According to this Australian article http://www.theaustralian.news.com.au/story/0,20867,20158516-601,00.html Peter Beattie has today promised to require all petroleum refiners in Queensland to produce only petrol with 5 percent ethanol. It's like Catch 22 - he can't make us buy it, but he can ensure it's the only product available.

This has got to be one of the most ludicrous policies I have seen in a long time. I'm not exactly sure what percentage of the nation's petroleum is refined in Queensland, but if you assumed it was enough for the Queensland market where is all the ethanol going to come from?

Are we going to import it from Brazil? Or is Beattie going to relax his tree-clearing legislation so that we can clear more land to grow sugar cane to produce it? And has anyone factored in how much water growing the sugar cane is going to take (just at a time when we've realised there's barely enough to go around)? And what about the flow-on effects for the price of products using sugar, and grain crops that can be substituted for it?

Of course, he's likely to get away with this because the Oppposition still can't work out that elections are won by the party having the largest number of seats; and journalists are generally so dim, that asking really hard questions in a press conference when the media release in their hands is still warm from the photocopier is just a bit beyond them.

GrahamY

I think your question "where is the ethanol going to come from?" is indeed pertinent.

One could suggest that Beattie is going off half-cocked on this one. However, I'm sure most would agree that we must start looking at energy alternatives ASAP. Surely this would be the new growth industry, problem is current approaches are not holistic.

Nuclear - shortsighted and nonrenewable - stop gap solution only if it can be implemented swiftly.

Ethanol - questions of production - do we need to grow food to make fuel?

We really can't afford an either/or approach we need to invest in ALL possibilities and alternatives.

As for Beattie - yeah, he'll get back in as default premier because the QLD opposition is about as credible as the federal opposition.

Cheers

It's probable that most of us know little or nothing about the technicalities of fuel production. All we know is that the increasing price of petrol is hurting us in various direct and indirect ways and that there's no sign of relief.

So what Peter Beattie is proposing seems likely to be a vote winner and right now that's maybe all he really cares about.

This is a policy statement by The Greens [WA]:
http://wa.greens.org.au/policy/economic/energy-04

Included is the statement:
'opposition to the use of anhydrous ethanol as a fuel extender for internal combustion engines on the grounds of excessive fossil fuel input in its production;'

I live in WA, but my understanding is that Queensland has huge coal reserves. So maybe Beattie can justify the overuse of greenhouse gas producing fossil fuels by falsely claiming that he is 'clean and green' on ethanol production.

Graham, I'm less concerned about the supply side, then you seem
to be. I think the market will sort that one out. Just recently
I read in the rural press, that some NSW growers were thinking
of switching out of cattle, into sugar, because of the rising
cane price.

I try to judge the whole thing, based on the fundamentals.
We need to start weaning ourselves off Middle East oil, to
which we have become addicted. A variety of alternatives need
to be looked at, from NW gas, to biodiesel, ethanol, wind,
solar, you name it, it needs to be examined and toyed around
with.

Food competing with energy, I don't see as an immediate
issue either. Lets face it, before ethanol came along, they
were battling to give sugar away, farmers were going broke
and bailing out of production. We seem to need to bribe
Iraqis to even sell our wheat! Using some of that wheat
for ethanol, would do wonders for the wheat market. Fact is
the world is still awash with food, thats why the EU and
US pay huge subsidies, to try and get rid of the stuff.

A change in commodity prices would affect consumers far
less then one might think. A loaf of bread contains about
10c worth of wheat. A kg of sugar is worth about 30c.
A litre of milk about 27c. A kg of meat about 1-3$.
The real cost to consumers comes from moving them down the
value added chain, through the Westfield Shopping Centre etc,
for people to buy. Some calculations that I have done
show that Westfield, as owners of the centres, would
be earning far more from some products, then the growers who
produced them.

Yabby, if ethanol is to be anymore than a niche additive you'll be talking about absolute food shortages, of which price rises will be the first precursor.

Came across this interesting piece on Fortune the other day http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/21/8383659/index.htm. According to it, one SUV full of ethanol would produce enough energy to feed one person for a year.

It says "The grain required to fill a 25-gallon SUV gas tank with ethanol, for instance, could feed one person for a year. If today's entire U.S. grain harvest were converted into fuel for cars, it would still satisfy less than one-sixth of U.S. demand."

The author Lester R Brown, looks credible, as you can see from this biog http://www.earth-policy.org/About/Lester_bio.htm. But I'm happy to be enlightened.

Graham, I guess we could extend that argument and say that the
300g steak that you ate for lunch took about 4kg of grain to
produce, which could have fed 6 people, so are you going to give
up meat?

I grant you, you are opening a can of worms, only time will tell
how the whole thing pans out. We know that right now, palm oil
makes extremely cheap biodiesel, highly competitive with the
stuff from Saudi Arabia. There is a real risk that more and more
of the world's rainforests will be chopped down, to grow palm oil
for exactly that use!

