The state of ethanol

On the 6th of December 2008 the New South Wales State Government announced that they will triple the existing 2 percent ethanol fuel mandate in the next two years and mandate a 10 percent ethanol blend (E10)  in all regular grade unleaded petrol (RON 91 – 93) by 1 July 2011. They will also introduce a 2 percent biodiesel mandate. Apparently higher octane unleaded petrol will not require ethanol content.

This announcement has been welcomed by the ethanol producers that supply NSW fuel companies. It has also been welcomed by NSW grain growers as it gives them another market for their product. However, it hasn’t pleased everyone. There was even some desperate rearguard action in State Cabinet to defeat the Government’s plans to mandate the use of ethanol in petrol.

The Service Stations Association is concerned that because there is only one ethanol producer in NSW (Manildra) the mandate will give that producer “a blank cheque in setting prices”.

The Australian Lot Feeders’ Association is concerned that the mandate  “will increase grain and food prices for negligible environmental, fuel security or regional development benefit”. Australian Pork Limited are equally concerned for the same reasons.

Even the NSW Farmers’ Association, who you would expect to fully support the mandate, was cautioning that market forces, not Government intervention, should determine the percentage of ethanol in petrol.

While all this was hitting the news stands there was an explosion at the Manildra ethanol distillery at Nowra on the South Coast of New South Wales.

Manildra ethanol distillery

Manildra ethanol distillery: Michael Carter

According to the Manildra web site the distillery converts industrial grade wheat flour into its primary products of protein and carbohydrate. A by-product of the carbohydrate production is ethanol. The distillery was opened in 1992 to supply the the beverage, food, pharmaceutical, personal care, ink, cleaning and hygiene, surface coating and explosive industries. Production has been increased to meet the growing, and now mandated, demand for ethanol blended fuel.

One thing is certain. The use increased of grain in the production of ethanol, even if the ethanol is a by-product, is going ensure the fuel vs. food debate continues. This will no doubt be enhanced by the announcement that the Dalby Bio-Refinery in Southern Queensland has started processing sorghum and should be at full ethanol production by the end of January 2009.

Another debate that is ongoing is whether running your vehicle on E10 actually saves you money. Ethanol contains less energy than unleaded petrol so there is a price/performance trade off. A trial by Drive.com.au indicates that at current prices E10 may be cheaper but you need to buy more of it to travel the same distance. So much more that running E10 costs you more than running your car on regular unleaded.

Of course there is also the life-cycle emissions associated with first generation ethanol production that further complicate the picture. Ethanol producers paint their product in a very green light. Check out the Enhance Ethanol site to see what I mean. Enhance Ethanol is the name Manildra have given their ethanol. The benefits outlined on the Enhance Ethanol site are in stark contrast to some research that shows first generation ethanol lags behind fossil fuels when you include the emissions from farm machinery, fertilisers and processing. However, you can also find research that presents the opposite conclusion. One thing all the research appears to agree on is that the life-cycle emissions from second generation ethanol (cellulosic ethanol) are far lower than those of the ethanol we are currently using in transport fuels.

That all leaves me quite uncertain about the benefits of mandating ethanol in fuel until cellulosic ethanol production is viable in Australia.

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