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Australian Government Policies for the Australian Biofuels Industry

Australian Government Policies for the Australian Biofuels Industry. Jan McCallum-Johnston APEC Energy Department of Industry, Tourism and Resources October 2006. Australian Government's Biofuels Policy Framework. 350 mega litres by 2010 Biofuels Target – Ethanol & Biodiesel

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Australian Government Policies for the Australian Biofuels Industry

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  1. Australian Government Policies for the Australian Biofuels Industry Jan McCallum-Johnston APEC Energy Department of Industry, Tourism and Resources October 2006

  2. Australian Government's Biofuels Policy Framework 350 mega litres by 2010 Biofuels Target – Ethanol & Biodiesel • Up from 28 ML in 2005 • Commitment to encourage target achievement a key policy driver Key supporting policies: • Prime Minister's Biofuels Taskforce • Biofuels Action Plan • $37.6 million Biofuels Capital Grants Program • Biofuels Production Grants • Ethanol Distribution Program

  3. Prime Minister's Biofuels Taskforce • Formed May 2005 to investigate environmental and health benefits of biofuels and assess progress towards 350 ML target. Found: • There are potentially significant health benefits from the use of biofuels in addition to already documented environmental and regional benefits • The biofuels industry faces considerable market barriers including low consumer confidence and high commercial risk; and • On current policy settings the 350 ML target would not be met

  4. Response to Biofuels Taskforce • The Government reaffirmed its commitment to the 350 ML target Key supporting measures: • Actively encouraging users of Government vehicles to purchase E10 • Undertaking vehicle testing of E5 and E10 blends to validate vehicle performance and a study on health impact of ethanol • Working with Federal Chamber of Automotive Industries to ensure accurate information about compatibility of vehicles with ethanol • Increasing fuel quality compliance inspections to ensure ethanol blends meet fuel quality standards • Allowing E5 blends to be sold unlabelled, subject to the results of vehicle testing

  5. Biofuels Action Plan – December 2005 • Key outcome of Biofuels Taskforce • Individual plans from major oil companies, members of the Independent Petroleum Group, and major retailers • Sets out volumetric targets and marketing strategies for ethanol and biodiesel • Will increase biofuel use from 28 ML to exceed 350 ML target by 2010 • Australian Government will review progress on a six-monthly basis • Following first review in June 2006, in aggregate companies will meet their commitments

  6. Research & Development • Biofuels Taskforce found that there is great potential for future advances in biofuels production from use of lignocellulosic feedstocks • It was concluded that future policy interventions in this area should be limited until further developments in production technologies were realised • Despite this, Government is lending its support to R&D of new biofuel technologies through its Renewable Energy Development Initiative (REDI)

  7. REDI Projects CSR & University of Queensland's 'SugarBooster' Program • Awarded $5 million to develop high-yield sugarcane for ethanol production Australian Renewable Fuels micro-algal biodiesel • Awarded $348,100 to develop biodiesel from micro-algal feedstock

  8. Biofuels Capital Grants Program • Program established in 2003 to support new or expanded biofuels production capacity • Competitive process judged on merit of business proposals • 7 projects awarded funding • 4 biodiesel projects totalling $25 million • 3 ethanol projects totalling $12.6 million • The completed projects will increase Australia's biofuels production capacity by 291 ML

  9. Biofuels Production Grants Ethanol Production Grants • 38.143 cents per litre paid to domestic ethanol producers per litre of fuel ethanol produced • Grant fully offsets excise applicable to ethanol making it effectively excise free • As of July 2006 $61.2 million dollars in grants have been paid and 158 ML of fuel ethanol produced since 2002 • Grant will be phased down in steps from 2011 to 2015 to halve ethanol's excise rate and give ethanol a long term 50% excise discount

  10. Biofuels Production Grants Biodiesel Cleaner Fuels Grants • 38.143 cents per litre paid to domestic biodiesel producers and importers • Grant fully offsets excise applicable to biodiesel making it effectively excise free • As of June 2006 approximately $4.5 million dollars in grants had been paid and 12 ML of biodiesel produced since 2003 • Grant will be phased down in steps from 2011 to 2015 to halve biodiesel's excise rate and give biodiesel a long term 50% excise discount

  11. Recent Policy Developments Prime Minister's Alternative Energy Statement – August 2006 • Ethanol Distribution Program • $17.2 million over three years • Support for fuel retailers to install new ethanol compatible pumps or convert existing pumps for ethanol use • New and existing ethanol retailers will receive additional funding if they can meet ethanol sales targets

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