Environment and Natural Resources Committee Inquiry into the Production and/or Use of Biofuels in Victoria October 2006 Inquiry into the Production and/or Use of Biofuels in Victoria Report of the Environment and Natural Resources Committee on the Inquiry into the Production and/or Use of Biofuels in Victoria ORDERED TO BE PRINTED Victorian Government Printer 2006 Parliamentary Paper No. 242 Session 2003-2006 i Parliament of Victoria Environment and Natural Resources Committee Inquiry into the Production and/or Use of Biofuels in Victoria ISBN - 0-9757811-2-X This report is printed on recycled paper. Table of Contents Committee Members .......................................................................................... vii The Environment and Natural Resources Committee...................................... ix Terms of Reference ............................................................................................. xi Chair’s Foreword ............................................................................................... xiii Executive Summary ........................................................................xv Table of Recommendations.............................................................................. xix Table of Findings............................................................................................... xxi Abbreviations................................................................................................... xxiii Chapter One: Introduction ............................................................... 1 Biofuels in Australia............................................................................................. 1 Transportation fuel use........................................................................................... 1 The place of biofuels............................................................................................... 2 Scope of the Inquiry and future directions .............................................................. 3 Inquiry process ....................................................................................................... 4 Inquiry report ........................................................................................................ 4 Chapter Two: The production and use of biofuels in Victoria and Australia ........................................................................................... 7 Ethanol production and use ................................................................................ 7 Ethanol production.................................................................................................. 7 Ethanol Capacity .................................................................................................... 8 Availability............................................................................................................. 10 Ethanol manufacture and properties ................................................................ 11 Ethanol: chemical composition and properties ..................................................... 11 Production processes and feedstocks .................................................................. 13 Biodiesel production and use ........................................................................... 19 Production and capacity ....................................................................................... 20 Availability............................................................................................................. 23 Biodiesel manufacture and properties ............................................................. 24 Biodiesel: chemical composition and properties ................................................... 24 Production processes and feedstocks .................................................................. 29 Chapter Three: International developments.................................. 33 Ethanol and biodiesel ........................................................................................... 33 Global biofuel production .................................................................................. 34 Countries producing biofuels............................................................................ 36 Brazil..................................................................................................................... 36 The European Union............................................................................................. 38 Germany............................................................................................................... 39 iii Inquiry into the production and/or use of biofuels in Victoria United States of America ...................................................................................... 40 Canada ................................................................................................................. 42 India ...................................................................................................................... 43 China .................................................................................................................... 43 Observations on overseas biofuels developments ......................................... 44 Chapter Four: Barriers, benefits and impacts................................47 Consumer and mechanical issues .................................................................... 47 Consumer confidence ........................................................................................... 47 Engine damage..................................................................................................... 51 Fuel consumption.................................................................................................. 57 Distribution, blending and storage......................................................................... 60 Octane .................................................................................................................. 62 Cetane .................................................................................................................. 64 Vapour pressure ................................................................................................... 65 Affinity with water.................................................................................................. 69 Environmental issues......................................................................................... 70 Greenhouse gases................................................................................................ 70 Air quality .............................................................................................................. 73 Air toxics ............................................................................................................... 77 Other environmental impacts ................................................................................ 80 Social issues ....................................................................................................... 81 Employment.......................................................................................................... 81 Health ................................................................................................................... 84 Economic issues................................................................................................. 86 Energy security ..................................................................................................... 86 Chapter Five: Current government activities.................................91 Commonwealth ................................................................................................... 91 Report of the Biofuels Taskforce........................................................................... 91 The Biofuels Capital Grants Program ................................................................... 92 Fuel excise............................................................................................................ 93 The Cleaner Fuels Grants Scheme....................................................................... 94 Energy Grants Credit Scheme .............................................................................. 96 The Fuel Tax Act 2006.......................................................................................... 97 Ethanol limit for petrol ........................................................................................... 98 Standards for biofuels ........................................................................................... 98 Renewable Energy Development Initiative ........................................................... 99 Victorian Government activities ........................................................................ 99 Government fleet .................................................................................................. 99 Industry Road Map.............................................................................................. 102 Industry support .................................................................................................. 102 Activities in other states .................................................................................. 103 Queensland ........................................................................................................ 103 iv Table of contents New South