The diesel crowd features a shed full of backyard producers fiddling with a technology that has been around for decades, and a handful of serious players, such as Australian Renewable Fuels that was spun out of Amadeus Energy last year.
The ethanol crowd has a similar mob of small fry, and a few bigger name players hoping to cash in on government subsidies and encouragement to make ethanol a permanent part of the Australian gasoline mix.
But from what The Slug has been hearing lately, that’s when it gets interesting because at least one serious player in the biofuels business reckons diesel will not work in Australia, and the future lies with ethanol.
Peter Anderton, one-time head of the Minproc engineering business and a man comfortable with complex issues, has spent the best part of three years analysing the Australian biofuels business.
His mission has been part corporate and part technical. Corporate because the ultimate controlling interest in the company he heads, Australian Ethanol, lies with the Roberts family of Multiplex (and Wembley stadium) fame. Technical because he has been trying to decide whether to invest in diesel and/or ethanol production in Australia.
The result of his journey into the specialist world of converting agricultural mass into liquid fuels has produced this equation from Anderton – biodiesel will work as a business in the US but not Australia – while ethanol will work as a business in Australia but not the US.
Time, demand in the different markets, and a lot of money, will eventually prove whether Anderton is right. But even before we know the answer to that question, there is little doubt that his campaign to make Australian Ethanol a substantial player in both markets will cause a lot of friction in Australia.
To prove his point about the differences between the US and Australian biofuels markets, Anderton is starting to invest a lot of money to support his theory.
At Swan Hill in Victoria, he is investing $A9.3 million in an ethanol plant that will process wheat, corn, barley and other grains.
In the US state of Nebraska, he is committing the first $2 million (with a lot more to come) on a soy-based biodiesel project near the town of Beatrice.
Further down the track, Australian Ethanol has plans to produce biofuels from Malaysian palm oil, as well as a listing on London’s AIM – complete with a $100 million capital raising.
Putting money where your mouth is always ranks as the most serious expression in a belief, and on that score Anderton wins full points.
The Slug, being a bit of a slow learner when it comes to understanding the merits of ethanol versus biodiesel in the renewable fuels space, is more than happy to let others do the talking and investing.
But one thing The Slug does know is that emerging technologies, and changing market habits, can be both a lot of fun when the game starts, and a deadly place to be if you get it wrong.
Right now, Anderton is betting the business on ethanol for Australia and biodiesel for the US – which is a courageous step which leaves two unanswered questions: (a) what if he’s right? What does that say about companies placing their bets the other way, and (b) what if he’s wrong?
Don’t we live in interesting times?
