Earlier this week, the Queensland Government introduced into Parliament a bill for a 2 per cent ethanol mandate (see this Brisbane Times report). This measure appears designed to placate Katter’s Australian Party, which is looking out for cane growers who would benefit from an ethanol mandate. As I’ve posted on before, it is unclear this measure would benefit the community and most likely would not (see Ethanol mandate should not proceed without cost-benefit analysis). Ethanol is much less efficient as a fuel than petrol and it is not clear it is better for the environment once you consider the land and other resources needed to grow the feed stock (e.g. sugar cane or sorghum).
Because E10 gets fewer kilometres per litre, and the price differential between E10 and regular unleaded is insufficient to make up for this, E10 effectively costs around an extra 2 cents per litre. So a typical motorist might end up paying an extra $30 over the course of a year because they need to purchase slightly more fuel to make up for the lower efficiency of E10. While it is not a huge amount of money, it is an extra cost on consumers and one that does not appear justified.
The best way to determine whether this policy is desirable would be to conduct a comprehensive cost-benefit analysis, which has not been done in this case. I note the Government has set up a new Queensland Productivity Commission and I’m sure it could have undertaken the rigorous study required. Instead, we had a glossy discussion paper lacking the detailed analysis required and a consultation process that was useless because it was not informed by a decent analysis of what this policy would mean for the Queensland community.
I made a submission to the consultation process pointing out the risks of this policy and the need for a cost-benefit analysis – which I thought was a pretty obvious point that reasonable people would agree on – but this point was not noted in the consultation report. It is regrettable this policy is being rushed through with so little analysis of its impacts on the Queensland community. It is also regrettable the RACQ is acquiescing in the introduction of the ethanol mandate and is not pushing the Government to provide convincing evidence that this policy will benefit the community and will not impose unnecessary costs on motorists.