Q.C.L.
ETHANOL FUMES AFFECTING GOVERNMENT POLICY DIRECTION
Last Thursday night I attended one of the Queensland Government run Ethanol Forums that
have been held in carefully selected sites and was left in no doubt that many of that nights
attendee’s wanted an ethanol mandate. In addition it seemed they believed it should be as
high a percentage as possible and hang the consequences for the livestock industries or
anyone else adversely affected by the mandate.
Still I consider it to have been an informative night even if it was a decidedly one sided
agenda and discussion. The forum was held in the Brisbane City Hall with the Queensland
Energy Minister Mark Bailey and Federal member for Kennedy Bob Katter in attendance.
During the prolonged question time the Energy Minister was asked why when both sides of
politics are so reluctant to intervene in a market why were they so keen to interfere in the
feed supply market in this way and as a consequence was he prepared to introduce a
mandate on Queensland produced fresh milk. The Minister quickly replied that he had no
intention of doing any such thing to help dairy farmers like he intends helping the ethanol
industry.
Another informative session contradicted many who had claimed either directly to me
earlier on, or in the forum, that feed grain prices would not rise under a mandate. Finally it
was acknowledged by one very high profile supporter of the mandate that yes grain prices
for feed grain users such as dairies will go up at least by around 15 to 20pc. Still others
claimed that the extra cost burden did not really matter as there are less than 500 dairy
farms left in the state now anyhow. While there was some discussion on biodiesel on the
night I found it extremely disappointing that there was not more focus on biodiesel and so
called second generation ethanol production both of which would not deliver what QDO
believes would be potentially a devastating impact on dairy of the proposed ethanol
mandate and potentially deliver some real benfits without the need for Government
interference in the market place.
On the night QDO did raise the need in the livestock industries and particularly in dairy for
starch and obtaining it from grain will become more expensive under the proposed
mandate. QDO also tried to correct statements by some which claimed huge benefits to
dairy from the meal made from ethanol by-product. As most are now aware the starch in
the grain has mostly been removed to make the ethanol and while what is left in the by
product is as a percentage higher in fat and protein it cannot replace the starch that is
needed from grain. In addition to this the ethanol by-product meal produced in Queensland
is very high in moisture which I believe reduces its usable life to well less than a week. This
makes it of little use to the average dairy farmer struggling under the weight of higher grain
prices. In many other regions of the world that produce ethanol, this product is fully dried
which makes it a much more transportable, storable and useable product.
QDO also asked why ethanol needed a mandate at all if it was in any way an efficient
alternative to petrol. The answer we were told was that some petrol outlets did not offer
the 10pc ethanol E10 fuel at their outlets and so restricted consumer choice. The other issue
raised on the night was what level the proposed ethanol mandate should be, with options
oftwo, five and ten percent mandates being thrown around. It seems to me that if a 10pc
mandate was to be introduced apart from devastating livestock industries it would also
restrict consumer choice as it would mean every litre of petrol sold in Queensland would
have to be E10 to reach the mandate. What came out of the discussion to me was the
interesting claim that a 2pc mandate increased consumer choice, but surely then higher
levels such as 5pc or 10 pc mandate would by necessity restrict consumer choice again to
achieve those mandate levels. Since 1980 ethanol has received over $1 Billion worth of
government support and it seems it still needs a mandate for it to be used. I understand the
net energy benefit of ethanol from molasses is around three times better than it is from
grain but even so molasses still compares badly against second generation ethanol
production systems, which utilise cheaper sources of feedstock such as biomass from crop
residues.
Interestingly, in the United States legislation has recently been introduced into Congress to
repeal their ethanol mandate. One of the reasons cited was the devastating impacts on the
livestock industries and the need to give consumers choice.
Why then are our leaders once again so willing to commit us to what has already been
shown to be unsuitable policy even in different overseas economies and tie itself to a
technology that in all likelihood will soon be overtaken by more efficient systems?