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SELECT COMMITTEE ON FUEL AND ENERGY
30/06/2009
Issues relating to the Fuel and Energy Industry

CHAIR —Welcome. I invite you to make a brief opening statement and then the committee will ask you some questions.

Mr Ger —I firstly would like to express my company’s appreciation at being given the opportunity to present before your committee. I have with me my colleague Mr Sole who is our national operations manager and if there are any technical questions, I would ask that I be allowed to refer them to him. By way of introduction, I would also like to provide a brief background of my present and past roles within Australian Renewable Fuels. While I have held the office of CEO and CFO I currently am engaged entirely in the marketing of product and to some extent sourcing feedstock for the industry and Australian Renewable Fuels in particular.

ARF has two biodiesel plants each with a 40,000 tonnes a year capacity which equates to roughly 45.4 million litres of fuel each. This is not a great volume but it does to some extent achieve a great goal when it is blended at given ratios. The two plants are situated in Adelaide, South Australia and Picton, Western Australia just beside Bunbury. Our company was listed on the Australian Stock Exchange in May 2005 and to date we have raised somewhere in the region of about $60 million to $80 million from various sources. The technology of the plants is Austrian based and it is world class. While both those plants have that technology unfortunately, through circumstances in the biofuels industry, they have never operated at more than 25 per cent of that design capacity.

Of necessity I would like to confine my comments to the biodiesel industry in South Australia and Western Australia, the two states in which we have actual industry experience and I think for which we can speak. Secondly, I would also like to confine my comments to biodiesel as a part of the biofuels industry as there appears to be little or no commercial ethanol production in this state. I do not think either Mr Sole or I are really qualified to talk on the question of ethanol but we are experts in biodiesel.

With regard to federal and state governments, as they relate to biodiesel, my major concern is that the division of the regulatory powers has led to some fragmentation in regulation. For example, New South Wales has a biodiesel mandate which will commence in 2010, Victoria initially rejected a biodiesel mandate and it is now reconsidering its options and South Australia and Western Australia still appear to be some while away from enacting significant alternative energy legislation, particularly in the area of biofuels.

The suppression of the regulatory powers appears to me to also facilitate a state of affairs where there is some disparity as to who owns the problem of implementing individual aspects of a coherent biofuels policy, for example, the mandating of biofuels which is governed by the states, financial assistance to producers in meeting infrastructure costs associated with distribution logistics required for biodiesel et cetera. The different regulatory authorities seem to me to have different responsibilities and different ownership of the problems that exist in the industry. I believe that the effects of a carbon reduction program will also involve the overall cooperation of both levels of government acting in unison in order to promote a viable biodiesel industry across the whole country.

In relation to taxation arrangements on biodiesel I would like to focus my concerns on the matter of the Commonwealth excise on fuel. In or about 2004 the previous federal government implemented a generous biofuels capital grants program whereby successful applicants received substantial financial assistance in the development of their individual biodiesel facilities. These grants, which ran into millions, were meant to stimulate biofuels production countrywide and relied on a major shift in consumer attitudes away from mineral diesel usage with the onset of global warming concerns. If producers were successful in the manufacture of biodiesel to the Australian standard and if their sales volumes to the Australian transport industry, which was targeted, were of sufficient magnitude, those recipients of the grants were freed from any liability of having to repay those grants in the future.

The cleaner fuels grant legislation implemented by the federal government is to be highly commended as an opening stimulus for the biodiesel industry. However, it has in my opinion two limitations. Firstly, the grant will commence reducing by 4c a litre per annum in each of the five years commencing 2011. This in my view is insufficient time to enable the industry to achieve stability and profitability. I would hope that the reduction in the cleaner fuels grant insofar as it affects biodiesel in particular can be extended for at least another five years. Secondly, the cleaner fuels grant is also available on imported biodiesel, thereby promoting the use of what effectively is palm based product, which may be contrary to the stated purpose of the legislation in the first instance and which allows for a certain amount of dumping of surplus palm biodiesel from the Asian region to occur in Australia.

On the question of taxation arrangements affecting biodiesel, I think that the recent decision of the federal government to remove the labelling requirement for biodiesel blends of up to five per cent is to be commended. That has had a dramatic effect on customer attitude. With regard to biofuels as an alternative source of energy, I again strongly compliment and encourage the various regulatory bodies, as these fuels have a role to play in carbon reduction; providing health benefits to the Australian population; regional employment in remote parts, particularly in Western Australia; and the preservation of valuable foreign exchange simply by reducing the amount of oil imports into the country.

