Sceptre Group – Soaring Aussie demand guzzles biofuels supply

Australia’s biofuel production is forecast to more than double by 2015 as new capacity is installed and demand for alternative fuels increases, a private consultancy forecast in a report.

Australia’s biofuel annual capacity is forecast to rise to 1.519 billion litres by 2015 from 636 million litres this year, APAC Biofuel Consultants said, adding that this would see more demand for sugar cane and soybeans as biofuel feedstocks.

“Biofuels are increasingly contributing to the Australian transport fuel mix, replacing imports, assisting fuel security and providing environmental advantages,” APAC joint chief executive Mike Cochran said in the report.

Australia’s crude oil production is declining, leaving biofuel production well placed to displace imported oil, which currently meets about 40 per cent of the country’s oil demand. Biofuel demand in Australia grew 34 per cent in 2009/10 from 2008/09, more than double the global growth rate.

biofuels Most Australian demand is for ethanol, which is blended with gasoline, rather than biodiesel, another major type of biofuel. Cochran said the country’s ethanol industry was establishing itself as a sustainable alternative fuel source but the biodiesel industry still needed to gain sustainable scale.

The APAC report said installed ethanol capacity was forecast to rise to 910 million litres by 2015 from 350 million litres in 2010 as some Australian states mandated greater usage of biofuel. It said waste starch, molasses and sorghum remained key feedstocks for Australian ethanol production but new production may rely on sugar cane.

Biofuel mandates, plus growing use of biofuels as alternative to crude oil-based fuel, would see biodiesel capacity rise to 609 million litres by 2015 from 286 million litres in 2010, it said. Rising biodiesel output may result in Australia needing to import close to 1.4 million tonnes of soybeans a year unless it develops a sustainable soybeans production base, the report said.

Australia’s only planned biodiesel expansion is by National Biodiesel Ltd, which is building a $220 million soybean-processing facility at Port Kembla, 100 kilometres south of Sydney, that will process soybeans into biodiesel. APAC said Australia’s new political scene, where the minority Labor government is in alliance with the Greens party, could also encourage the development of new biofuel capacity.

General Motors’ Australian unit recently launched a new flex-fuel passenger car, which can either run on 100 percent gasoline or an 85 percent ethanol/15 percent gasoline (E85 blend), which will further boost ethanol demand, the report said. Refiner Caltex Australia is also setting up a network of E85 retail outlets in east and south Australia.

http://www.businessspectator.com.au/bs.nsf/Article/Australia-biofuel-output-seen-doubling-by-2015-9R542?OpenDocument&src=hp15

For more information on Biofuel Investments, please visit Sceptre Group’s website at www.sceptreinternational.com.

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