Not surprisingly, in November 5 2007, Australian Renewable Fuels chairman Max Ger yesterday scathingly attacked Canberra's "pathetic" attitude towards the local biofuels sector after announcing the closure of its Perth and Adelaide operations at the cost of 33 jobs. We say, biofuels do NOT have competitive advantage in Australia and their support under current technologies, represents a cost to the taxpayer. See Australian Business

Biodiesel is produced by reacting methanol with natural fats notably tallow or vegetable oils such as canola or imported palm oil by a process of transesterification. This involves replacing the trialcohol glycerol component of the oil/fat with methanol leaving a more mobile ester which has characteristics of petroleum diesel. The high price of petroleum combined with exemptions from federal excise has promoted a new industry with the first plants coming into operation during 2005 through 2006/07.

 With some variation depending on the choice of oil or fats, including tallow, the production of biodiesel requires one litre of methanol per ten litres (ie about 8 per cent of mass of biodiesel produced.)

 By end of 2006-07, biodiesel production in Australia is anticipated to be 523 million litres per year, requiring therefore requires some 41,000 tonnes of methanol per year. Refer for example,


Biodiesel deduced methanol requirements




Biodiesel Industries Australia,

Rutherford NSW

1 200

1 200

Australian Biodiesel

Group Berkley Vale NSW

3 000

3 500

Biodiesel Producers Australia

Albury Wadonga


4 700

Australian Renewable Fuels

Adelaide SA

3 500

3 500

Riverina Biofuels

Deniliquin SA


3 500

Australian Renewable Fuels

Picton WA


3 500

AJ Bush



4 700

Australian Biodiesel Group

Narangba SE Queensland


3 000

Natural Fuels

Darwin NT

13 000



SE Queensland


1 000

Natural Fuels

Botany NSW


13 000

Total methanol per year


21 000

42 000

Biodiesel manufacture represents a market by end 2007 of some 40 000 tonnes per year for methanol.

Industry specialists consider that by 2011, the demand for methanol could increase to 75 000 tonnes per year (Eg Phillip Hardey, Australian Biodiesel Group).


Biodiesel production is enabled by a federal production grant, (Cleaner Fuels Grants Scheme) which effectively nullifies the excise payable on fuel which will apply until 2011 after which it will be progressively phased out to 2015. At present, the grant is $0.38 per litre of fuel (say a 39 per cent level of assistance at the retail value of diesel).

While the production of ethanol requires six units of energy to produce just one, biodiesel is considerably better than ethanol, (and probably the best of the biofuels) but with an energy returned on energy invested (EROEI) of three, it still doesn't compare to oil, which has had an EROEI of about 30.

In our opinion, Biodiesel production in Australia has no net economic value added. The subsidies and waivers from excise represents a form of assistance to the rural sector. Some like Natural Fuels use imported palm oil and so with the methanol at international prices there is little to justify the plethora of small plants being commissioned around Australia.

One hectare of canola crops produces typically just 400 litres of biodiesel. (The litres of diesel required to clear, manage, harvest etc) and produce the equipment, transport and refine and distribute are not bought to account and so the low figure of 400 is gross).

"By promoting biodiesel as a substitute, we have missed the fact that it is worse than the fossil-fuel burning it replaces" (The Guardian).

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