Biofuels need seeding

In welcoming the Federal Government's investment in the car industry and extra $1.3 billion for the Green Car Innovation Fund, the chairman of the Biofuels Association of Australia, Neil Rae, says seed funding is needed to build an alternative fuel industry.

This will help develop the ethanol and biodiesel industry, he says.

Several companies are pushing ahead with refining plants for both ethanol and biodiesel but more work on infrastructure is needed, he says.

Rae believes that with industry support Australia's greenhouse gases can be slashed and our dependency on imported oil reduced.

Australia currently imports 40 per cent of its conventional oil needs at a cost of $12.5 billion last year alone, according to the CSIRO.

"I haven't seen the details of the green car innovation fund but I'd certainly like to think there's room for the alternative fuels industry," he says.

Rae, who was in Melbourne last week for a national biofuels conference, said the industry faced many "speed bumps" to growth, including existing government policy.

"The suggestion is that the market will bring biofuels to the people," he says.

"It's not as easy as that.

"It's going to take a little bit of encouragement for government."

Among the BAA priorities is infrastructure support to compete effectively against conventional fuels, direct and indirect tax benefits and convincing consumers that biofuels were a viable and sustainable fuel.

The BAA also wants the Carbon Pollution Reduction Scheme broadened to include biofuels.

"There's no silver bullet," Rae says.

In Australia, transport represents 14 per cent of all greenhouse gases.

"Yet ethanol can reduce greenhouse gas emissions by 37 to 60 per cent and biodiesel by 75 per cent, according to the CSIRO," he said.

"We have alternative fuel sources that instantly have a positive effect on greenhouse gases so why isn't it being embraced?"

Rae accepts that consumers, and governments, are still in the dark about the advantages of ethanol and biodiesel.

"There is no doubt that the industry and investors need to get clearer signals from the Federal Government," he said.

One of the more immediate concerns was that biodiesel loses access to Federal Government fuel tax credits from July 1, 2011.

The association wants a five-year extension to the credits until 2016.

From 2011, the tax rate on biodiesel will be 3.8c a litre, increasing 3.8c a year for five years.

Privately, many biofuel heavyweights at the conference believe both carmakers and oil companies have a vested interest in making it hard for the emerging fuel alternatives, waging campaigns that ethanol-blended petrol will harm their cars.