Federal govt NOT supporting biodiesel industry?

New fuel tax bill discourages growth says biodiesel producer

The Australian reports that mid August, the Australian Biodiesel Group (ABG), Australia’s largest biodiesel producer, opened our largest biodiesel plant – with an annual capacity of 160 million litres – at Narangba, north of Brisbane.

However, CEO Dr Len Humphreys says, “The recent activities of the Australian Government impede the growth of the biodiesel industry. That is stupid because we are an Australian company.”

He says this Australian-based, Australian Stock Exchange-listed company has no further plans to expand in Australia but is instead looking to North America, where it has joint ventures for projects that could produce 480 million litres a year.

Biodiesel can be used in most modern diesel engines without modification and ABG says the substitution of its full production of biodiesel for conventional diesel would save 150,000 tonnes of greenhouse gases emissions a year.

Len Humphreys’ view on the government’s July 06 fuel tax bill

• it eliminates the incentive for off-road users, like farmers and miners, to take up biodiesel;
• it has created massive complications for ABG’s customer base with six different tax treatments for biodiesel.

Bob Gordon, from Renewable Fuels Australia says:

• the bill substantially reduces biodiesel’s capacity to compete in the market;
• only diesel with 5 per cent biodiesel appears to qualify for a rebate, whereas earlier all biodiesel qualified;
• the full rebate returns the fuel excise tax of 38c a litre;
• progress in new production growth has just come to a shuddering halt in Australia;
• the biggest beneficiaries are the major oil companies, because they “pegged for a 5 per cent limit on the use of biodiesel in the market”.

What’s happening eleswhere

• In the European Union, the biggest biodiesel market, Germany and France offer the industry tax incentives. At least 2 per cent of all transport fuels must be biofuels, rising to 5.75 per cent by 2010.
• In the second-biggest market, the US, a number of states have mandatory targets for biofuels, and insist on the use of biofuels to improve city air quality.

The biodiesel industry in Oz & ABG’s competitive edge

“Australia produced 10 per cent less oil last year than the previous year,” says Dr Humphreys, “yet there seems to be a complete lack of recognition about the need to have national security”. While the European biodiesel industry has concentrated on using canola, and the US on soybean oil, Dr Humphreys says ABG had developed a process to turn a range of animal and plant fats into biodiesel.

“At any point in time, cotton seed oil could be low priced, canola oil could be low priced,so there was no obvious choice for us. We developed a technology that processes most of the naturally occurring oils. It can process them in any ratio as well.”

The flexibility of ABG’s process gives it a competitive edge.

Dr Humphreys says ABG offers not just an alternate fuel for the nation, it also offers farmers an alternative income that could iron out the peaks and troughs of their other businesses.

The industry is developing oilseed plants that can grow in areas that are too dry for traditional cereals and oilseeds.

Where to now?
ABG’s next step will be into North America – they have to look at markets that encourage the growth of biodiesel.