Australian Government Policies for the Australian Biofuels Industry

1
Australian Government Policies for the
Australian Biofuels Industry

• Jan McCallum-Johnston
• APEC Energy
• Department of Industry, Tourism and Resources
• October 2006

2
Australian Government's Biofuels Policy Framework

• 350 mega litres by 2010 Biofuels Target Ethanol
  Biodiesel
• Up from 28 ML in 2005
• Commitment to encourage target achievement a key
  policy driver
• Key supporting policies
• Prime Minister's Biofuels Taskforce
• Biofuels Action Plan
• 37.6 million Biofuels Capital Grants Program
• Biofuels Production Grants
• Ethanol Distribution Program

3
Prime Minister's Biofuels Taskforce

• Formed May 2005 to investigate environmental and
  health benefits of biofuels and assess progress
  towards 350 ML target. Found
• There are potentially significant health benefits
  from the use of biofuels in addition to already
  documented environmental and regional benefits
• The biofuels industry faces considerable market
  barriers including low consumer confidence and
  high commercial risk and
• On current policy settings the 350 ML target
  would not be met

4
Response to Biofuels Taskforce

• The Government reaffirmed its commitment to the
  350 ML target
• Key supporting measures
• Actively encouraging users of Government vehicles
  to purchase E10
• Undertaking vehicle testing of E5 and E10 blends
  to validate vehicle performance and a study on
  health impact of ethanol
• Working with Federal Chamber of Automotive
  Industries to ensure accurate information about
  compatibility of vehicles with ethanol
• Increasing fuel quality compliance inspections to
  ensure ethanol blends meet fuel quality standards
• Allowing E5 blends to be sold unlabelled, subject
  to the results of vehicle testing

5
Biofuels Action Plan December 2005

• Key outcome of Biofuels Taskforce
• Individual plans from major oil companies,
  members of the Independent Petroleum Group, and
  major retailers
• Sets out volumetric targets and marketing
  strategies for ethanol and biodiesel
• Will increase biofuel use from 28 ML to exceed
  350 ML target by 2010
• Australian Government will review progress on a
  six-monthly basis
• Following first review in June 2006, in aggregate
  companies will meet their commitments

6
Research Development

• Biofuels Taskforce found that there is great
  potential for future advances in biofuels
  production from use of lignocellulosic feedstocks
• It was concluded that future policy interventions
  in this area should be limited until further
  developments in production technologies were
  realised
• Despite this, Government is lending its support
  to RD of new biofuel technologies through its
  Renewable Energy Development Initiative (REDI)

7
REDI Projects

• CSR University of Queensland's 'SugarBooster'
  Program
• Awarded 5 million to develop high-yield
  sugarcane for ethanol production
• Australian Renewable Fuels micro-algal biodiesel
• Awarded 348,100 to develop biodiesel from
  micro-algal feedstock

8
Biofuels Capital Grants Program

• Program established in 2003 to support new or
  expanded biofuels production capacity
• Competitive process judged on merit of business
  proposals
• 7 projects awarded funding
• 4 biodiesel projects totalling 25 million
• 3 ethanol projects totalling 12.6 million
• The completed projects will increase Australia's
  biofuels production capacity by 291 ML

9
Biofuels Production Grants

• Ethanol Production Grants
• 38.143 cents per litre paid to domestic ethanol
  producers per litre of fuel ethanol produced
• Grant fully offsets excise applicable to ethanol
  making it effectively excise free
• As of July 2006 61.2 million dollars in grants
  have been paid and 158 ML of fuel ethanol
  produced since 2002
• Grant will be phased down in steps from 2011 to
  2015 to halve ethanol's excise rate and give
  ethanol a long term 50 excise discount

10
Biofuels Production Grants

• Biodiesel Cleaner Fuels Grants
• 38.143 cents per litre paid to domestic biodiesel
  producers and importers
• Grant fully offsets excise applicable to
  biodiesel making it effectively excise free
• As of June 2006 approximately 4.5 million
  dollars in grants had been paid and 12 ML of
  biodiesel produced since 2003
• Grant will be phased down in steps from 2011 to
  2015 to halve biodiesel's excise rate and give
  biodiesel a long term 50 excise discount

11
Recent Policy Developments

• Prime Minister's Alternative Energy Statement
  August 2006
• Ethanol Distribution Program
• 17.2 million over three years
• Support for fuel retailers to install new ethanol
  compatible pumps or convert existing pumps for
  ethanol use
• New and existing ethanol retailers will receive
  additional funding if they can meet ethanol sales
  targets