Fledgling Australian Industry Battles Misinformation

Ethanol has been dragged through the mud in theAustralian press over the past twelve months. U.S.producers overcame the same odds. Will they prevail Down Under?
By Tom Bryan | April 01, 2003
As one Aussie analyst recently told EPM, ethanol production in Australia is in its infancy. It's struggling for identity and battling the same misinformation campaigns U.S. producers faced a decade ago.

Helen Carr, director of Ethanol Australia Pty. Ltd., told EPM the ethanol debate has been dragged through the Australian press and parliament over the past twelve months.

"If asked the question: 'What do you know about Ethanol?,'" she said, "most Australians would have said 'Ethan Ol'? Don't know 'em, mate!.' Ask the same question today and, as BP discovered in a national survey, many Australians would consider ethanol to be a product that will destroy fuel systems and void warranties on vehicles. Mud sticks."

Is Australia 20 Years Behind U.S.?
The Australian ethanol misinformation quagmire is all too familiar to the American ethanol industry, which is finally starting to win the information battle that's been raging for over 20 years. Last year, a chief executive officer of Australian Biofuels said Australia was up to two decades behind the United States and Brazil in terms of production and consumer acceptance. EPM asked a few of Australia's ethanol industry leaders if that statement holds true today.

"It seemed that way at the time (last year) because of a lack of a market involving oil companies and all the negative press," said Bill Wells, industry consultant and president of Wells Enterprises International. "However, with the right package of federal framework and incentives, this ground could be made up very quickly. We have mounted a heavy campaign to reverse the negative press and we are making headway."

It is the aim of ethanol proponents in Australia to have 10 percent ethanol in all its gasoline within 15 years, and that goal is reachable, Wells told EPM. "Hopefully, the oil companies will get on board and do this in a controlled but steady fashion voluntarily, but we think the government is prepared to enforce introduction if progress is not made," he said. "The feedstocks and infrastructure are there. Behind the scenes, we are assured that the current government is working toward that goal. . . by this June."

Steve Schuck, manager of Bioenergy Australia, said "I don't believe we are set back 20 years, but the industry has certainly been damaged for a while." (Note: While preparing his answers for this article, Schuck told EPM, the Minister for the Environment announced that ethanol blends in Australia would be capped at 10 percent, and labeling would be compulsory).

Brett Kuskopf, project manager for ethanol development for CSR Sugar in Australia, said the battles fought in the United States and Brazil gives Australian producers an advantage.

"Obviously, we are lagging the United States and Brazil in terms of actual production and a well defined legislative framework for Biofuels in Australia, but we have the advantage of starting from a more informed position. So, provided we take the time to involve all the relevant stakeholders, there is the potential to develop a substantial and sustainable fuel ethanol industry in Australia in a relatively short time frame, without suffering the setbacks experienced in both Brazil and the United States during their 20 years of development."

Oil Industry Influence & Control
John Anderson, deputy prime minister of Australia, was quoted a few months ago as saying, "The other side of the coin is that I do call on people, including. . . some of the petrol companies, who are engaging in a lot of advertising that suggests that they think it's a good thing to discourage people from using ethanol. They are the same companies who are all using ethanol and promoting the use of ethanol in countries like America, the very same ones."

Considering this statement, EPM asked, how much control and influence does the oil industry have on the growth of the ethanol industry in Australia?

"It is hard to say why they would make statements like that, especially given the (growing) acceptance of ethanol by their U.S. affiliates or parents," Wells responded. "To be fair, I also hear companies like BP say publicly that the only reason they canceled their E10 program in Brisbane is because of the negative press for E20 and higher blends in the southeastern regions of Australia. They say E10 is good petrol, but it was getting painted by the same brush as E20, and sales were beginning to drop because of public perception that maybe something was wrong with ethanol."

Of course, Wells said, there is another reason as seen in the "30,000 foot view." He said oil companies control the fuel supply to a large extent in Australia, and "they will want to see if they can exercise as much control over the introduction of ethanol blends as they can."

Schuck said, "The oil majors in Australia seem to be very protective of their turf. They would not want to lose market share. Also at the moment they use zero cost butane backed into the fuel. If ethanol were to be mandated, they would have to back this off to maintain Reid vapour pressures. Photochemical smog is a growing problem, especially in Southeast Queensland and Sydney. The oil majors - possibly not BP - and the motor manufacturers seem to have taken a common line."

Kuskopf agreed, saying, "There is no doubt the oil companies in Australia have had, and will continue to have, a significant impact on the future of the ethanol industry in Australia. Like any industry, there are both supporters and detractors present that will each be heard by the policy makers and in the market place from time to time. The actions of the oil companie, for example, placing 'No Ethanol in our Petrol' signs on their petrol bowsers during the recent negative campaign against fuel ethanol blends to supposedly 'inform' fearful customers, seems to contradict their 'reserved' public support for ethanol. . . and it is very disappointing to an ethanol advocate like myself.

"However, it must be remembered that they are making business decisions and they are unlikely to wish to participate in the growth of the fuel ethanol industry unless it makes economic sense to them. Dragging them along kicking and screaming through a mandate would achieve some basic objectives for ethanol producers, but it would not create a lot of mutual goodwill."

Labeling Friend or Foe?
Australia is considering a number of ideas that have been implemented to increase the use of ethanol and decrease Australia's dependence on foreign oil. Some officials are pushing for a 10 percent ethanol mandate. A 38 cent-per-liter producer subsidy has replaced the 38 cent-per-liter excise tax exemption, and there has been a push for national labeling legislation such as is already being done in Victoria.

But how does the Australian ethanol industry feel about these programs, especially a national pump labeling campaign?

"Ethanol proponents here are split over the issue of labeling ethanol, although all agree that it should not be a warning or ominous label in any sense," Wells said. "We have had labeling in the United States forever and we have learned to live with it just fine. In fact, in California it is a tool to tell consumers that MTBE is not present. Clearly, when we get to a situation where 10-percent ethanol is everywhere, then there is no point in labeling, but my personal opinion is that now it is necessary to let the consumer know which blends are present so they can make an informed choice at the pump."

"Labeling is a double edged sword, Kuskopf said. "If the majority of the public has a positive view about ethanol in fuel - meaning it is seen as an acceptable fuel with added environmental and regional development benefits - then labeling could enhance its presence in the market. On the other hand, if there are overly negative perceptions by the public, it may have the reverse effect. In essence, if you have effective fuel standards and a 10-percent cap on ethanol, labeling is unnecessary." EP