A SUCCESSFUL campaign by petrol retailers across the State resulted in a backflip by Premier Barry O’Farrell on banning regular unleaded petrol from July 1.
The Australasian Convenience and Petroleum Marketers Association (ACPMA) began distributing flyers and a petition against the move earlier this year at some of NSW’s 1600 service stations and the issue created a storm of controversy amid claims up to a million motorists would be forced to buy premium unleaded.
Mr O’Farrell announced on Monday night the government would scrap plans to ban regular unleaded and replace it with a 10 per cent ethanol blend, E10.
But the government has not backed down on proceeding with the State’s ethanol mandate under which petrol companies must ensure that 6pc of all fuel sold is ethanol.
ACPMA general manager Nick Moulis said motorists unable or unwilling to use E10 fuel would be forced to buy more expensive premium unleaded at about an extra 11 cents per litre.
“In many cases E10 products are not recommended for smaller engines, particularly water pumps – ethanol is not a product you want to use when water is present,” Mr Moulis said.
“Farmers need regular unleaded for a lot of their smaller equipment.”
He said costs for service stations to refurbish tanks so they were suitable for E10 would have been prohibitive and would have resulted in higher costs at the bowser.
“The NSW government said in 2007 the cost to industry to successfully implement it would be $270 million.”
There is only one producer of ethanol in NSW – Manildra, which has come under fire in recent days for its substantial political donations and lobbying of the government – and Mr Moulis said ethanol was “supply point sensitive”.
He said a combination of factors including the global financial crisis from 2007 to 2009, uncertainty about the future of the federal government’s fuel excise had contributed to a lack of interest from investors in ethanol production plants.
“Where we are in the generational development of the ethanol industry is behind the mandate timeline,” he said.
Mr Moulis said anecdotal evidence in NSW suggested one million vehicles would not be able to use E10, adding there was a one to three per cent fuel economy reduction and that negated the slightly lower price of E10.
“The ACCC report found there needed to be a 3.6c/L reduction (between E10 and regular unleaded) but the average difference is 1.7c and there are cases when E10 costs more than regular.”
“We would like the government to suspend the mandating process because we believe there are sensitive supply issues, concerns about the price for the consumer and the cost of infrastructure rebuilding. They’ve already done that with the diesel biofuel mandate and they need to do the same with ethanol because the mandate has outpaced the industry - new ethanol plants we hoped would be built have not been built.”
The proposal to ban unleaded in favour of E10 was first legislated by the former Labor government in 2009 in the Biofuels Act.
Greens MP John Kaye said there was mounting evidence challenging E10’s environmental and economic benefits and the mandate was unlikely to provide the promised reductions in greenhouse gas emissions.
“Energy Minister Chris Hartcher is ignoring the Productivity Commission’s downgrading of the benefits of E10 in December last year.
“Their analysis is likely to overstate ethanol’s greenhouse gas reductions compared to petrol, but it still suggests that E10 will not meet the state government’s clean fuel standards,” he said in a statement.
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