Biofuels in Australia – Some economic and policy considerations

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This report discusses some economic and policy issues associated with the production of liquid biofuels in Australia and overseas. Ethanol and biodiesel are the principal alternative fuels discussed here, and the topics covered include:
• Competition for crops with alternative markets: Food, fibre, livestock and biofuel producers are competing for the same commodity crops in the international arena.
• Policies affecting biofuels security: There are net subsidies to petroleum-based transport fuels and vehicle use in Australia, and recent changes to the fuel taxation system have had a negative impact on the biodiesel industry.
• Options for expanding demand: Misunderstandings and misinformation among consumers, and a lack of availability of E10 and B5 in southern and western states, are currently constraining demand growth.
• Options for encouraging future capital investment: In addition to an emissions trading scheme, targeted incentives could be introduced to promote the judicious use of biofuels.

As the production of biofuels is an emerging industry in Australia, the information contained in this report is important in determining what benefits may accrue from any proposed diversion of human and animal feed stocks – sugars, cereals and oilseeds – into biofuel production.

Who is the report targeted at?

The report was prepared to provide information and advice to all levels of government and industry in Australia. It is of particular relevance to the energy and transport sectors, as well as those agricultural sectors engaged in the production of sugars, cereals, oilseeds and livestock. Since it includes a review of the research literature on economic and policy aspects of ethanol and biodiesel, it may be of interest to other scientists in the energy, transport and agricultural fields.

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