Alternative Fuel Policy A Changing landscape. Gavin Hughes CEO Biofuels Association of Australia

Transcription

1 Alternative Fuel Policy A Changing landscape Gavin Hughes CEO Biofuels Association of Australia

2 Add name of presentation here on Slide Master Who are the BAA and what do we do? The Biofuels Association of Australia ( BAA ) is the peak industry body representing biofuel producers, marketers, retailers and others with the purpose of providing leadership and facilitating the building of a sustainable and economically viable Australian biofuels industry, consistent with national and community interests and environmental standards. Deliver policy reform that supports the development and growth of a sustainable biofuels industry Advocate for the industry by ensuring policy makers understand the environmental, social and economic benefits that biofuels can deliver Work with the research and development community to align research outcomes with the industry s commercial drivers

3 Biofuels What has been achieved Substantial investment has been made in the sector >$500M since 2000 Installed Biofuel Capacity is now approximately 850ML Contribute approximately $100M to the economy directly each year net of government support and a further $560M indirectly each year* Since 2005 the BAA estimates that biofuels have been responsible for the abatement of Consumption of Biofuels approximately 2.85 Billion litres^ Equivalent to approx. 5.6 million tonnes of CO2e abatement or (2.7 on a full LCA basis) Generated 350 direct jobs and Indirectly a further 3000 indirect jobs mainly regional Australia* This is based on less than 1% penetration into the market!! Data Sources: BAA estimates using ^Petroleum Stats and Import Data and *Deloitte Study 2014

4 Cents per Litre Add name of presentation here on Slide Master Current Policy Framework Ethanol Mandate in NSW 6% Queensland Mandate 2016 (2-4% starting point) Excise to be phased in over a 5 year period to 33% of the Petrol rate commencing 2016 Imports attract full excise rates Biodiesel Mandate in NSW 2% Queensland Mandate 2016 (0.5% starting point) Excise to be phased in over a 15 year period to 50% of the Diesel rate commencing 2016 Imports attract full excise rates from 1 July 2015 Advanced Biofuels Unclear Feb-16 Aug-18 Fuel Excise changes (Assumed 2.5%CPI indexation) Feb-21 Aug-23 Petrol & Diesel Excise Ethanol Excise Biodiesel Excise Feb-26 Aug-28 Feb-31 Aug-33 Feb-36

5 Why the World is choosing to mandate Biofuels There are a range of reasons why countries choose to move down the biofuel path. Many of these are very relevant to Australia. GHG Reduction Jobs/Economic Development Fuel security / Independence Reduce Fossil Fuel Reliance Balance of Payments Air Quality

6 Add name of presentation here on Slide Master Thailand A case study Source: Thailand Ministry of Energy

7 Strong Policy Delivers Results Add name of presentation here on Slide Master

8 Strong Policy Delivers Results Add name of presentation here on Slide Master

9 Australia needs to move with the times GASOLINE SULPHUR STANDARDS ppm ULP 50ppm PULP Add name of presentation here on Slide Master Fuel Quality Standards Australia s fuel specifications are falling far behind the rest of the world Sulphur content for ULP is set 15 time higher than what is acceptable in Europe Whilst the rest of the world is moving to Category 4 compliance we are still languishing down in Category 2 Australia 150???

10 Lowering Sulphur content would allow RON95 Consumers to choose E10 and save $ Add name of presentation here on Slide Master Europe, US, Thailand and other Category 3 & 4 countries all have the warranted option of RON95 or E10 Even accounting for a full energy content differential, this could offer at least a 10cpl saving for Australian motorists PULP Price ($/litre) Equivalent E10 Price ($/litre) Additional Consumption required for Parity Price Energy Content Adjusted saving per Litre (Cents/litre) $ 1.20 $ % $ 0.12 $ 1.40 $ % $ 0.11 $ 1.60 $ % $ 0.11 $ 1.80 $ % $ 0.10

