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Tuesday, 25 November 2003
Page: 17952

Senator ALLISON (9:17 PM) —I also rise to talk on the Fuel Quality Standards Amendment Bill 2003. This bill, as we know, has been around for some time and is part of the mess, as I think we can describe it, that is the current situation for alternative fuels and ethanol in particular. The purpose of the bill is to set out a framework which will provide for determinations to be made that set fuel quality information standards for specified suppliers of specified fuels. The minister said in his second reading speech:

This is a flexible mechanism and, in the first instance, will be used to set parameters that will apply to the labelling, at the point of sale, of ethanol blends.

One of the major problems with this legislation, which the Democrats will move to amend to get it right, is that very approach—that is, that it will be used in the first instance to label, at the point of sale, ethanol blends. One of the problems with that approach is that, rather than it being about informing consumers about what is a desirable fuel to use and what are the benefits of one fuel over another, the intention is to use this framework to warn motorists about the fact that a fuel is an ethanol blend.

The reason we are in this situation is that the ALP has run a pretty effective scare campaign over the whole business of ethanol blended petrol. Despite the fact that we think labelling is a terrific idea, and we would be the first to say that consumers should be entitled to know what is in the fuel that they get and the relative merits of different fuels, we do not support a labelling system which singles out one fuel additive without considering the many hundreds of components in the fuel. Why say, for instance, that a petrol has ethanol in it and not say what else is in that fuel?

There are some fuels which would have more than 100 components to them, so we recognise that this would be problematic. However, the approach that has been taken by the government, aided and abetted by the ALP, is that this labelling is a warning much like you would get on tobacco products—a warning label saying `beware'. We think this is a very serious problem, especially given the lack of confidence in the industry at the present time thanks to the sort of scaremongering that has gone on. We would like to see a label which genuinely informs consumers about fuel quality and fuel efficiency.

Let me refer to the web site of a major fuel supplier, BP. If consumers were to go to this web site, they would find that most BP stations would make four different petrols available to consumers. The first of them is BP lead replacement petrol, otherwise known as super. The web site says that it contains no lead and `lower benzene and sulphur'. The web site also mentions BP regular unleaded petrol. It says:

BP Regular Unleaded Petrol was introduced in 1986 to enable new vehicles to operate with a device known as a catalytic converter which was designed to lower emissions ... BP Regular Unleaded Petrol contains a detergent additive to keep your injectors and inlet valves clean and maintain performance.

Again, you will not know this if you just rock up to your petrol station. BP also offers as a product BP premium unleaded petrol. The web site says:

BP Premium Unleaded is a special blend of petrol designed to bring high octane and knock free performance to unleaded cars with a high octane requirement. BP Premium Unleaded is seasonally blended to help cars start easily, and because of the higher energy content, gives the potential for a reduction in fuel consumption all year round.

Then there is BP Ultimate. The web site says that BP Ultimate is:

... a very powerful, high octane (98 RON), unleaded fuel that maximizes engine power and performance. BP Ultimate's unique formula also produces less pollution than any other Australian petrol.

Not surprisingly BP Ultimate is the only fuel to receive the Australian Greenhouse Office's `Greenhouse Friendly' certification. Plus, every time a BP plus card customer buys BP Ultimate, BP invests 1-2 cents per litre in a range of independently audited environmental projects which offset cars' greenhouse gas emissions.

That is just one example of the range of petrol products which are available at your average petrol retailer.

As I said, we are now focusing on ethanol blends because of the scare campaign that the ALP—and some of the motoring groups—have run. The claim has been made that ethanol is harmful to cars. In some states, quite large `Guaranteed no ethanol' signs have appeared at petrol stations around the country. This is despite the fact that ethanol is widely used, promoted and accepted in many other countries around the world. Ethanol is mandated in many states in the United States and it is being considered by at least one Canadian province at the present time. It has been used in Brazil for more than 30 years.

What are the benefits of ethanol? It is an oxygenate, for a start, and that means that it makes fuel burn much more cleanly. It raises octane levels whilst eliminating the need for harmful chemicals such as benzene, toluene and xylene. They are all carcinogenic substances. If you look at the fuel that I just mentioned—BP's high-octane fuel, BP Ultimate—you will probably find that those are the additives which increase the oxygen level in that fuel. It would be much more sensible for people to be encouraged to use ethanol blends rather than those additives. Ethanol also reduces carbon monoxide and other harmful greenhouse gases. It is a renewable fuel, of course. It can be made from a range of sources. One that we have been using in this country for almost a century is molasses, a sugar by-product. We have been using it and exporting it from this country in large quantities for a great number of years. Mostly it ends up in spirits.

Senator Forshaw —Sake.

Senator ALLISON —Sake, yes. Wave over a little bit of flavouring and it becomes sake. I am sure they do other things to it, but it is the case that it is a very high use of what is a by-product. It is also possible, as we know, to make ethanol from a range of materials, some of which are waste products from agricultural activities. Our technology has become better and better at turning these waste products into usable ethanol and other by-products. The production of ethanol from grain can result in a very good feedstock for animals which, I am told, is particularly valuable because it sits in the second stomach of the cow. This makes it very valuable as a stock food, particularly for dairy cows. And, obviously, ethanol is renewable. The more we can displace fossil fuel petroleum products in this country, the closer we will get to sensible greenhouse reductions and the closer we will be to being self-sufficient in transport fuel. Of course, the greatest reason for supporting ethanol is the fact that it provides rural and regional communities with job creation prospects. It also provides farmers with additional income and an opportunity to diversify their crops. And, importantly, in times of drought, it allows the water-intensive cotton industry, for instance, to grow crops such as sorghum, from which ethanol can be produced. The last time this issue was debated in this place, the ALP was again scaremongering about the effect of using grain on the meat industry, the beef industry. None of that is justified.

