By waiving the excise of A$0.38 per litre, on current production capacity, the industry receives assistance of A$65 million per year with declared aims to increase production to 350 million litres per year by 2011 representing a subsidy of A$133 million per year!  The sugar industry has been in receipt of extensive subsidies to promote an economically inefficient industry that has been identified as contributing to the destruction and growth on the corals of the Great Barrier Reef.

The use of alcohol in an energy rich country like Australia is a politically expedient initiative representing a concentrated benefit (the marginal seats represented by the cane growers) and a distributed cost to the Australian public. It is worth noting that Australia exports around 10 million tonnes pa of natural gas (LNG). Australia is well placed to produce GTL which can be valuable source of sulphur free diesel and represent a valuable export opportunity. GTL is not supported as the employment potential is low, with the benefits distributed, ie. politically invisible. Ethanol's "claim to fame" as an environmentally friendly and sustainable fuel is dubious. Investigations by CSIRO, Environment Australia and other respected institutions concluded that, when the production/consumption life cycle is considered, E10 does not yield discernible overall environmental benefits.

An ecologist at Cornel University (http://www.news.cornell.edu/stories/July05/ethanol.toocostly.ssl.html ) concluded.....

In terms of energy output compared with energy input for ethanol production, the study found that:

- corn requires 29 percent more fossil energy than the fuel produced;

- switch grass requires 45 percent more fossil energy than the fuel produced; and

- wood biomass requires 57 percent more fossil energy than the fuel produced.

In terms of energy output compared with the energy input for biodiesel production, the study found that:

- soybean plants requires 27 percent more fossil energy than the fuel produced, and

- sunflower plants requires 118 percent more fossil energy than the fuel produced.

Ethanol is produced in Australia by the fermentation of molasses and wheat by-products. The production capacity is 170 million litres.

- A CSR Sarina mill in Qld produces has a production capacity of 60 million litres per annum from molasses.

- Manildra at Nowra New South Wales capable of producing 90 million out of a capacity of 100 million litres pa.

Since the 1990s, Manildra has been using wheat flour from its plant at Gunnedah to produce a range of wheat by-products with the balance of starch production fermented into ethanol.

Some  90 per cent of ethanol is used as an additive for gasoline (petrol). (Australia's market is 19 billion litres pa.)

In November 2005 it was announced that a A$54 million ethanol plant is to be built in southeast Queensland at Dalby.

And June 2006 it was announced that Primary Energy will invest A$100 million produce 80 million litres pa of ethanol from some 200 000 tonnes of wheat at Kwinana WA.

The companies are the Queensland Fuel Group and Petro Fuels and Lubricants to begin construction in mid-2006 to be the state's first dry mil:l ethanol plant, initially producing 40 million litres of ethanol annually from mid-2007. It is expected to eventually produce a minimum of 80 million litres a year.

The plant will use sorghum and wheat  as the primary feed stocks.


Australian Biofuels has two joint proposed ventures to produce ethanol:

- Mossman Queensland based on sugar to produce 40 megalitres.

- Coeambally near Griffiths in NSW based on rice aiming to produce 80 megalitres.

In December 2002, Multiplex Constructions Pty Ltd agreed to sell its ethanol fuel company Australian Biofuels Pty Ltd to Perth minerals explorer, Indcor Ltd, for $3.5 million in cash and scrip. The deal includes 50 per cent of two ethanol development projects together with technical agreements, supply contracts with sugar cane and grain producers and a bankable feasibility study making it the only listed dedicated ethanol play on the Australian stock market.

Australian Biofuels owned by Indcor (that begain as a potential magnesium producer in Tasmania, owns one half of the Mossman Central Mill's sugar cane ethanol project in north Queensland and is working jointly on a grain ethanol project in Coleambally near Griffith, NSW (and Kwinana WA).  The company will be based in Brisbane and has plans to partner with another four sugar cane mills and grain grower co-operatives in West Australia, Victoria and New South Wales.  Multiplex Constructions would contribute a minimum of $1.5 million to Indcor to support the capital raising for the development of the ethanol production plants.

September 2003, Indcor announced it has plans for a A$22 million first stage ethanol plant at Swan Hill to produce 45 million litres of ethanol using corn, wheat and barley grown in the local area.  The project is contingent on of Federal government incentives.  Indcor also expects to earn carbon credits through hardwood plantations around Swan Hill.

Global Ethanol is a newly formed company that has no previous experience working with ethanol. In March 2006, Midwest Grain Processors, Lakota, Iowa, has signed an agreement with Global Ethanol, Brisbane, Australia, to sell it a 60 percent share of its firm for US$100 million. Mr. Ehlert said the US $80 million plant, expected to be completed Dec. 1, will employ 37.

Midwest Grain has operated a ethanol plant in Lakota for three years. It produces 100 million gallons annually. The Riga plant will produce 57 million gallons a year.


In July 2003, the federal government allocated A$47m including $10m subsidy (for excisable ethanol and hence an allowance of an advance subsidy to be paid before the payment of excise on fuel sales) to the Manildra group with the balance of $37m aimed at new entrants like the Australian Biofuels group. 


- Australia’s sugar industry is located marginal voting electorates and by world standards while technically efficient, by reasons of the size of production (family owned farms typically just 80 hectares), economically inefficient.  The industry has been subject to on-going subsidies and assistance packages. The federal government is promoting ethanol as an additive for gasoline to reduce oil consumption and reduce pollution. The economic cost to the Australian community is substantial and in our opinion vastly greater than the emotive benefits of a renewable energy. The sugar industry is economically inefficient and by its use of fertilisers, contributes to Great Barrier Reef damage a source of tourist income of multiple value to the sugar industry.

- The federal subsidies will be spread among nine projects currently planned, three of which are slated for Gunnedah, Quirindi and Parkes - all National Party electorates. The fourth NSW plant is intended for Maitland, held by Labor.The subsidies were approved despite what business and government sources said has been ferocious opposition within cabinet and several key departments.

- Summary of criticisms It takes more energy to produce ethanol than the energy content.

- Ethanol is 20 per cent less efficient than gasoline. Containing 15 per cent ethanol, ethanol reduced fuel efficiency by 7 per cent.)

- Legislation in Australia limits ethanol use to 10 per cent of gasoline. It is called E10 with two majors, Caltex and BP with intentions from Shell.

- The Australian car manufacturing industry is in receipt of government assistance by tariffs. After meetings with government, it has dropped its opposition to ethanol.

- Read this review.


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