Ethanol – Fuel for Thought and Your Car!
Dec 2003 - John Howard announced clarification of excise on fuel ethanol.
Clarification that had been sought since the Federal Budget announcement of May 2003 when it was advised that ethanol would be exempt for 5 years until July 2008, then excise would be imposed at a level related to some energy and environmental consideration.
With a lead-time of 2 years to build the plant, a 3 year excise exemption and then some unknown imposition – possibly even 38.4cpl equal to petrol, the May announcement gave no comfort to the fledgling industry, let alone the financiers who normally only invest if they have zero risk and the personal guarantees of everyone’s mothers (and grandmothers as well).
Dec 2003 - announced excise would increase 2.5cpl per annum from July 2008 to cap at 12.5cpl in July 2013.
I personally think it’s economically viable to build a plant with this excise imposition, but you need to understand the variables or the risks in producing ethanol:
- The cost of grain is variable and subject to significant change with drought or flood.
- The cost of crude oil impacts on the selling price of ethanol and this can be subject to wide ranging changes.
- The exchange rate to US$ impacts on the Australian selling price of ethanol via crude oil pricing.
TfA have been intimately involved in the conception and gestation of the fuel ethanol industry in Australia, particularly with the Dalby Bio-Refinery where preliminary engineering, cost estimation and EPA Licensing and Development Approval have been obtained. We’re ready to deliver the first dry mill grain plant in Australia, which utilizes the world’s best practice in plants direct from the US. The US now has over 63 plants producing nearly 1 billion US gallons of ethanol per annum, with cars using ethanol at 10% addition to fuel and traveling trillions of miles per annum.
- It is not new, nor is it a risk to your car.
- It is good for the Australian economy – rural in particular.
- It is good for the environment, particularly the best practice grain plants which CSIRO really should review, instead of the existing 20+ year old Australian ethanol plants.
Last time I checked, TfA didn’t have $80M to invest in a plant, but we would. Will a banking institution, the mother of conservative thinking, lend $80M with the Government’s recent announcement? Surely property investment is safer, so why would they bother?
So, after 2 ½ years of explanation, lobbying, providing open book analysis of a potential new industry, our highly skilled bureaucracy in Canberra still haven’t provided enough incentive for the banks to risk their money. I know Chris & Ross Harrison and Bill Elliott of Petro Fuels, and Mark & Tony Lowe of IFS who are proponents of the Dalby Bio-Refinery deserve a better result after the tireless efforts and endless dollars that they have committed to something they passionately believe in.
Our last chance rests with the Democrats (Lynette Alison) who through the Senate are negotiating for a better outcome. They seem to put the Country before politics, which I applaud. If only the media understood the difference.
An Australian Ethanol Industry – to be or not to be, that remains the question ...
JAN04