Last I read, around a third of the US corn crop was going into
ethanol and quite frankly farmers are cheering. There might be
hungry people, but nobody is prepared to pay to feed them, so
its not a question of a shortage of food, but a shortage of resources to pay for that food. Farmers, like anyone else, deserve
to be paid for their labour and costs that they incur.

I do not think that one magic bullet will solve the energy crisis.
It will have to come from many sources, ethanol being just one of
them. As the price of energy rises, less wastage and more efficient
use will be another. But lets look at another option. We run 100
million sheep in Australia, growing wool that hardly anyone wants
to buy these days. Wool farmers are growing broke everywhere.
Developing fuel crops which they could grow and actually make a
living, whilst you the consumer get your tank filled, is just one
of many options. Algae are another potential source, one of many.
We need to explore all these options. So I think its best not to
close our minds to anything, but also not look for any magic bullets. Yup, food and energy crops might well compete one day.

Graham, I printed out and digested Lester's article. IMHO the
issue is so complex, only the market will sort it out.

Yes, wheat and sugar prices have risen, but from incredibly low
levels. Much grain is only produced in many parts of the world,
with massive Govt subsidies, for political rather then economic
reasons.

I think the key is to see ethanol not as a cure all, but as
just another of many potential energy sources for the future.

Personally I don't believe that the solution to feeding the
third world, is to keep commodity prices below their cost
of production, by Govt subsidies.

If we look at the poorest areas, ie. the Horn of Africa,
last week's Economist has a detailed article discussing
lack of family planning, the world's highest birthrates
and overpopulation as problems leading to mass starvation
in that area. Shipping ever increasing boatloads of food into
that area, is not going to solve their problems either, in the
longer term.

Personally I think that their answers lie in modern family
planning availability, ie. its easier to feed 2-3 kids rather
then 10. Secondly, Western agricultural methods might be great
for the West, but things like permaculture would be far better
suited to the third world to increase food production there,
rather then chemical farming, as we do it.

Meantime, if corn is only worth 60$ US to a grower in Iowa or
wheat is only worth 150$ to a farmer in West Australia,
if you crunch the numbers, that tonne of wheat can produce
400l of ethanol. If it makes economic sense, why not do it?

Yabby, if it was left to the market that would be one thing, but it isn't being left to the market. If it was left to the market no-one would be buying ethanol.

At current rates of fuel it is still not economical as a fuel additive, particularly as it doesn't pay excise. As food is in even shorter supply than things you can turn into petrol, like coal and shale oil and natural gas, ethanol is likely to scream up in price as a result of any significant substitution to a point where it will be even less commercial than it is now. So long-term, it probably isn't a threat to food availability.

But short term, it is. Particularly to those who buy their food as grain, rather than processed, like we do in the west.

Graham, sorry for my seemginly wishy washy response :) but
I don't think its as clear cut as you suggest.

We don't know for sure what consumer reaction will be,
as without ethanol being freely available, its hard to
know exactly. What we do know is that more and more
people are so called green concious. If you look at the
Toyota Prius, its expensive and surveys show that the
majority of people who buy one, buy it to make an
environmental impact statement. Now they have a huge
waiting list and can't keep up with demand.

Alot of people I have spoken to, are keen to use biofuels
for similar reasons. Many are also aware of what is going
on in the Middle East. They know that Iran knows, that
if they were to close the Straits of Hormuz tomorrow,
the West would be basically stuffed. They are highly
uncomfortable with depending on the Middle East for
their wellbeing, so would be happy to use alternate
sources of energy.

Already the first farmers in WA have started making their
own biodiesel from their own crops, all on farm. Cost
is only one consideration in their reasoning.

All the figures that I have seen from the US and locally,
suggest that around 50$ per barrel is the cutoff point.
If oil stays above that, its worth doing, if oil falls
below that, they will lose money.
Thats allowing for tax etc.

In terms of say wheat or barley, just about all the grain
that we sell from Australia, is processed further. It goes
to flour mills in Indonesia, Egypt, Japan, Iraq, etc. etc.
The stuff you see on TV in bags, going to the third world,
is usually donated grain as food aid, mostly with a big
American flag on it.

Yabby,

I'm doing some research in this area and if you could provide a source and/or rationale for your comment "a loaf of bread contains about 10c worth of wheat" I would be interested to read it.

Cory, these days they make some larger loaves, but the old standard
loaf of bread contains about 500g of flour. The yield of wheat
to flour is around the 77-80% mark. Last years ASW price for wheat
to farmers gross, was 185$ a tonne, or 18.5c a kg gross. After
transport, handling, financing etc, they were left with about 150$ a tonne.

You can crunch the numbers yourself from that. You will land up with
about 10c a loaf that the farmer is paid, the rest goes to others.

