Australia to Raise Biofuels Consumption: USDA

Australia’s federal government will implement new fuel standards for gasoline from 1 January 2022, which may significantly raise the ethanol blend rate in the country and boost demand for imports.

Under the new fuel quality standard, Australia aims to reduce maximum aromatics content in the gasoline pool to 35pc from 42pc on a volumetric basis. Ethanol will be the primary substitute for aromatics and Australia will need to approximately triple its bioethanol use on the year to 550mn l in 2022.

Additional ethanol demand in 2022 will be met mostly from imports, according to the USDA, as there are no indications that domestic capacity will increase in the short term.

Ethanol and biodiesel blending rates are both set to decline in 2021 from 2020 levels according to USDA data, due to no federal government subsidy, tax credit or mandate supporting the production or use of biofuels. Only two states have biofuel programmes with ethanol and biodiesel mandates, but these mandates are far from being reached.

Ethanol

Ethanol consumption in Australia is forecast to decline by 5mn l from 2020 to 175mn l in 2021. It will comprise only 1pc of the gasoline pool of 16.9bn l in 2021, mainly driven by reduced production after a third of ethanol production facilities closed in September 2020.

Expected ethanol production in 2021 is 180mn l, lower by 10mn l from that in 2020. There are no indications the closed plants will reopen in the short term, and there have been no new bioethanol facilities built in the last 10 years. As a result, additional ethanol demand in 2022 will need to be met mostly from imports. Imports of denatured ethanol are forecast to increase slightly to 10mn l in 2021 from 5mn l in 2020.

Biodiesel

Australian biodiesel use is also forecast to decline to 13mn l in 2021 from an already-low 18mn l in 2020, taking up only 0.1pc of the total diesel pool of 16.358bn l in 2021.

B5 biodiesel fuel is the most common blend used in Australia while the B20 is generally sold for commercial operations and is labelled, although there is also an Australian fuel standard for pure unblended biodiesel (B100).

Biodiesel production is forecast to decline to 18mn l in 2021 from 27mn l in 2020, after one of the domestic producers ceased production in the middle of 2021. The three remaining biodiesel producing facilities in Australia using mainly tallow and a small proportion of used cooking oil (UCO) feedstock, have also suffered from a drop in feedstock supply during Covid-19.