Australia government to subsidise ethanol plants
Date: 02-Nov-01
Country: AUSTRALIA
Agriculture Minister Warren Truss said this week the government planned to implement a programme to ensure environmentally friendly fuels such as ethanol provided two percent of Australia's transport fuel consumption by 2010.
The government, which faces a national poll on November 10, would offer a capital subsidy of 16 cents for each litre of new or expanded bio-fuel production capacity constructed, equal to a subsidy of about 16 percent on new plant, Truss said.
Under its target, transport use of bio-fuels such as ethanol and bio-diesel, initially sourced from sugar by-products and grain, would increase from 40 million litres a year to 350 million litres by 2010 - about two percent of the petrol market, or one percent of the total liquid fuel market.
The subsidy would be paid until the 350 million litres target was reached, or until June 30, 2007, whichever occurred first.
Sugarcane producers, who have been campaigning for government support to set up an ethanol industry, welcomed the news.
But Australia's main cane grower body CANEGROWERS said it was doubtful that the plan would lead immediately to a new ethanol producing industry without mandatory blending of ethanol with petroleum.
"It's only through that mandating that ethanol becomes seriously commercially competitive with oil at US$22 a barrel," said CANEGROWERS general manager Ian Ballantyne.
"Every other country in the world where ethanol or a fuel additive or a bio-fuel is being used has required mandatory legislation."
Truss said at least five new ethanol distilleries were expected to be set up under the programme, generating about 2,300 construction jobs and 1,100 permanent jobs.
It would also lead to improved air quality in cities and a reduction in greenhouse gas emissions, with tailpipe pollution from urban vehicles reduced by around 40 tonnes per year.
Truss said biofuels could be easily blended with petroleum without requiring new distribution infrastructure or engine modifications.
