ramping up ethanol production CSR revs up development plans for...

ramping up ethanol production CSR revs up development plans for ethanol project
Liam Walsh
16feb06
ETHANOL projects are being ramped up in Queensland this week but some work remains on the backburner.

Increasing demand saw sugar supplier CSR reveal plans yesterday to spend $15 million for new drying equipment – a "molecular sieve" – to enable fuel-ethanol production at a facility at Sarina, south of Mackay.

BP is also unveiling what it says is Queensland's first ethanol blending facility at Mackay tomorrow, which will help viability of the industry but not reduce costs at the bowser.

Ethanol, made from substances ranging from corn to sugar, can be used in applications such as car fuel or industrial solvents. But drivers have been wary due to disputed stories that engines might be damaged.

CSR's announcement yesterday, confirming earlier flagged plans, means the Sarina facility should have the capacity to produce 32 million litres of fuel grade ethanol by July.

The company has previously sent the ethanol down to a Victorian facility for drying.

"The main driver is really about the emerging renewable fuel push in Australia," CSR Ethanol general manager Gavin Hughes said.

Mr Hughes said CSR's market for the fuel last year was 1 million litres. This was projected to expand to 8 million this year.

"We believe renewable fuels are a way of the future," he said.

But another planned CSR facility to make up to 100 million litres at Burdekin remains on hold.

Asked about this, Mr Hughes pointed out the market was still in "very early days". The Sarina facility would build capacity and expertise for a future market, he said.

A BP spokesman said the blending facility, costing $240,000, would allow tankers to transport fuel to the Mackay area whereas previously this came from interstate.

"It . . . makes the whole supply chain more efficient," he said.

This did not mean cheaper prices for consumers with the E10 fuel still being sold at the same price as regular unleaded petrol.

But the BP spokesman said this would boost the industry's viability.

George Barker, who led a study examining the economic potential of producing ethanol in Queensland, said governments and businesses were increasingly supporting the industry.

Business still showed some caution with new investments, said Dr Barker, director of the Centre for Law and Economics at the Australian National University.

"If everyone invests at once, you can get oversupply," he said.

Dr Barker said continuing high oil prices meant the feasibility of the industry still stacked up. But opinion has been divided about ethanol's viability with some overseas studies also questioning the sector's energy efficiency.