Agriculture and Food Minister Kim Chance has called on the Federal Government to rethink the Fuel Tax Bill, which threatens the future for a biofuels industry in Western Australia.
Agriculture and Food Minister Kim Chance has called on the Federal Government to rethink the Fuel Tax Bill, which threatens the future for a biofuels industry in Western Australia.
Mr Chance concerns with the tax were echoed by Australian Renewable Fuels Ltd which called the legislation a cruel blow.
The minister said the 2006 Fuel Tax Bill did not support the Federal Government's Biofuels Action Plan or the Federal Government's 350 megalitre biofuels target.
"With the changes proposed in the Bill, any attempt by Australia to move away from its heavy reliance on fossil fuels will be endangered, along with the aim of developing a sustainable and viable biofuels industry," he said.
"It is vital the Federal Government puts in place a fuel tax system that provides certainty to the new and rapidly growing biofuels industry."
Biofuels are fuels produced from renewable organic sources.
Biofuels with commercial prospects in Australia are ethanol and biodiesel.
The Cleaner Fuels Grant Scheme (CFGS) is a grant for biofuels producers of 38.1 cents per litre that offsets the 38.1 cents per litre excise which is payable on diesel and petrol fuels. The grant was established to encourage the production and sale of cleaner fuels.
With the new Fuel Tax Bill, the grant will fall between 2011 and 2015. The grant will decrease to 19.1 cents per litre for biodiesel and 12.5 cents per litre for ethanol by 2015.
The grant is classified as revenue by the Australian Tax Office, which means it is treated as assessable income for producers - a further cost to the biofuels industry.
"The WA Government recommends that the scheme in its current form be extended indefinitely to ensure a viable biofuels industry is allowed to develop in Australia," the Minister said.
Recent reports by ABARE indicate that, with the proposed changes, biodiesel production in Australia will not be viable in 2015 and ethanol production will be marginal.
"This is an industry with the potential in WA alone to produce up to 850 million litres of biofuel each year and we should not put that sort of resource in jeopardy," Mr Chance said.
Below is a statement on the issue from Australian Renewable Fuels Ltd:
The Australian biofuels industry has been dealt a cruel blow by legislative
changes passed by the Senate last night according to Darryl Butcher,
Managing Director of leading biodiesel group Australian Renewable Fuels
Limited.
The legislative changes introduced through the Fuel Tax Bill 2006 remove the
incentives established to encourage and foster the growth of the emerging
biodiesel industry, significantly hampering future growth prospects.
Mr Butcher added: "This is a retrograde step which will have significant
implications for an industry which is already demonstrating it can become
viable. With the stroke of a pen approximately 75% of the target market for
biodiesel producers has been wiped out."
"In excess of $150 million has been invested in the biodiesel industry based
entirely on assurances by the Federal Government that the status quo would
prevail. Today these assurances have been shown to be an absolute sham."
"The massive benefits of renewable fuel are now in jeopardy. The
government saw fit to encourage the establishment of the biofuels industry
and now that we have done exactly what they requested of us they change
the rules. The biodiesel industry was on track to directly abate more than 1
million tonnes of greenhouse gases annually before 2010 and this is now at
risk.
"We will manage our way through this issue, but it is simply wrong that we
have to. The government has failed to deliver what it promised. The only
winners from this are the oil companies," he said.
Issued by Fowlstone Communications +612 99559899 Page : 2
About Biodiesel
Biodiesel is a clean burning alternative to mineral diesel fuel that is produced
from renewable resources such as animal fats and vegetable oils (fat)
including (but not limited to) canola, soybean oil, palm oils, tallow and used
cooking oils.
Biodiesel may be used as an alternative to mineral diesel in most applications
due to the fact that it has similar physical and combustion properties to
mineral diesel. A number of vehicle and diesel engine manufacturers have
confirmed that Biodiesel is suitable for use in several of their engines.
Biodiesel has been in commercial production in Europe since 1991 and in the
USA since 1997. Production in Europe has almost doubled every two years
since 1991 and global consumption is currently estimated at 3 billion litres per
annum.
In those two jurisdictions there has been significant assistance provided by
government to facilitate the establishment of the industry.
About ARF
ARF's plants utilise the proven Energea technology. Energea is a leading
technology provider in Europe and has constructed the world's largest
biodiesel plant in the United Kingdom. ARF's strategic alliance with Energea
gives the company access to a proven technology with the potential to be a
low cost producer to supply domestic and offshore markets.
Fat is the principal feedstock in biodiesel production and ARF has exclusive
five year feedstock supply agreements in South Australia and Western
Australia with Gardner Smith, the market leader in the delivery and storage of
fats in Australia.
As previously announced ARF has also concluded biodiesel sales
agreements, domestically and internationally, for its entire production.