In conclusion, there is one remaining matter that I would like to outline before your committee. The Australian biodiesel industry is essentially a tallow based industry. Small amounts of canola and other vegetable oils are used, but fundamentally this industry in Australia today relies on tallow simply because of the price of the raw material. The major problem besetting the industry during its brief life has been an extremely volatile pricing of Australian tallow, which is the prime feedstock. Apart from relatively small amounts of tallow consumed by various Australian industries, a significant amount of Tallow is exported to the Asian region, with China and India taking up most of the volume of Australian tallow for soap and candle production. This has led to an enormous price pressure on tallow which threatens the viability of the entire Australian biodiesel industry.

Until such time as alternative sources of renewable fats and oils are available from plants such as ditropha and the cultivation of algae, I believe that the industry will continue to suffer from input cost price pressures that have already crippled several Australian producers. The commercial production of oil from algae still in my view appears to be three to five years away, with the primary thrust being led in the United States. However, on the question of ditropha oil production, I would welcome federal and state government consideration of allowing ditropha oil production and the growth of ditropha plants to occur in Australia under controlled conditions as a considerable boost to the viability of biodiesel production here. I thank the members of the committee for allowing us to make that presentation.

CHAIR —Thank you very much. I have an opening question. We have previously been told as a committee that there are infrastructure issues associated with the widespread introduction of biofuels. Can you talk us through how you see that particular issue?

Mr Ger —Sure. Prior to the 2006 income tax legislation changes, insofar as they affect fuel tax excise, if we produced biodiesel and it met the Australian biodiesel standard, the end consumer of the product, if they were eligible, could claim the entire amount under the fuel tax rebate. As long as the biodiesel standard, it qualified. Of course, users of mineral diesel, provided their products met the Australian mineral diesel standard, qualified as well. But in 2006—and this was largely driven by a density issue—the blended fuel suddenly did not have to comply not with their individual standards; the blended fuel had to have the properties of the Australian diesel standard. Clearly, once you went over a 20 per cent blend, you had a situation where density issues made it impossible to sell biodiesel into the community and for them to claim the fuel tax rebate. The fuel did not qualify any longer under the diesel standard.

What effectively happened with those changes in 2004 was that the biodiesel producers were almost invariably compelled to market their biodiesel through the oil majors. Because of the changes to blending rules, the changes to paperwork, the changes to the standards, we were fundamentally forced into a position where our richer market was through the oil majors. They had the distribution networks. That is the problem. Previously we could go to a company such as Fortescue Metals, where we could deliver 100 per cent biodiesel at a competitive price. They could use it in their production, particularly in the underground operations and things like that, and they could claim the fuel tax credit. Once the blending requirement could not exceed 20 per cent and all the attached requirements came into force, they suddenly had to have separate infrastructure and separate record-keeping—

CHAIR —It became too complicated.

Mr Ger —It became too complicated.

CHAIR —That forced people like yourself to then channel through the major fuel suppliers—is that right?

Mr Ger —Precisely.

Mr Sole —Well, we had two options. You have got the fuel majors, who can then dictate, or you have people who are big enough to have their own supply, and they said, ‘We are prepared to come and do work with you on this.’ We actually have some customers of Wesfarmers at the moment that are prepared to do that.

CHAIR —What caused that change?

Mr Sole —The legislation change in 2006. You could claim excise back on a B100 biodiesel, but when that legislation changed you had to meet diesel fuel spec. The only thing that stops biodiesel meeting diesel fuel spec is density, because biodiesel is denser than diesel. Diesel gives exemptions when it is actually lighter than its spec to be allowed in the country, while biodiesel can never meet diesel fuel spec purely on density. In every other aspect we meet the parameters—in fact, we exceed the parameters of diesel fuel.

CHAIR —Is that something that was envisaged would happen at the time? Was that discussed at the time?

Mr Ger —It happened at the time and we actually applied to the development authority to have the density issue dealt with and modified so that there would be no impact.

CHAIR —So why didn’t they?

Mr Ger —We did that and we were just refused with no reason.

CHAIR —So there was no explanation?

Mr Ger —No explanation given as to why the density cannot be changed. It was simply changed.

Mr Sole —That went to the department of heritage, not too long ago, as well. They rang us up about eight months ago.

Senator McEWEN —The state department?

Mr Sole —The minister of heritage and environment.

CHAIR —That is a federally budgeted one, isn’t it?

Mr Sole —The federal one, yes.