As I said, the reason we think that the proposal that has been put forward is flawed is not that we do not want to see a labelling system. We do; we think it is a very healthy thing for consumers—motorists—to know what is in their petrol, know the effect it has on the environment, know the effect it has on asthma rates in this country and have a sense of doing the right thing and being able to recognise when that is the case. At the present time, that is impossible. If we just focus on ethanol, then, firstly, we will exacerbate the current lack of confidence in the fuel, which is quite unjustified, and, secondly, we will not educate consumers to make the right choices or the best possible choices.

As I understand it, the current situation is that the Energy Task Force has been working on a proposed fuel quality standard label. Again, it is just for ethanol; the task force is not looking at the broader picture. The label will be mandated at the point of sale. As I understand it, two labels have been proposed, and there has been a compromise, as is so often the case when you get a proposal which has to be agreed to by consensus between two groups that perhaps might have opposite interests and opposite viewpoints. We understand the situation to be that the labels have been a compromise between the label that the ethanol producers and promoters wanted and the label which the automotive industry cynics are proposing. The Energy Task Force apparently could not decide on what a final label should look like; it has left it to the minister to do that and to discover what the preferred label should be. It is also my understanding that there is no time frame in place for that final decision to be made.

It is also the fact that the industry is somewhat disgruntled that so much work, effort and argument is going into a labelling system which is likely to do further damage to the ethanol industry. A great deal of work is going into this labelling system, but there is very little on the much more important question of what the excise rates on alternative fuels will be. The proposal we are debating tonight may be a pointless exercise if, at the end of the day, we have no alternative fuels and no ethanol in our fuel mix. If, by 2008-12, that industry ends up with an excise which puts it out of business, we are all wasting our time here.

Part of the scare campaign here has been the misuse of information to do with whether or not ethanol blended petrol is harmful to cars. As was pointed out the other day, many countries have been using ethanol blends for a very long time. In fact ethanol fuels have been in use here even at higher levels than 10 per cent for a long period. Yet no-one can stand up in this place and point to specific instances where cars have been shown to have been damaged by using ethanol blends.

A vehicle list was being prepared based on testing, and a lot of testing has been done over time. In fact the original Ethanol Development Board was set up to do testing way back in the early 1990s. Its purpose was to test vehicles and to come up with both fuel standards and an understanding of which vehicles could run safely on ethanol. Auto manufacturers were still in the process of consulting component manufacturers and their head offices overseas to determine which models would run safely on ethanol. A preliminary list, which was not by any means complete, was leaked and used by the auto industry and the ALP to cause a great loss of consumer confidence in the ethanol industry.

The Energy Task Force, as I understand it, has gone back to work and the FCAI is currently working on a second list. They are currently in the process of consulting engine manufacturers, components manufacturers and the like, and I would be very surprised if the final list which is produced does not show that the vast majority of vehicles can run on ethanol. In fact they will probably run much better than on non-ethanol blends.

The problem here is that perception becomes reality. The media often does not print all of the details, all of the arguments or a balanced account of the current situation, and so a lot of people have simply picked up on the general message. Perception is reality, and perception at the present time is that they are being ripped off if they are using ethanol blended petrol and, added to that, that there is a danger their vehicle will somehow be damaged.

One of the problems here is that the process for determining that list is being conducted behind closed doors between auto manufacturers, their head offices and components manufacturers, and I think it is regrettable that that process is not an open, transparent or independent one. You could ask why it is that models in other countries that are already running on ethanol, and are recommended by manufacturers to be running on ethanol, are somehow on the other list in this country so far. We do not have any idea when that list is going to be finalised. At the very least we should not move on labelling for ethanol until we have had a good promotional campaign and a good reassurance promotion that makes sure that whatever labelling is put in place does not do further damage to the industry.

It has been suggested to me that part of this problem is the lack of communication between government departments. It has been suggested that the auto industry has been slow in responding to questions and, all in all, there is not as much of a sense of urgency in getting this right as there ought to be. The fact of the matter is that motorists in other countries drive cars which burn cleaner fuels, and in Australia there are major barriers to doing that.

In submissions received by the Senate Environment, Communication and the Arts Legislation Committee that looked into the bill, the committee heard that an independent Commonwealth funded study was conducted in 1997-1998 into viability of ethanol as an additive in fuels. That study tested a total of 60 vehicles—19 of which were pre 1986 and 41 post 1986. It concluded that the use of E10, or 10 per cent ethanol blends, in these vehicles presented `no apparent detrimental effect on other aspects of engine or vehicle performance'. Since 1992, a large proportion of vehicles driving in the Sydney Basin have been driving on E10 without any substantiated reports of engine damage to vehicles.

The Democrats will be moving amendments to this legislation to not proceed with ethanol as a labelling system, at least not in the first instance. We would like to see developed a star rating system. We have star rating systems for energy efficiency in washing machines. This approach applies to a range of consumer products. We say that the labelling of the contents of fuel should not take place until we have such a comprehensive labelling scheme in place. That labelling should apply to petrol, diesel, unleaded, lead replacement, LPG, CNG and LNG and so on. We think that it is just not fair to single out a single additive to fuels without considering those other additives such as toluene, benzine and xylene, which are of course harmful to public health. We propose that a labelling scheme take into consideration emissions levels and the impact of emissions on public health, as well as fuel efficiency. It may be that we need two different rating systems to be presented to take into account those two factors. But I am sure it is not beyond the wit of people to develop such a scheme.