Caltex’s Bio E10 unleaded, which blends 10% ethanol with regular unleaded petrol, is now available at 114 sites in New South Wales, 81 sites in Queensland and six sites in the ACT.

Caltex is also supplying its so-called ‘new generation’ diesel, which contains 2% biodiesel, to over 150 sites in NSW.

Australian Industry Minister, Ian Macfarlane, said the availability of ethanol-blended fuels was increasing all the time, giving motorists the choice of a cheaper fuel with lower greenhouse gas emissions.

“In June 2005 there were 70 service stations selling ethanol. Today ethanol and biodiesel-blended fuels are available at more than 800 outlets across Australia,” Macfarlane said.

He said the Coalition Government was a strong supporter of a competitive local biofuels industry, pointing to the recent extension of the Ethanol Distribution Scheme, which provides grants to service station operators to install facilities to sell biofuels.

“We expect an extra 400 outlets will begin selling ethanol-blended fuel as a result,” he said.

The scheme has been extended 15 months to June 30 2009, and provides up to $10,000 for operators to upgrade their equipment and support the sale of ethanol-blended fuel. Further cash grants are available to service stations that reach ethanol sales targets.

In addition, a re-elected Coalition Government would invest $5 million in a pilot plant in NSW which uses next-generation technology to produce ethanol more cheaply and from non-food feedstock such as sugar cane bagasse and sawmill residues, and $6 million in a trial to test the use of biodiesel blend B20 in heavy vehicle engines.

Meanwhile, the Australian Labour Party has promised $15 million to help companies set up next-generation ethanol pilot plants.

Ethanol Technologies (Ethtec), the company that would operate the proposed NSW ethanol pilot plant that has received Federal Coalition backing, said the plant would be sited at the NSW Sugar Milling Co-Operative Harwood Mill and Refinery in the state's north.

Ethtec owns the exclusive rights from Apace Research to further develop and commercialise technologies for the production of ethanol from lignocellulosic material such as wood, bagasse (waste from sugar production), crop stubble and municipal green waste.

Ethtec said this new process was expected to have immediate application worldwide in all new and existing ethanol distilleries that use traditional sugar, corn or starch feedstocks.

According to the company, there are more than 300 of these plants worldwide, either in operation or in the final stages of construction, while the current annual global production of ethanol using traditional methods is about 50 billion litres.

"Phase one of the project pilot plant project is a critical phase for a commercially viable cellulosic ethanol fuel industry to be established worldwide," Ethtec said.

"It involves a new hydrolysis process that converts the hemicellulose and cellulose components of the fibre to sugars at a significantly lower cost than competing methods."

These sugars have a ready market in the production of renewable chemicals and bioplastics, and as an alternative in some traditional sucrose markets, the company said.

Phase four of the pilot plant project, which can be undertaken at the same time as phase one, involves a new process of simultaneous ethanol recovery and liquid waste treatment.

"If successful, this new process will eliminate the liquid waste stream and thereby significantly reduce the environmental impact of ethanol distilleries," Ethtec said.

"Furthermore, by using 'induced phase separation', the ethanol recovery essentially eliminates the need for the conventional distillation technology, thus dramatically improving the energy balance of ethanol production, with accompanying reduction in greenhouse gas emissions."

Cellulosic ethanol production's advantage over traditional methods of ethanol production is that it does not use food as the feedstock for sugar production, only waste or surplus material.