Ethanol, loud and proud, is coming to a petrol pump near you. Probably not soon, but it’s coming with yesterday’s endorsement by the new deputy prime minister just another step along the road to 10% ethanol mix being commonplace at the bowser.

The ethanol cheer squad has regrouped under Queensland government
leadership since the federal government’s appalling handling of
unregulated ethanol mixing and has already won a new convert –
NSW is following the Beattie government in giving E10 preference for
its fleet. Too bad it’s a purely notional victory as it’s nearly
impossible to buy the stuff thanks to the PR disaster Howard and
Costello caused in their ham-fisted attempt to look after the vested
interests of their mate Dick Honan and his Manildra empire.

At this stage I’d better declare a conflict – I was paid by Queensland
to be the independent chair of an ethanol conference two months ago.
Presentations ranged from the absolutely gung-ho Brazilians busily
expanding their vast sugar cane plantations as they gear up for ethanol
exports to China and Japan, to the Orbital Engine Company
engineer who showed the damage E20 does to the engine of the
wrong sort of car.

In between was a story that E10 is safe for most but not all vehicles,
and that the cane farmers and at least part of the grains industry are
lobbying hard for the federal government to mandate E10 use. But even
that wouldn’t save any cane farmer who’s already marginal – and there
are plenty of those.

There’s a chicken-and-egg problem in that bankable investment in new
ethanol plants requires confirmed buyers, but buyers barely exist
without guaranteed large-scale production. The petrol companies are
less than enthusiastic, although BP and Caltex are slowly extending the
number of outlets offering E10 in Queensland, mainly in the sugar towns
where the locals are already keen on the story.

Ethanol needs a massive PR campaign to undo the
Howard/Costello/Manildra damage. It’s a campaign that will stress
environmental and renewable biofuels stories, but the petrol companies
are wary of going with ethanol’s biggest potential advantage: price.
With no excise payable on Australian-produced ethanol, E10 should be a
few cents a litre cheaper at the bowser if it’s adopted on sufficient

Aside from the question of reliable supply though, the big problem for
the oil majors here is that your standard petrol station’s
infrastructure is set up for three choices at the pump: Unleaded,
premium unleaded and one other. LRP is disappearing fast, leaving
diesel, super-premium unleaded and E10. Everything, including image and
reliable supply, is already in place for the first two.

E10 is nonetheless on the way, partly because it should be cheaper and
a little greener (with the potential to be much greener down the track
when production from new sources is perfected), but mainly because
there are votes in it. With Canberra looking at another ethanol study,
expect some sort of E10 undertaking just in time for the next federal
election, courtesy of a Queensland sugar seat.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey