I welcome the announcement by BP Australia Pty Ltd today that it has signed contracts and a Memorandum of Understanding that will result in the production and supply of over 200 megalitres (ML) of biofuels per annum by 2008. On 22 December 2005 I released the Biofuels Action Plan which brought together plans by major oil companies, members of the Independent Petroleum Group and the major retailers to develop a competitive biofuels market in Australia. This Action Plan showed that the industry expected to not only meet but exceed the Government's biofuels target of 350 megalitres by 2010. Today's announcement by BP contributes to more than half the Government's target and affirms industry's expectation.
To further support the biofuels industry, I am pleased to announce that the Government will amend relevant legislation so that biodiesel made from tallow using new technology, that does not form esters, receives the same favourable tax treatment as biodiesel made by existing esterification processes. Biodiesel and fuel ethanol are subject to excise but are effectively tax free until 1 July 2011. The amendments are expected to be included in a major excise legislative reform package to be introduced prior to 1 July 2006.
Today's announcement by the Government to amend relevant legislation will support new investments in the industry, such as BP's investment in at the Bulwer Refinery in Queensland, and builds on other Australian Government initiatives to support the development of the biofuels market including the $37.6 million Biofuels Capital Grants Programme and the Commonwealth fleet use of e10. BP's investment represents a major step in the development of the biofuels industry and signals to consumers, producers and the financial sector that BP is strongly committed to the industry's future.
I congratulate BP and their partners Colyer Fehr Tallow Pty Ltd, Primary Energy and CSR on their agreements to work together to invest in and produce over 200 ML per annum of biofuels. I also congratulate Australian Renewable Fuels on their recent decision to open a 45 ML capacity biodiesel plant in South Australia and on the company's agreement with Dermody Petroleum, a leading fuel distributor in South Australia. I understand that Australian Renewable Fuels plans to roll out a total of five biodiesel plants by 2007. I am delighted with the investments being made in the biofuels industry, they demonstrate confidence in the market and the future of the industry.