Today I am pleased to release the report of the Biofuels Taskforce. I commissioned the Taskforce in May of this year to examine the latest evidence on the impacts and benefits of ethanol and other biofuels.
The Taskforce found that:
there are potentially significantly greater health benefits from ethanol use than previously thought; and
greenhouse and regional benefits are similar to previous research undertaken; but that
the biofuels industry faces considerable market barriers including low consumer confidence and high commercial risk; and
on current settings the Government's biofuel production target of 350 megalitres (ML) by 2010 will not be met.
I reaffirm the Government's commitment to achieving our target of at least 350 ML biofuel production by 2010.
In a world of high oil and petrol prices, it is important that unnecessary barriers preventing the development of an alternative fuels market in Australia are removed to allow consumers to make decisions based on sound economic, environmental and social signals. In a climate where petrol prices are likely to remain high it is important to encourage greater use of biofuels.
Today I announce a package of measures to help address market barriers and restore consumer confidence in the biofuels industry.
The Australian Government will work with oil companies, petrol retailers, consumer groups, the biofuels industry and car manufacturers to ensure achievement of the target by 2010. In particular, the Government will work with the major oil companies to develop Industry Action Plans to underpin the achievement of the 350 ML biofuel target.
The Deputy Prime Minister and I will meet oil companies next week to commence the development of Industry Action Plans. This meeting will also provide an opportunity to discuss the outlook for petrol prices.
The Government will closely monitor progress against the Industry Action Plans to ensure all actions are delivered on time.
Consumer confidence in the biofuels industry was damaged in 2002. The Taskforce report finds that the low level of consumer confidence is not justified by the facts. The Government considers that every effort should be made to restore consumer confidence in the biofuels market. The Government will:
demonstrate its confidence in ethanol blended fuel by encouraging users of Commonwealth vehicles to purchase E10 where possible;
undertake vehicle testing of vehicles in the Australian market to validate their operation with E5 and E10 ethanol blends and work with the Federal Chamber of Automotive Industries to ensure that consumers receive accurate and up-to-date information;
increase fuel quality compliance inspections to ensure ethanol blends meet fuel quality standards;
simplify the E10 label, which inadvertently acts as a warning to consumers against using ethanol;
subject to the results of vehicle testing, allow E5 blends to be sold without a label, as in Europe, giving fuel companies greater commercial flexibility to increase supply; and
work with Australian fuels and transport industries to establish standard forms of biodiesel to provide certainty to the market.
work with the States and Territories to adopt fuel volatility standards (an existing market barrier) that are transparent, nationally consistent and take full account of the latest information on the impacts of ethanol blends on air quality.
The Biofuels Taskforce found that there are potentially significant air quality and health benefits from ethanol use. To further assess and promote the benefits of biofuels the government will:
commission a study on the health impact of ethanol to validate overseas research under Australian conditions; and
promote biodiesel's beneficial environmental properties such as its biodegradability through a B5 biodiesel trial in Kakadu National Park.
The package I announce today is in addition to the Australian Government's existing significant support of biofuels, which includes a generous 50% excise concession for alternative fuels, a $37.6 million capital fund to support new biofuels production capacity and a total of $41.2 million in production grants to fuel ethanol producers, demonstrating the Government's firm commitment to the development of a viable Australian biofuels industry.
I would like to thank the Taskforce, Dr Conall O'Connell, Dr David Brockway, Dr John Keniry, and Mr Max Gillard for their report.
A copy of the report can be downloaded from: http://www.dpmc.gov.au/biofuels/final_report.cfm