E10 state of play

CHOICE looks at the pros and cons of biofuels such as ethanol.
Learn more

02.Pros and cons of biofuels

Ethanol is one of a number of potential alternative transport fuels that include liquefied petroleum gas, biodiesel, compressed natural gas, and liquefied natural gas and shale oil.

In 2007, Australia produced 199 million litres of biofuels, including 149 million litres of ethanol and 50 million litres of biodiesel. The federal government has supported the development of alternative fuel technologies, including ethanol. It has also provided funding for research and development into new biofuel technologies, such as producing ethanol from cellulose and other materials.


  • Has a range of environmental benefits and is more sustainable in the long run.
  • The Australian Medical Association believes E10 and other biofuels can reduce deaths and ill health by improving air quality. 
  • The Australian Lung Foundation says it can reduce levels of toxins from car exhausts and greenhouse gas emissions.
  • The Australian Greens are in favour of biofuels as an important part of the solution to both the climate crisis and depleting oil reserves, but also warn of ecological risks and possible food shortages. The Greens support research and development into second-generation biofuels such as those produced from algae and lignocellulose from waste, but also want 100% carbon accounting when assessing the emissions reduction of biofuels.
  • Motoring groups such as the NRMA and Australian Automobile Association (AAA) are also generally in favour of biofuels. The NRMA believes producing transport fuels in Australia will provide a buffer against oil shortages and import costs, but argues a national education campaign is needed to raise consumer awareness about E10. The AAA, which supports the maximum 10% limit on ethanol in unleaded petrol, is concerned that, with its higher production costs, motorists could end up paying more to run their vehicles with E10. Its own study found world oil prices would have to reach $US92 per barrel before the cost of ethanol (without a subsidy) would become economically competitive with petrol. (The current cost per barrel of crude oil is about $US73.)


  • Its production uses grain needed for beef, chicken and pork production; E10 provides less fuel efficiency.
  • May damage vehicle and boat engines; imposes costs on petrol stations to install new equipment; supply of ethanol is limited and production costs are higher than for regular petrol.
  • There is a range of organisations, led by the Australian Lot Feeders Association, that oppose the mandated use of E10, arguing it will increase food prices and distort grain markets. These groups, which include some farmers, service station operators, motoring and marine groups, stock feed manufacturers and some livestock industries, have come together as the Against Ethanol Mandates Alliance to oppose the introduction of ethanol mandates by government.

Sign up to our free

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.


Other green fuel initiatives

Ethanol produced from waste: Producing “cellulosic” or second-generation ethanol from forest ground waste and general household garbage is a more sustainable way to produce ethanol because it doesn’t put pressure on food crops. The Victorian government, together with Holden, Caltex and several engineering companies, has established a consortium to develop a process to produce ethanol from municipal waste.

New blends of ethanol-based fuels are also being developed. Caltex’s “Bio E-Flex” fuel will adjust the blend of ethanol from 70% to 85% between seasons for better engine performance, but it can only be used in certain vehicles. And new vehicles are being developed to take advantage of ethanol-blended fuels:

  • Ford has developed new V6 and V8 engines that inject pure ethanol into the engine to increase its output.
  • The Ferrari F430 Spider Biofuel runs on E85, a fuel that is blended with 85% ethanol.
  • Lotus is developing an engine known as “Omnivore” to improve fuel efficiency,
  • GM expects half of its vehicles to be running on ethanol by 2012.

Biodiesel is much the same as petroleum-based diesel but is produced from vegetable oils, animal fats and used cooking oil. Biodiesel can also be used as a neat fuel comprising 100% biodiesel. B20 is a blend of 20% biodiesel and 80% mineral diesel, while B5 uses 5% biodiesel. There is ongoing research into producing B20 from non-food crops such as algae. Biodiesel is biodegradable, and engines only require minimal modification to run it. It is cleaner burning than traditional diesel reducing emissions and improving air quality. However, similar to ethanol, pure biodiesel has lower energy content than diesel (86%), which means vehicles travel a shorter distance on the same amount of fuel.

There are currently seven biodiesel producers in Australia and the fuel itself has limited availability at this stage. The fuel excise on the biodiesel component of the product will be fully negated by a government grant until 2011.

Your say - Choice voice

Make a Comment

Members – Sign in on the top right to contribute to comments