Up until even five or 10 years ago, there weren’t robust fuel quality standards for biodiesel and for ethanol,” Mrs Brodie said.
“We work on the fuel quality standards; we work with the Australian Competition and Consumer Commission, looking at the use of alternative fuels; [and] we work on communication, education and awareness around using bio-derived alternative fuels.” Mrs Brodie said that prior to the implementation of the standards, issues concerning the quality of biofuels had led to a lack of trust from consumers and contributed to misconceptions about alternative fuels.
“There were, in the past, quality issues before we had fuel quality standards for biofuels,” Mrs Brodie said. “We’re working on two main things, [the first of which is] the development of sustainability standards for bioenergy with the International Organisation for Standardisation.
“I am the chair of Australia’s Mirror Committee and we’re in the middle of a four-year process,” she said. Mrs Brodie said a comprehensive communications and education program concerning the use of biofuels was the BAA’s second project, and would see it working with groups such as mechanics and motoring organisations to quash misunderstandings. Mrs Brodie, as the representative for the alternative fuels industry on the Fuel Standards Consultative Committee, is also working on the development of the E85 Standard in order to address a blend of petroleum with 85 per cent ethanol.
At the moment, the B20 Standard, as set by the National Biodiesel Board, is due for public consultation. This standard sets a blend of 20 per cent biodiesel and 80 per cent diesel.
The economic climate
With new legislation focussed on the impact that fossil fuels have on the environment and the importance of a sustainable future, biofuels are looking more attractive than ever.
On July 1, 2011 the biofuels industry was given an extension on the current taxation arrangements for renewable fuels and these will be valid for the next 10 years. Mrs Brodie said she believed this was the “biggest development” so far.
“The industry didn’t know what the fuel excise was going to look like for alternative fuels,” she said.
Mrs Brodie said that if the policy for an alternative fuels excise, which has now been implemented, had not been passed, the biofuels industry would have come to a standstill.
The industry pays a customs or exsice duty rate of 38 cents per litre on biofuels products but is granted it back by the government, leaving the taxpayer in a neutral position. The Cleaner Fuels Grants Scheme refunds 100 per cent of the excise or customs duty rate on eligible biodiesel and renewable diesel.
The Ethanol Production Grants program, which gives back 100 per cent of the excise duty rate to domestic producers of ethanol, was extended for 10 years on December 1, 2011.
“We’ve got the legislative framework around fuel excise which is in place for the next nine years, until 2021, and that gives the industry a position of certainty in which they can make investment decisions,” Mrs Brodie said.
After June 30, 2021 the government will review the taxation arrangements. According to Mrs Brodie, the slow uptake on biofuels meant it was not easy for the industry to gain momentum, especially when people weren’t taking advantage of
alternative fuels at the bowser.
“The consumer needs to be able to want to purchase the product. The consumer needs tobe able to access the product,” she said. “Although the consumer is asking for it they might not be able to access it very easily. We need to ensure that there is a growing development of the market on both the retail and the production side.”
She said the BAA believed that the production of local biofuel would benefit Australia’s economy and push forward sustainability.
“We want to have fuel independence in Australia rather than relying on imported fuels,” Mrs Brodie said. “We’ll be reducing the trade defi cit if we’re using local fuels. There are a lot of really good reasons to use biofuels, outside of emissions reduction.”
Common misconceptions about biofuels There are countless myths about biofuels and what they can do to cars. According to Mrs Brodie, a lack of understanding about biofuel means the majority of vehicles run on environmentally harmful fossil fuels.
“It’s the biggest problem that the industry faces,” Mrs Brodie said. In reality, the vast majority of vehicles, machinery and trucks can use blended fuels.
In 2009, 99.44 per cent of cars produced in Australia could run on an ethanol blend. According to the BAA’s website, biodiesel has advantages including better lubrication, reduced wear and tear on the engine and fuel pump, and a longer engine life.
Australian biofuels are produced from waste streams in a process designed to have the least possible impact on the environment and human consumption. This negates the issues of deforestation and lack of food that surround biofuels production in some other countries.
Contrary to common belief, ethanol-based fuels do not reduce the power of vehicles. In Australia, V8 Supercars use ethanol-based (high-octane) fuels to increase their power.
Although a blended fuel can increase fuel consumption by 1 to 3 per cent, the overall outcome is better for the environment. “We’ve got people, particularly the mechanics and the salespersons, that say ‘don’t put that in your engine’ when in actual fact it’s fine because the product is warrantied and there are no issues with it, but we still have ongoing perception issues within the industry and for the average consumer.” What the future holds Despite its troubled past, the biofuels industry is predicted to expand.
According to Mrs Brodie, Federal Treasury modelling predicted that by 2050, 75 per cent of Australia’s fuel needs might be met by biodiesel.
Meanwhile, the Federal Government’s Renewable Energy Target aims for 20 per cent of Australia’s electricity supply to come from renewable sources.
However, Mrs Brodie said that the lack of education about biofuels made it difficult for the industry to take off.
“The industry really needs to focus on communicating and educating the reasons for using biofuels,” she said.
At the moment, E10 (a blend of unleaded fuel with 10 per cent ethanol) was slightly cheaper than unleaded petrol at the bowser. “I would suspect that the pricing differential is going to remain fairly constant with what it is now – priced ever so slightly at a discount at the bowser,” Mrs Brodie said. However, she did not believe that the price should ever be too low for environmentally friendly fuel.
“I don’t see any reason where they should be substantially cheaper and the reason for that is there are an awful lot of good reasons for using alternative fuels: those externalities such as environmental benefits, the reduction of trade deficit [and] jobs for Australians.
Why should a product that is better for your engine and the environment be cheaper?” According to Mrs Brodie, there were a number of reasons as to why the industry was going to boom.
“One is the implementation of the carbon tax, which means that people are going to be looking for lower-emission alternatives. One is going to be the reducing [of] fuel tax credits, which will encourage the users of biodiesel and bioethanol because they will continue to get 100 per cent of their fuel tax credit whereas the fossil fuels [users] won’t.
“I think we’re going to see a really substantial move towards bio-derived fuels and alternatives, and also the reasons why people use biofuel are not just about emissions reductions. “We are going to see a really big growth in the industry in the years to come.”

 

By Courtney Pearson

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