CHAIR —Is it a tax issue, an excise issue, or is it environment?

Mr Ger —They control what the standard is.

CHAIR —That is, the department of heritage and the environment?

Mr Ger —Yes, they control what the standards are, while the ATO control the excise, obviously. So it is nothing to do with environment. Our personal feeling is that there was political pressure from the oil majors at the time on the then government to say, ‘Hey, you need to stop these people coming on board.’ The easiest way was to remove the threat by saying, ‘Let’s make a spec that they can’t meet and is impossible for them to meet.’ There are two bits to the bow. One is making density for diesel which is lighter, so you are given less fuel for your litre. The other was that the way we use the Australian standard is based on the European standard for biodiesel, and it does not reflect Australian conditions. The European standard deliberately targeted canola and rape seed and eliminated all other feed stocks. Australia took that standard on without thinking that we have tallows, we have coconut, we have mustard seed, we have all those other things that we could use in Australian conditions. That effectively meant that we could not use lower density feed stock. We were forced to use only the feed stocks that could meet the European standard. In effect, tallow failed European standards because in the carbon chains that they look at tallow has a lot of C17, which is the standard that they use for testing against. So that was blinded against canola, which was a C18, C16 product. Tallow has a wide range. In its bell-shaped curve there is quite a wide range and distribution of C-chains. We were not actually meeting the law effectively until heritage actually changed that legislation to say, ‘We’ll allow C17 to be in the standard now, so tallows can be used properly.’ But it still eliminates anything below C14. Hence we can never meet the density of diesel fuel. Yet we can meet every other parameter.

CHAIR —So that is one of the things that you would recommend should be changed, presumably?

Mr Ger —Senator, could I just take that to the next level, if that is the basis of the argument. Our distribution to market must go through the oil majors in volume. I can assure you that we were fairly substantial producers. In the eastern states there is the plant at Albury-Wodonga, which is a large biodiesel producer. Most of their production is channelled through one of the oil majors. The oil majors will only pay the MOPS Singapore price, which effectively means that at no stage can biodiesel ever cost them more than imported mineral diesel. Without appearing cynical, clearly they have an input into the MOPS Singapore price by virtue of their refining capacity. So what you have is: they will not pay more for our product—and our product is based on home-grown products and has not taken millions of years to develop—so at the moment a particular oil major, which I do not want to mention, is saying to me, ‘Max, we’ll take as much as you can give us but it is going to be at no more than 99c or $1 a litre, which is our MOPS Singapore price for imported diesel.’ To produce a litre of biodiesel, our fully absorbed cost today is about $1.11. So there is a disparity, and because there is no mandating, no compulsion, to really focus on the use of alternative energies and less harmful fuels they can avoid buying the biodiesel altogether.

Senator HUTCHINS —We have heard evidence during the conduct of our inquiry about the relationship between the production of biofuels and food shortages. Does your organisation have a view on that which you could outline to us?

Mr Ger —I might just start off and get Lorin to finish, if you do not mind. Tallow is fundamentally animal fat. It is a product that nobody should ingest. I strongly recommend that anybody who eats tallow should desist from that. In fact, I think McDonald’s have even removed tallow as part of the baking of their rolls. Our major feedstock is tallow. There are small amounts of vegetable oil, but in comparison the food for fuel argument does not apply in this country because, simply, the industry is tallow based. If we talk about ditropha and algae oil, none of those fuels and feedstocks enter the human food chain.

Mr Sole —We have not fired a shot in anger, and yet the prices of so-called oils for food have gone up. It is nothing to do with our production. We would be lucky to have produced 25 per cent of our total production over the last three years, so it is nothing to do with that. The other thing is that oil price is driven by the soy price out of the United States. The soy price from the United States had rocketed due to the farmers not planting soy because they planted corn and grain for ethanol production. So it is ethanol production in the United States, and the United States hunger for it. It drove the reduction of soy grain, so soy prices went up; hence, palm prices went up in Asia. Asian palm was too expensive, so they dived in Australia. Australia’s tallow is the only BSC-free tallow in the world, so they just hooped into the Australian product and drove up the tallow price. A 10-year average of $5.40 a tonne was running at $1,050. We had a 100 per cent increase in under six weeks.

Mr Ger —I will give you the exact figures. The Australian moving 10-year average was $565 a tonne prior to that move and then it went to over $1,050 a tonne into store. Bear in mind that that is in Western Australia and South Australia. It might have been marginally cheaper in Victoria and New South Wales.

Senator HUTCHINS —What period did that go up in?

