The Department of Industry claimed production for fiscal 2004-05 reached 22 million litres and is forecast to increase as more ethanol plants, such as the Dalby Bio-Refinery in Queensland’s Darling Downs, come online.

Industry Minister Ian Macfarlane said the Government had committed grants worth $A436 million to support the growth of the ethanol industry.

“Ethanol’s true moment in the sun is yet to arrive, but that production leap shows drivers are warming to the fuel and the supply side of the industry is poised for substantial expansion,” he said.

But the Australian Biofuels Association claims the outlook is not as positive as the Government makes out.

The Australian Financial Review yesterday quoted Australian Biofuels Association executive director Bob Gordon as saying the Government had significantly overstated production at the Minildra plant in central New South Wales.

Instead, he said the true total increase should be between 14 and 16%.

The discrepancy comes because rather than showing the increased uptake by the oil refiners, the extra supply was mainly sold through independent retailers, reflecting a rebound in sales, following widespread criticism of ethanol two years ago.

In December last year, refiners BP, Caltex and Shell each pledged a commitment to the Australian Government to increase their use of biofuels from 28 million litres in 2005 to between 89 and 124 million litres this year.

Looking further ahead, the Government and the refiners agreed to work together to increase the country’s annual usage of ethanol to at least 350 million litres by 2010.

However, none of these companies have signed an agreement with an ethanol producer since these announcements were made, according to Gordon.

He told the newspaper that the refiners were unlikely to reach their targets unless they started entering agreements.