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B2004/34 - 3 year windfall for excise-free biofuels

The Energy Grants (Cleaner Fuels) Scheme Bill 2003 will be amended to provide a longer excise-free period for biofuels, including ethanol, which will give greater certainty to industry players, Nationals Senate Leader, Ron Boswell announced today.

“The Australian Government has re-considered the Bill and seen the need to extend the excise-free period for biofuels from 5 years to 8 years to enable industry proponents to secure finance, as well as to give them more time to establish their plants and clear debt before the excise phases in,” Senator Boswell said.

“It is expected that the Democrats will support the measure.”

The extension of excise-free arrangements will apply to the manufacture and importation of ethanol, biodiesel, Compressed Natural Gas (CNG), Liquified Natural Gas (LNG), Liquified Petroleum Gas (LPG) and methanol.

“The amendment means local biofuel producers, including ethanol producers, will have an 8 year excise-free period from 18 September 2003 until 30 June 2011 to help kickstart their operations. The announcement brings into line excise on all biofuels.

“Under the amended legislation, effective excise on locally produced biofuels will remain at zero until July 2011, before phasing in at 2.5 cents cent per litre each year until it reaches a full excise level of 12.5 cents per litre on July 1, 2015.”

Senator Boswell said that The Nationals would continue to promote the need for biofuels production in Australia now and in the future.

“This extension of the excise free period will give confidence to industry proponents who feared that 5 years excise-free was not sufficient time to properly establish themselves or secure their investment,” he said.

Senator Boswell said he has consistently backed ethanol production from sugar as one avenue to be pursued as a pillar of support for Australia’s struggling sugar industry. He believes the emergence of a viable ethanol industry will help to rebuild the economic bases of many regional communities.

“Ethanol production shouldn’t be sold as a ‘magic wand’ solution to the problems facing the sugar industry, but it has the long-term potential to provide one avenue for diversification and increased profits to sugar farmers,” he said.

“However, if we are to reap the benefits of ethanol production and its use as a viable, cleaner fuel in Australia, we need to make sure that a local industry gets off the ground, and to do this, we must provide a legislative framework that will allow and encourage the industry to get on with the job.”

“Government support through $37 million in capital grants and an extended 8 year excise-free period for the fledgling ethanol industry will be justified by the significant future benefits for regional Australia,” Senator Boswell said.

Senator Boswell said the extension to the excise-free period for ethanol as contained in the reworked Bill would complement the Australian Government’s revised sugar industry assistance package, which was currently being negotiated and was expected to be announced within weeks.


Media Contact - Paul Leven