ENERGY: by Patrick J. ByrneNews Weekly
Ethanol needed for new fuel, engine standards
, February 26, 2005
Australia has had one of the lowest fuel emission standards in the developed world.
For the first time in 2006, Australia is to have a national fuel standard called Euro 3, which will require a reduction in the aromatics - like toluene, benzene and xylene - in engine fuel. These additives in fuel boost the engine energy burn, or octane rating, of a vehicle.
Even countries like the Philippines and Thailand are operating on the Euro 3 standard. The new standard will require alternative additives to boost the octane rating of petrol.
The Federal Government also has an agreement with motor vehicle producers to have new cars operating at a minimum 95 octane rating, at a higher engine compression, by 2006.
To achieve the Euro 3 standard and the new engine specifications, the logical choice of fuel additive is ethanol, a renewable fuel that adds oxygen to the engine burn, boosting the octane rating. It is a renewable fuel that is produced most efficiently from sugar-cane, corn, sorghum and wheat.
The price of ethanol is competitive with current fuel additives.
Back in 1991, President George Bush senior introduced a Clean Air Act, which has greatly boosted ethanol production. Investment in ethanol plants has lifted US production to 13 billion litres annually, such that the US is about to overtake Brazil as the world's largest producer.
Brazil has been growing its ethanol-sugar industry at the equivalent of one-Australian sugar cane industry every two to three years. The industry was built with $4 billion in subsidies since the mid-1970s.
Brazil has lobbied Australia to become a co-supplier of ethanol to a potentially huge Japanese market.
Unless the Australian Government puts ethanol investment incentives in place, at the time the Euro 3 standards are to take effect, the oil companies are likely to argue they are unable to supply new oxygenates to replace the current aromatic additives, and seek exemption from the new standards.
One incentive measure by the US state of Minnesota was to grant oil companies exemption from the new fuel standards only if they were unable to source their ethanol within the state.
This led to a huge increase in production from 40 million litres in 1992 from two small plants, to one billion litres today from 14 large plants, 12 of them co-operatively owned.
US ethanol production currently takes about 13 per cent of the US corn and sorghum crop, and is expected to rise to 20 per cent by 2012.
US ethanol production has a 6:1 flow-on economic benefit to the economy. The US government sees it as a high value-added industry, with high return to farmers, that helps keep down the US farm subsidy bill.
Comparable benefits await Australia, when the Federal Government develops the will to make it happen.