nsw makes a move

Biodiesel mandate in NSW defies backlash

Australian
Greg Roberts | June 06, 2008
NSW will become the first state to mandate a minimum level of biodiesel use in motor vehicles as the state Government continues to defy an international backlash against biofuels.
NSW plans to introduce a 2 per cent biodiesel mandate and double its ethanol mandate for petrol, which was introduced in October, from 2 per cent to 4 per cent next year.
While motoring organisations welcomed the move, they warned some vehicles could experience difficulties with the fuel.
NSW Regional Affairs Minister Tony Kelly told The Australian the biodiesel mandate would be introduced as soon as was practicable.
The moves were part of government plans to boost the biofuel mandate in NSW to 10per cent by the end of 2010.
Mr Kelly admitted there were divisions within the NSW cabinet over the policy but said it had the support of most ministers.
"The Government is of the view that the policy is good for jobs and good for the nation's balance of payments," he said.
No other state has followed NSW down the mandate path, although Queensland has signalled its intention to do so with a 5 per cent ethanol mandate by 2010.
Victoria ruled out mandating biofuels in February following a parliamentary inquiry.
Ethanol is increasingly controversial because it is made from fermenting grain.
The fuel came under fire at the UN food crisis summit this week because large areas of corn and other crops are being converted to ethanol production, causing food shortages.
The Weekend Australian reported last week that the ethanol push in Australia was threatening grain shortages and driving up food prices.
Biodiesel is made from vegetable and animal fats and oils.
It, too, is controversial because vast tracts of rainforest in countries such as Indonesia and Malaysia are being cleared for oil palms to make biodiesel.
Mr Kelly said the NSW mandate would be met from production at the Biodiesel Industries facility near Maitland in the Hunter Valley, north of Sydney.
Biodiesel Industries managing director Andrew Hill said the plant produced about 40 per cent of the 50 million litres of biodiesel made each year in Australia.
Mr Hill said 60 per cent was made from recycled cooking oil, with tallow, canola and cotton oil accounting for most of the rest.
The facility's biggest customer, Caltex, said that while the company backed the development of biofuels, it did not support mandating.
"We believe the market for biofuel blends should develop on a normal commercial basis driven by customer demand," Caltex said in a statement.
The company said it would not sell biodiesel made from palm oil because the clearing of rainforest and peat swamps had greatly increased greenhouse gas emissions.
Renewable Fuels Australia director Bob Gordon welcomed the NSW mandate plan.
"This will help motorists through more price competition and flexibility in the market," Mr Gordon said.
Diesel in Sydney is selling at about $1.80 a litre compared with $1.65 a litre for petrol.
NRMA director Graham Blight said a 2 per cent biodiesel mandate would make little difference to prices at the bowser.
However, Mr Blight said biodiesel had a bright future compared with ethanol and would be up to 5c a litre cheaper than diesel if the mandate rose to 10per cent.
NRMA motoring research director Jack Haley cautioned that some vehicles using biodiesel were breaking down in cold weather as fuel solidified.
"Most are OK but checks should be made with the vehicle manufacturer and with the fuel retailer," Mr Haley said.