The Australian Lot Feeders’ Association (ALFA) is concerned that Federal and State Government assistance for the unviable grain based ethanol industry distorts grain markets, increases food prices and threatens the internationally competitive and profitable rural businesses that compete with the ethanol sector for grain.
1. The fuel security argument is flawed because the majority of Australia’s ethanol is sourced from food crops (eg wheat, sugar cane and sorghum), crop yields vary in line with Australia’s erratic climate, ethanol represents less than 10% of petrol consumption, and Australia does not have a fuel security issue. Grain derived biofuels can only hope to replace a negligible portion of Australia’s transport fuel demands without significantly impacting upon food supplies. This is the same for the world’s largest ethanol producer, the US, where 100% of its corn crop (the world’s largest) if diverted to ethanol would only meet 7% of its fuel needs. Mandates of ethanol content in fuel aggravate this situation because they create an inflexible demand for grain which is disconnected to supply. Fuel security is also not an issue in Australia with the National Energy Security Assessment concluding that our overall fuel security position is ‘high’ to 2016 and ‘moderate’ to 2035.
2. The regional development argument is flawed because the jobs created by a Government assisted ethanol industry are few, extremely costly to taxpayers and more than offset by job losses in other more viable rural industries that compete with it for grain. There are currently only 3 ethanol plants in Australia with the industry receiving more Government assistance and protection per litre of ethanol produced than the US. According to ABARE the taxpayer cost for each job created is around $546,000 per job per year. Given that a feedlot using the same amount of grain as an ethanol plant alone contributes more than 2 times the number of jobs, a Government assisted ethanol industry may actually result in a net loss in employment due to unfair competition and rising costs.
3. The environmental argument is flawed because the life cycle emission benefits compared to regular unleaded are negligible (the CSIRO states only 1-4%) and extremely costly to taxpayers (the Productivity Commission concludes $394-511 for every tonne of CO2-e reduced). Given ethanol also has poorer fuel economy to regular unleaded petrol, more ethanol and hence emissions are released.
What we are seeking
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