No wonder farmers are hoping that ethanol from wheat has potential,
as at 150$ a tonne, they are fast going broke producing wheat.

A tonne of wheat can make around 400l of ethanol. American farmers
who have switched to ethanol production, are laughing all the way
to the bank, and actually finally earning a living in the process
for a change.

Yabby, you're just trying to over-complicate the issue and obscure it. If ethanol were to fill a significant amount of our petrol needs, the price of grain and sugar would skyrocket, making the cost of food higher, and also pretty quickly making ethanol uncompetitive as a fuel additive.

At the margin higher food costs would cause more people to starve.

The market won't correct the problem if governments mandate a certain percentage of fuel to be ethanol. In fact it will end up making fuel more expensive as the price of ethanol rises, yet refiners are still obliged to incorporate it.

It won't reduce our dependence on overseas oil, except at the margin, and given the growth in China and India, the pressure on oil will catch-up in a matter of months and we'll be just as vulnerable, unless you want all of our fuel to be generated from ethanol, in which case we won't be able to grow enough sugar and grain.

If there was a case for ethanol, the government wouldn't need to mandate it and subsidise it - the oil companies would be falling over themselves to supply it. That's what they're doing with LPG, although again with government aid.

Graham, why on earth should oil comapnies be interested in
ethanol? It just adds to their infrastructure costs after all,
so its easiest to just peddle away on petroleum , as per the
past.

Your problem seems to be that you are seeking a magic bullet,
as are many, to solve everything. Forget all that.

Just see ethanol as one of a myriad of energy supplies.
Sometimes it will be competitive, sometimes not.

The future lies in the diversity of energy products, not
in one particular magic pill.

Another diversion. I never said it was a magic pill - that's what you're implying. What I said was that mandating it was a bad idea. If using it makes any sense then oil producers and/or retailers will pick it up without governments forcing the to use it.

You ask "why on earth should oil comapnies be interested in
ethanol?" They'd be interested if it was cheaper than petrol, reliable (we haven't even touched on fluctuations in supply and price because of harvest conditions) and able to be substituted because it would give them an edge over their competitors.

You might remember not so long ago that some of the independents in Sydney and Melbourne were in trouble for adding ethanol to petrol so as to make it cheaper (this only works because ethanol is exempt from excise). So, it will be used if it is legal and available, because it has been used when it was illegal and available.

I also said it was a bad idea because it competes directly with food usage which will have a cost effect for those who eat, as well as also making its way into the price of petrol and making it uncompetitive as a fuel additive on price.

Every way you look at it, it is the opposite of a magic pill!

"If using it makes any sense then oil producers and/or retailers will pick it up without governments forcing the to use it."

Well thats the problem, most likely they won't. Look at LPG,
its been around for ages, cheap as chips, but consumers are pissed
off that its not available everywhere, so many never converted.

At the end of the day, it makes sense for the major oil companies
to stick by where they have their investments, ie. oil wells,
refineries, retail distribution. Biofuels simply add cost, extra
investments etc, to their system and is basically a pain in the arse
for them, even if its good for the country as a whole to start
addressing the issue of sustainable energy.

Fact is, a few cents difference in price does not matter to the
majors. If they make money on the wells, make money on refining,
as long as they have a certain % market share, with as little investment as possible, they are doing fine, thank you very much.
You the consumer, will buy the stuff anyhow.

The problem with biofuels is that they are at an embryonic stage
and need a guaranteed market to get going. At the end of the day,
they will benefit everyone, for if there is more supply around,
prices for Arab oil will drop.

Food prices are already below the cost of production alot of the time, due to the 1 billion$ a day subsidies paid by the EU and
US. Biofuels will throw a spanner in the works there and will be
great for the Australian economy. So they should be a win-win
situation for all concerned, in the longer term.

A politician that promises something thats the best joke I;ve heard all day.

Seriously as if this guy is going to do anything with Ethanol. If Australia wanted to. Australia could run more vehicles off Ethanol and cut down the oil we use. But since the whole world is controlled by the Oil corporations that will never happen.

If the Ethanol is ever introduced into petrol the media will come up with some [deleted for obscenity]story that it wrecks cars. That will make people fear it.

[Deleted for obscenity]We dont need to use oil as fuel. But we will be for a long time because some Greedy men have a lot of money and can sway a lot of people in power. [Poster suspended for a week.]

And it gets worse. Now Lawrence Springborg is promising a 10c rebate for ethanol. If ethanol stacks up, it stacks up without bribing people to use it. Unfortunately, this is an example of pork barrel politics at its worst, and you can see why Beattie got away with it - because the Coalition wanted to bribe voters in sugar seats too. It's times like this I think we need a fourth political force that will be content to hold only a minority of seats, but use its numbers to influence the majors to take-up rational policies.