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Joint Media Release
Minister for the Environment and Heritage
Dr David Kemp, MP
Minister for Agriculture,Fisheries and Forestry
Warren Truss, MP

10 May 2002

Major Study on Market Barriers to Biofuels

Environment Minister David Kemp and Agriculture Minister Warren Truss today announced a $5 million, two-year study to address market barriers to the increased use of biofuels in transport. The study will develop a broad strategy to increase biofuels production to 350 million litres per annum by 2010.

Biofuels are fuels produced from renewable organic sources. Biofuels with commercial prospects in Australia include ethanol and biodiesel. Total fuel ethanol production in 2000 was 40 million litres. Most fuel ethanol is used as a component in a blend comprising 10 per cent ethanol and 90 per cent petrol (E-10). Biodiesel is a generic name for fuels obtained by treatment of vegetable oils or animal fats and it is commonly blended with diesel at concentrations of up to 20 per cent.

The Coalition announced in the 2001 election campaign that it would set an objective that fuel ethanol and biodiesel produced in Australia from renewable sources will contribute at least 350 million litres to the total fuel supply by 2010. Progress towards the objective will be reviewed in 2006.

The biofuels study, to be managed by Environment Australia in consultation with other departments, will be funded from the Greenhouse Gas Abatement Program. It will consider vehicle testing and a technical assessment of the E-20 ethanol blend in standard vehicles. While blends containing up to 10 per cent ethanol are regarded as acceptable, concerns have been expressed by some vehicle manufacturers and other stakeholders that higher blends may risk operational or mechanical problems.

The study will examine options for addressing market access difficulties including an assessment of the respective merits of nationally mandated minimum biofuel standards for transport fuels, and voluntary arrangements. Existing biofuel manufacturers report that, even with an excise exemption, they are having difficulty accessing markets.

The study will assist in determining the detail of measures needed to implement the Coalition's election commitment. The Government remains committed to a program to boost biofuel production and will decide on a final package later this year, after receipt of preliminary study data.

Until there is a decision on the biofuels initiative, funding of biofuel projects will continue to be considered under the Greenhouse Gas Abatement Program process.

Media Contacts:
Catherine Job (Minister Kemp) (02) 6277 7640 or 0408 648 400
Tim Langmead (Minister Truss) (02) 6277 7520 or 0418 221 433

Commonwealth of Australia