11 Add name of presentation here on Slide Master Why hasn t Biofuel growth been faster in Australia? Policy instability and uncertainty On again off again mandates Excise policy changes RET uncertainty Removal of grant support mechanisms (CFG & EPG) Lack of enforcement of mandates (Exemptions) Market Barriers to entry Consumer Confusion Mixed messages to consumers Poor understanding of Fleet compatibility (Now approaching 95%) Poor consumer understanding of the benefits of using biofuels Pricing Misinformation

12 Add name of presentation here on Slide Master An example of misinformation often quoted as fact BREE Report February 2014 Costs & Benefits of the EPG program, Ethanol Sales (Source: BREE) 284 million litres EPG Program Cost (Source: BREE) ($108) million Savings Passed Directly to Motorists (Source BREE) +$63 million Energy Security Possibly Negative Jobs created as a result of the Ethanol Industry (Source: Bree) Jobs $ k per Job = + GHG Abatement effective cost per tonne of CO2e abatement (source BREE) 0.39Mt $274/T FORGONE REVENUE ARGUMENT: Apply Future Proposed Ethanol Excise Rate 284 million litres $0.125 X = Future Ethanol Excise Rate $32 million 281 Direct Jobs 2668 Indirect (Source DAE) Emissions: 398k Tonnes CO 2 abated Revised Costs & Benefits, Ethanol Sales (Source: BREE) 284 million litres EPG Program Cost (BAA Analysis) ($32) million Savings Passed Directly to Motorists (Source BREE) +$110,320 Direct +$64 + = +$11,619 Indirect + million Net cost/benefit of EPG to Taxpayer +$31 million New Cost per Regional Job per Regional Job New Cost per Tonne of C0 2 -e abated +$77.88 per tonne CO2-e

13 Add name of presentation here on Slide Master What will dominate the policy space in the future? CLIMATE POLICY Maintaining only 2 o C warming will be a significant challenge Currently Transport emissions are set to nearly double by 2035

14 Add name of presentation here on Slide Master What will dominate the policy space in the future? Deaths ??? AIR QUALITY Deaths attributed to ambient air pollution and PM rose 68% from 2005 to If the same trajectory continues then that number could rise to nearly 2500 attributed deaths Diesel now classed as a Group 1 carcinogen also will stoke the fire for change PM & Air Quality Road Toll

15 Add name of presentation here on Slide Master What will dominate the policy space in the future? JOBS At only 1% of the fuel market biofuels have already demonstrated that they can drive regional employment (350 direct & 3000 indirect) Technology advancements in this area will also drive research and development activities globally Not everyone can work in the hospitality and finance sectors! The manufacturing sector requires rebooting if Australia is to have a healthy economy into the future.

16 Isn t Tesla (and the electric car revolution) going to fix CO2 emissions and air quality issues? If all electricity was generated from renewable sources then this would be true. But it isn t so. Current emission estimates Add name of presentation here on Slide Master Source kg CO2/ 100km % National generation Brown Coal % Black Coal % Gas % Renewables 0 14% Average 15.6kg CO2/100km Note: Assumes 17.2kwh/100km consumption (ref: Leaf & Tesla)

17 Add name of presentation here on Slide Master How do electric cars compare? 156g CO 2e /km 113g CO 2e /km 110g CO 2e /km 98g CO 2e /km 85g CO 2e /km TESLA MINI COOPER E10 TOYOTA PRIUS E10 LEAF Electric Powered Holden V6 Commodore E85 HYUNDAI E10

18 The BAA s view on Policy Objectives This industry is at a fork in the road. As a country we must decide if we want to develop this new industry that has so much opportunity? The BAA would like to see the following as a matter of urgency: NSW Government follow through on enforcing the 6% Ethanol and 2% Biodiesel mandate in the short term and then move towards 10% Ethanol mandate as promised. Qld introduce a 3% Ethanol and 0.5% Biodiesel Mandate with a trajectory to encourage new investment. Review of Fuel standards that allow consumers that buy 95RON vehicles to buy E10 as an alternative as consumers are able to do so in the US, Asia and Europe.

19 Thank You

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