E10 state of play

CHOICE looks at the pros and cons of biofuels such as ethanol.
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With regular unleaded petrol soon to be phased out in NSW, many drivers will have no choice about using E10 - unless they want to pay for a premium unleaded fuel. Queensland was also set to introduce an ethanol mandate for petrol, but in a last-minute reprieve, this has been suspended.

Ethanol is safe to use in most new cars, as well as older vehicles manufactured after 1986, up to a maximum concentration of 10% – which is no problem as, by law, E10 cannot have a concentration higher than 10%.

Currently, there is no uniform national framework for the introduction of biofuels, although the federal government is considering a review of existing Australian biofuel programs and policies.

Because of these pressures, CHOICE believes more consumer education about E10 petrol and vehicle compatibility is needed. We are also concerned about possible price rises when the fuel excise subsidy runs out, unless production costs can be lowered.

Is E10 suitable for all new cars?

Many new cars have an “E10 suitable” sticker on or near the fuel cap. However, there are some exceptions with certain models of cars, so always check with your vehicle manufacturer first. Some fuel-injected engines may have problems from deterioration of certain components such as seals, pipes and fuel pumps.

Check the Federal Chamber of Automotive Industries website for a list of post-1986 vehicles and motorbikes that are compatible with E10. It also details some models that aren’t suitable – for example, many pre-1986 vehicles have carburettor fuel systems that may struggle with the higher vapour pressure of ethanol, as well as steel fuel tanks that can be damaged by ethanol.

What does it cost?

Ethanol is produced by fermenting sugars from plants such as wheat, sorghum and molasses. Locally produced ethanol attracts a fuel excise rebate of 38c per litre (which matches the excise tax exactly), and this will continue until 30 June 2011. So effectively it is tax-free right now. But after this date the excise tax will be applied to ethanol (and biodiesel) on a sliding scale until it reaches half the excise on conventional fuel by 2015.

The excise rebate provides a price incentive to encourage the uptake of ethanol and E10, which has higher production costs. However, as demand increases and production expands, the costs should lower so that, when the excise rebate is reduced, it won’t mean higher prices at the bowser.

The hidden cost of ethanol

One of the downsides of ethanol is fuel consumption. Pure ethanol has less energy than petrol, so an E10 blend with 10% ethanol results in 3.5% higher fuel consumption on average. However, some motoring experts believe changes to fuel consumption depend on how the engine adapts to the different type of fuel – so any variations in consumption are likely to be different for different types of vehicles and not necessarily uniform across all cars.

According to our calculations, E10 was three cents cheaper when petrol cost $1, but now that petrol costs more and E10 isn’t 3% cheaper, you’ll end up paying slightly more – about nine cents for every 100km travelled in a Toyota Corolla for a saving of 0.4kg of CO2 per 100km.

What's happening in my state?

New South Wales is currently the only state with a government mandate for E10.

  • In NSW, the government introduced an ethanol mandate in 2007 that ensured 2% of all petrol sold had to be made up of ethanol; this will rise to 6% by 1 January 2011. From 1 July 2011, regular unleaded petrol will be phased out in favour of E10. 
  • The Queensland state government has been actively promoting E10 for several years, both for environmental benefits and to maximise opportunities for local growers and industry. Regular unleaded petrol was to be phased out by the end of 2010, but in October the government put a hold on plans to introduce a 5% ethanol mandate for petrol. According to the government, 120 million litres of ethanol fuel is currently produced in Queensland and is expected to increase in coming years.
  • Victoria does not have a government mandate to replace regular unleaded petrol with E10, but will consider it down the track. Currently it has a 5% biofuels target by 2010, which consists in large part of using biodiesel. 
  • The South Australian government does not mandate the use of ethanol in unleaded fuel. The government is monitoring developments in the petroleum industry nationwide, but has no plans to phase out unleaded petrol. In SA, none of the four major petrol companies stocks E10, but it is sold in at least 65 independent service stations. 
  • In Western Australia, there is no government mandate for the supply of E10, but it has a target of 5% for biofuels. It is examining growing grain for ethanol production and is also trialling biodiesel in some buses. 
  • In Tasmania and the Northern Territory, there are no moves to phase out regular unleaded petrol in favour of E10. 
  • The ACT does not currently have an ethanol mandate or biofuels target.


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