According to a report in The Australian newspaper, under a proposal to be submitted next week for Cabinet consideration, Macfarlane will advocate an average ethanol content of 2%, which is much lower than the 10% demanded by sugar cane growers.
The oil industry is understood to have agreed to place 350 million litres of biofuels in petrol each year by 2010, which represents 2% of the total petrol and diesel fuel demand in Australia in exchange for an annual production subsidy of $150 million.
The Cabinet rejected mandating a 10% ethanol/petrol blend on the grounds the oil industry could stall billions of dollars of planned investments in refinery technology to produce cleaner fuels, the report said.
In response to concerns that high ethanol levels could cause engine damage, service stations will be forced to label the ethanol levels in petrol. Under the proposals, ethanol levels will vary across the nation.