Mr Ger —That was over a period of three or four months. At one point before oil started to have that one rise in 2008, tallow was more expensive than biodiesel. We were paying more for tallow than we could get for our biodiesel with all the reagents and work done on it.

Mr Sole —To extend that: the major oil food crop in Australia is canola, and WA is the producer of over 80 per cent of canola. Canola runs at $1,300 a tonne, so who would be using canola to make biodiesel when it costs you nearly twice the amount you can sell it for on the fuel market anyway? Hence we do not go towards canola unless for specific reasons the customer requires a winter blended product. We very rarely touch it. We try to use UCOs. UCOs, which are used for cooking oils that come out of the fish and chip shops, have high demands in animal feed, so they tend to go back into animal feeds. That raises the price.

We support the Australian farmer, because we want to use tallow. We try to stay local. Because of the fascination of Asia with Australian markets, they will always attack this market. Whenever the palm prices start to rocket, they will dive to tallow. Tallow does get used for food over in Asia; they just replace the palm with tallow. They do not have the legislation or considerations that we have in this country for what a food is.

Senator HUTCHINS —So indirectly, this food-for-fuel argument, even though it is not an issue in Australia—they have sort of abandoned corn and wheat in America—

Mr Sole —It has its origins in the United States. The Europeans have dealt with it largely through rapeseed and the Australians use a tallow based business. The Argentineans and other South Americans are also largely tallow based. The argument is principally in the United States.

Senator HUTCHINS —You said that you operate the two plants you have at 25 per cent capacity. You could triple it, then?

Mr Ger —We are capable of producing up to 90 million litres of fuel. If that were blended even at 10 per cent, it stands to reason that there are a billion litres of diesel blend fuel which has those redeeming qualities that could go into the Australian market.

Mr Sole —It is still less than one per cent of the whole diesel market in Australia, so it is a nothing at the end of the day when you look at it from that aspect. If we had all the biodiesel plants all producing, it is still less than 2.5 per cent.

Senator HUTCHINS —But you said your per-litre cost is about $1.11—

Mr Sole —That is fully absorbed.

Senator HUTCHINS —yet the oil companies are saying the spot price is 99c. That is what you have to do; there is no independent distribution chain for you to plug into, is there?

Mr Ger —We can go with the individual customers, as Loren mentioned. We can go to companies like, for example, Fortescue Metals Group. But we already supply directly to certain companies like Santini. The Caltex or BP truck arrives. It has a certain content of mineral diesel. He tops up with biodiesel. It is completely miscible. By the time he gets to Santini, there is a blended fuel there. So I am able to go to some mining companies and sell small quantities. This is the fundamental issue: if those companies do it that way, where the oil major passes through our gantry, picks up biodiesel and blends it, there is no problem, but if they themselves want to blend on site the cost of infrastructure—a storage tank, heater tank infrastructure, blending infrastructure and some sort of distribution outlet—

Mr Sole —And then administration on top of that, because the ATO then requires you to have a bonded site there, even though biodiesel realistically is not an excise fuel like diesel is, because it is so insignificant. Then there is the paperwork involved, administrative duties et cetera, which we handle for them. It becomes a real red-tape pain to try to get something like that. Alcoa has taken fuel from us before, but they have flatly rejected that. They said, ‘There is just too much red tape; we’d buy it off you if we didn’t have to go through this red tape.’

Senator HUTCHINS —Do you see a state like mine—New South Wales—and other states potentially mandating the biofuels down the track? Do you see there being a better market position to talk to Caltex and Shell?

Mr Ger —Yes. If it were mandated, the power would pass to the biofuels industry. Then the oil majors have to bland and cannot say: ‘We’ll blend if it suits us. If it’s cheaper than our product—imported mineral diesel—we’ll do it; if it isn’t, we won’t.’ That would force the issue. That is the point I was trying to make in that earlier presentation. The federal government very generously gave us this biofuels capital grant. We received something like $7.15 million. But in order to retain that grant we have to sell 45 million litres of fuel into the Australian transport industry. The only way we can get into the transport industry is through the oil majors, and the oil majors will not pay the price. So we are beaten before we start.

Senator McEWEN —What level of mandating would give you the result that you want?

Mr Ger —I think about five per cent. Somewhere between two and five per cent would at least sustain the industry.

Senator McEWEN —Would that take you above 25 per cent production?

Mr Ger —Yes. The Australian diesel market, in my understanding—I have heard conflicting figures—is somewhere between 14 billion and 18 billion litres of fuel a year. We are producing 90 million, so it is really a drop in the ocean.

