Despite a biofuel consumption mandate in New South Wales, zero carbon policy-linked costs, effectively excise-free biodiesel imports and the federal government's ethanol production grants program, recent statistics reveal that biofuel is yet to make significant headway in Australia.
"Biofuels remain slow to gain acceptance in Australia," APAC Biofuel Consultants joint chief executive officer Mike Cochran said.
"Furthermore, as refineries close and Australia becomes increasingly reliant on imported transport fuels, it is very unlikely that indigenous biofuel production will replace imports above the current level (of about 2%) based on current trends in the near future," he said.
Statistics in a new report by this consultancy group revealed that biofuel demand increased by 4% to 398 megalitres in the last financial year with Australian output slightly down at 357ML.
Biodiesel was behind the growth as its consumption rose 40% to 114ML in the recent financial year, while the demand for ethanol-blended petrol was 284ML - a 13% fall from peak demand of 326ML in the 2010-11 financial year.
These volumes pale into insignificance when compared to Australia's typical national petrol consumption of 18.7 gigalitres per annum, and biofuel-incentivising NSW consumed 75-80% of Australia's fuel-grade ethanol production last year.
"The two or three cent per litre price discount to regular grade petrol remains an insufficient incentive for motorists to switch to ethanol blended fuel," Cochran said.
"Instead, motorists are switching to higher octane grades, a trend which is most noticeable in NSW."
APAC Biofuel Consultants, a joint venture of EnergyQuest and Ecco Consulting, has questioned whether revised government policies of 2011 were effective in supporting the industry.
"The Commonwealth's 2012 Energy White Paper called for a review of fuel excise (including biofuels) arrangements to improve market regulation by the Productivity Commission," Cochran said.
"The industry therefore, is now waiting for direction from the new government."
In more encouraging news, he said advance biofuels were making progress in Australia with the development of algae and cellulosic technologies for processing into transport fuels, along with projects supported by the federal government's Australian Renewable Energy Agency.
Cochran said there was considerable aviation interest in biofuel too.
"The Australian Initiative for Sustainable Aviation Fuels was recently established to facilitate the sustainable growth of aviation fuels in Australia.
"Also Virgin Australia and the Brisbane Airport Corporation announced in April 2013, a feasibility study into the creation of Australia's first ‘bio-port' at Brisbane Airport."
