Ethanol level to be fixed and displayed
Ethanol content in petrol will be capped at 10 per cent and all service stations will have to advertise ethanol levels at the bowser, under measures agreed yesterday by key federal ministers.
Most ethanol-blend petrol is sold in Sydney, but, unlike Victoria, NSW has no law requiring the content to be labelled.
The decisions, made at a specially convened meeting of cabinet's energy sub-committee, follow several months of fractious debate over the cost, environmental benefits and regulation of the fuel additive.
It is understood ministers have also agreed to oil company demands to mount a campaign to counter negative public perceptions of ethanol-blend petrol.
However, deep divisions remain in cabinet over the 38-cent-a-litre subsidy paid to ethanol producers, which is estimated to cost more than $150million a year.
National Party members, led by the Deputy Prime Minister, John Anderson, want the subsidy extended beyond its initial period, which expires in September.
Most of the ethanol produced in Australia comes from sugar and wheat grown in National Party electorates.
The Finance Minister, Nick Minchin, is believed to have argued strongly against extending the subsidy.
The Treasury has also warned that the cost to taxpayers of subsidising ethanol could blow out to several hundred million dollars as production rises.
Those arguments are expected to gain increasing currency as the Government puts the final touches to the May 13 budget, already under pressure from the costs of war and the drought.
However, ministers also see strong political reasons for retaining the subsidy. Its removal would mean a significant increase in the price of ethanol-blend petrol, reducing its appeal to motorists.
It would also kill plans by ethanol producers such as Manildra and CSR to build plants in crucial National Party electorates.
The decision to impose a 10 per cent cap on ethanol follows warnings from car manufacturers that a higher concentration of the additive could harm engines and void car warranties.
The issue of the subsidy and the parallel excise duty imposed on ethanol imports are now likely to be thrashed out by cabinet at its pre-budget meeting on Tuesday.
Ethanol has emerged as a politically volatile issue after the Federal Government issued a commitment in the 2001 election campaign to a greenhouse target of producing 350 million litres of biofuels by 2010.
Although ethanol, the most commonly available biofuel, has some proven effects in reducing greenhouse emissions, doubts over its effects on engines have bred strong consumer resistance.
A survey commissioned last year by the Herald found that independent service stations in Sydney were selling fuel containing up to 30 per cent ethanol.
A trial of 10 per cent ethanol-blend petrol at eight Brisbane service stations is believed to have seen a 20 per cent drop in sales.
The Environment Minister, David Kemp, is expected to announce the new measures in the next few days.
You know, somebody actually complimented me on my driving today. They left a little note on the windscreen. It said, 'Parking Fine.'So that was nice.