Senator McEWEN —You mentioned that you use tallow. How adaptable is the technology that you use? How adaptable is the infrastructure that you have to use some other source of biomass?

Mr Sole —As long as it is a fat—for example, a triglyceride or a derivative of a triglyceride—we can use it in our production. Apart from eucalyptus, most products are a fat, so we can use them to generate biodiesel. Mustard seed—you name it; we can convert it.

Mr Ger —May I add one last thing? I know that time is limited and we have taken your time. The single greatest initial move which would cost nobody anything and is just a state of mind is the question of ditropha plantations. Ditropha is classed as a highly noxious weed. It is grown in several other countries around the world. Areas like the Kimberley and the Pilbara are highly suited for ditropha plantations. The reason that it is rejected in Australia is simply that the leaf is so highly toxic. It is the oil—

Senator McEWEN —Toxic to human beings or stock?

Mr Ger —To any animal. If you talk about growing ditropha, it must be under the controlled conditions that I referred to, but that would have an enormous impact. If we could produce ditropha oil, we could (a) provide employment in remote areas to people such as the Indigenous populations, which I think would have a major benefit, and (b) have a situation where that oil would replace the tallow and provide a better product. Ditropha will provide a product with a far lower cloud point and, therefore, is more suitable. Infrastructure required to handle ditropha oil is a lot less than that for tallow. It is really a mindset that Australia has to come to terms with. ‘Can we grow ditropha?’ This is a state thing, I imagine.

Senator McEWEN —I think that, because you would have to import the plant, it would attract federal participation.

Mr Ger —Absolutely.

Senator HUTCHINS —Where is it from?

Mr Ger —It is grown in India, Indonesia, Africa—particularly in countries in the equatorial areas of the world.

Mr Sole —And then there is administration on top of that because the ATO then require you to have a bonded site, even though biodiesel, realistically, is not an excise fuel like diesel is because is it so insignificant. So, again, there is the paperwork involved, administrative duties et cetera, which at the moment we handle for them. It becomes a real red tape pain to try to get something like that. Alcoa have taken fuel from us before but they have flatly rejected business because there is too much red tape. They have said, ‘We’d buy it off you if we didn’t have to go through this red tape.

Senator HUTCHINS —Further down the track, with a state like mine, New South Wales, potentially mandating another state’s biofuels, do you see that you would be in a better market position to talk to Caltex, Shell and so forth?

Mr Ger —Yes. You see, if it is mandated the power passes to the biodiesel industry. Then the oil majors have to blend and cannot stand back and think: ‘We’ll blend if it suits us. If the imported mineral diesel is cheaper than our product then we’ll do it and if it isn’t we won’t.’ That would force the issue. That is the point I was trying to make in the earlier presentation. The federal government very generously gave us this biofuels capital grant. We received something like $7.15 million. But in order to retain that grant we have to sell 45 million litres of fuel into the Australian transport industry. The only way we can get it into the transport industry is through the oil majors, and the oil majors will not pay the price. So we are beaten before we start.

Senator McEWEN —What level of mandating would give you the result that you want?

Mr Ger —I would have thought about five per cent. Somewhere between two and five per cent would sustain the industry.

Senator McEWEN —Would that take you above 25 per cent production?

Mr Ger —Yes. My understanding—I have heard conflicting figures—is that the Australian diesel market is somewhere between 14 billion and 18 billion litres of fuel per year. We are producing 90 million. So it is really a drop in the ocean.

Senator McEWEN —You mentioned that you use tallow. How adaptable is the technology that you use? For instance, you use tallow, but if we all became vegetarians how adaptable would some of the infrastructure you have be in using biomass?

Mr Sole —As long as it is a fat—for example, a triglyceride or a derivative of a triglyceride—we can use it in our production. Apart from eucalyptus, most products are a fat and we can use them to generate biodiesel. Mustard seed—you name it; we can convert it.

Mr Ger —May I add one last thing? I know time the time is limited—and we have taken our time; I do apologise.

CHAIR —That is okay. You go for it.

Mr Ger —The single greatest initial move, which would cost nobody anything—it is just a state of mind—is the question of jatropha. Jatropha is classed as a highly noxious weed and it is grown in several other countries around the world. Areas like the Kimberley and the Pilbara are highly suited to jatropha plantations. The reason it is rejected in Australia is simply because the leaf is so highly toxic.

Senator McEWEN —Toxic to human beings?

