Senator NASH (New South Wales) (6.51 pm)—I rise tonight to speak about ethanol and its im-portance not only to rural and regional Australia but also to this nation as a whole. We have a sig-nificant opportunity to build a sustainable domestic biofuels industry in Australia, for the benefit of all Australians. There are significant benefits that stand to be delivered through the develop-ment of this industry, but there are certain impediments in the way of further development and I would like to talk about a path forward to ensure that we have industry growth and development. As ethanol is primarily produced from molasses or starch, there has been much focus on the po-tential benefits for the sugar and wheat producers in our rural and regional communities and the flow-on effects for those communities. As a National, my focus and concern are very much on delivering where we can to develop industry in our regional communities.
In September 2002, we saw the government introduce a domestic production subsidy to en-courage industry growth. Ethanol has been used as a fuel additive in Australia for a number of decades and we want to see that continued and developed. In recent years, ethanol as a fuel addi-tive has attracted considerable media focus; however, most of the coverage that we have seen has been negative. Regardless of the inability to substantiate negative claims on the effect of using ethanol, consumer confidence has declined substantially. Indeed, in April 2003 the government introduced a 10 per cent cap on the ethanol blend allowable in fuel. Historically, the four major oil companies have been reticent about purchasing and blending ethanol in their fuel mix, and that is still the situation today. As a result of the decline in consumer confidence in the product, it would appear the oil companies have been even less inclined to purchase ethanol.
I would like to point out that this is a policy that the government took to the 2001 election and I would hope therefore that there would be a very strong belief that we should deliver on that policy. An excise regime currently applies to ethanol at the rate of 38.142c per litre. Recognising the po-tential benefits of the biofuel industry to the nation, as I have said, the government has put in place a target of 350 million litres of biofuel production by 2010. Currently domestic ethanol production stands at 105 million litres per annum, with the industrial, pharmaceutical and fuel sectors the ma-jor users.
Ethanol has the significant benefit of being a renewable fuel. Our fossil fuel reserves are finite and our estimation is that our reserves will only last for around another 24 years. Ethanol is do-mestically produced and, as a renewable fuel, there is no limit on future production capacity. If we can encourage industries out in our regions to develop domestic production, I believe we need to support them wherever we can.
In terms of our balance of trade, we have an increasing trade deficit due to petroleum product imports. These figures have increased from $448 million in 2001 to around $6½ billion in the fi-nancial year 2005-06. If we can reduce our reliance on foreign oil by increasing our domestic fuel production capacity through ethanol, there are obvious benefits for the nation. Certainly, one of the benefits of the development of an ethanol industry in Australia is the potential for economic returns for primary producers as well as the economic stimulation and job growth in rural and re-gional communities—something that The Nationals have pushed very hard in the past and will continue to push in the future. Ethanol production would provide another market option for pri-mary producers which would of course maximise their income returns. It would also stimulate industry development in regional Australia, with resulting job opportunities and economic growth contributing to the prosperity of our regions.
The benefits of ethanol to the environment are without question. In certain cities in the United States, ethanol is mandated specifically as a result of the environmental benefit it provides. In Australia we are becoming increasingly aware of the environment and what we can do to improve it, and we should continue to very focused on this area. Preliminary results from a CSIRO study of May 2005 suggest there is a significant reduction in greenhouse gas emissions resulting from the use of ethanol in fuel. For each litre of ethanol produced, the study suggested that there is a 2½ kilogram reduction in greenhouse gas emissions, which is the equivalent of removing 70,000 cars from Australian roads—and the benefits of that are quite obvious.
Traffic related air pollution is a growing concern in our community. Reducing vehicle emis-sions through increased use of ethanol has real health advantages for Australia, particularly in cit-ies where pollution levels are high. Ethanol is not a carrier of toxic particles found in fuels such as petrol and diesel. Minimising the use of petrol through the increased use of ethanol would be a distinct advantage in reducing air pollution in metropolitan areas.
I would like to point out too that the Australian Medical Association has come out recently very strongly supporting the development of an ethanol industry in this country. The President of the AMA said:
“The AMA is a strong advocate on initiatives related to environmental impacts on human health such as global warming …
“We are equally passionate about the impact of vehicle emissions on human health and we would encour-age governments to pursue responsible measures to reduce emissions.
“The AMA considers the use of biofuels such as ethanol in petrol as a positive move.
“In our opinion, there is incontrovertible evidence that the addition of ethanol to petrol and biodiesel to diesel will reduce the deaths and ill-health associated with the emissions produced by burning those fuels …”
It is very interesting to see that the positive effects of the development of the ethanol industry are being picked up by important bodies such as the AMA. The development of this industry is not just about supporting rural and regional communities; it is also about supporting the health bene-fits for this nation.
Australia is lagging behind the rest of the world in recognising the significant benefits of etha-nol use. Brazil and the United States are currently the world’s leading producers of ethanol. The United States has recently again shown its commitment to the industry, with its Senate over-whelmingly passing an energy bill that will significantly expand the use of renewable fuels such as ethanol. It would seem that percentage mandates for ethanol use in fuel and also clean air legis-lation have been instrumental in the successful uptake of ethanol use in various nations around the world. We as a government certainly need to be focused here in this nation to do what we can to ensure the development of the ethanol industry.
There has certainly been some suggestion over recent years that ethanol should be mandated. While I can certainly take on board those sentiments that are being put forward by some sectors that mandating is an option, I believe that we need to perhaps look at alternative measures to en-sure the take-up of ethanol in this nation. We are now looking at a situation where we see the oil companies virtually refusing to take on ethanol. We have said, as a government, that it is part of our policy that we want to see a 350 million litre target for biofuels in this nation. To do that, we are going to need to require the oil companies to increase their take-up. If we have a requirement of 350 million litres by 2010, it seems to me fairly simple, sensible and obvious that we have an annual volumetric target placed upon those oil companies that they have to meet for each year up until 2010 so that we can indeed implement the policy that, as a government, we have taken to the people and that we have said we will follow through and implement. What I am putting forward is that we have a volumetric target, a volumetric requirement on the oil companies that is enforce-able, so that we reach our policy target of 350 million litres of biofuel by 2010.