Mr Ger —And to animals, to stock. If you talk about growing jatropha it must be under the controlled conditions that I referred to. But that would have an enormous impact. If we could product jatropha oil we would, firstly, provide employment in remote areas to groups such as the Indigenous populations, which I think would have a major benefit; and, secondly, we would have a situation where that oil would replace the tallow product. Jatropha oil would provide a product with a far lower cloud point, and therefore it is more suitable. The infrastructure required to handle jatropha oil is a lot less than tallow. So it is really a mindset that Australia has to come to terms with: can we grow jatropha? And it is a state thing, I would imagine.

Senator McEWEN —Because you would have to import the plant it would attract federal legislation.

Mr Ger —Initially. That is right.

Senator HUTCHINS —Where is it from?

Mr Ger —It is grown in India, it is grown in Indonesia—particularly the equatorial areas of the world.

Mr Sole —The Japanese use it as a fuel because it can be burnt directly in a diesel motor, but its cetane number is not strong. It is like palm; it grows best so many degrees off the equator. But we are in contact with people who are developing their own plantations, or their own plant, and they have made a hybrid plant that can yield more oil. Not only is there that oil yield but the meal that is left over can also be used as a biomass for making ethanol. So the Jatropha plant is a double-edged sword, which palms are really not per se; you have got to leave the tree up. But with Jatropha you have got the meal, so you can use it for something else as well. So that is being looked into. And they are making these hybrid plants less and less toxic to animals but, at the end of the day, you do not want animals eating the plant anyway.

It would grow quite well in the Ord, and we have made that suggestion before. We went to the state government here, to the ag apartment, and said, ‘You’ve got the Ord, which isn’t fully utilised.’ I said,  ‘What if we gave you an order to grow, say, soy, which has a nine-month turnaround, and we took all your production? We could guarantee we could take all the oil you could produce out of the Ord.’ They were not interested; they did not want to know. They wanted to play around with watermelons. I said: ‘What other industry do you not have to develop? We are already here. We can already take the volume. We already know what area you have got.’ But there is just no appetite to support this industry.

Mr Ger —There has to be a fundamental change in that line of thinking about the provision of the feedstock. The feedstock rules this game. The feedstock price will dictate the success or the survival of the biodiesel industry in Australia.

Mr Sole —And, unfortunately, people call everything biofuels. That is like saying I have got horses, where one is a thoroughbred and one is a Shetland pony. They are still horses, but they are for different issues. Ethanol is ethanol; biodiesel is biodiesel—and never the twain shall meet. Ethanol relies on foodstocks; it uses corn, wheat et cetera. Biodiesel does not need to. Unfortunately, we get tarnished with the same brush and, whenever you see reports in the paper here saying ‘ethanol crops’, they put Australian Renewable Fuels in the statement, but we are biodiesel. So it affects the public perception. The ethanol group also have a better political arm than we do—for example, their New South Wales mandate, because there is sugar cane et cetera—while biodiesel just does not have a big political arm because we do not have crops that are reliant on a starch conversion. So it has always been very difficult for us to get a foothold any which way.

Senator McEWEN —So is the industry precarious?

Mr Sole —Very precarious.

Mr Ger —Absolutely. Natural Fuel had this major plant in Darwin which has closed down. Their plant in Singapore has closed down as well. The only real biodiesel producers of any consequence now are us, a company called Australian biodiesel producers and—what is the one in Aubrey Wodonga?

Mr Sole —BPL.

Mr Ger —Yes, Biodiesel Producers Ltd, I think it is. And Smorgon in Melbourne produce a bit of biodiesel. But all the other players have basically fallen away. And we are a single industry business; I think Smorgon are supported by their other arms of industry.

Mr Sole —People say the world is in recession, but we had our recession two years ago. I was unfortunate; I had to lay off 40 people and I do not like that feeling. And that is from  the communities where I live—two communities: in Adelaide and the community down in Picton. We were major infrastructure in that community, and we want to re-employ. We are managing to sustain some of it. We are well known in the community. We were supporting sporting events et cetera in the community; now we cannot afford it. We are living by the skin of our teeth to get through. And it is mainly due to Max that ARFuels have survived this long. As I said, Natural Fuel, which was a multibillion-dollar company, the biggest biodiesel plant in Australia, fell over and fell over quite quickly. If you ask anyone in the industry, they will say, ‘ARFuels shouldn’t have survived.’ We are still here kicking, but we need support. It is as simple as that.

CHAIR —Thank you very much.

Mr Ger —Thank you very much for having us here.

[12.12 pm]