Policy and Excise Framework, and Building Local Supply

Biofuels are the lowest emission alternative to fossil fuels; they are truly sustainable and renewable sources of energy.

These attributes mean that the longer-term outlook for the industry is strong. The ever-increasing high cost of extracting crude oil from fields, as well as searching for and establishing new oil fields and a pending pricing of carbon on a world-wide basis will create conditions which are favourable for the biofuels industry.

Biofuel Excise Policy

On 1st July 2011, the biofuels industry in Australia was given an extension on taxation arrangements such that for renewable fuels (ethanol, biodiesel and renewable diesel) would continue to receive effective excise free status for the next 10 years. Under this arrangement, the industry pays its full excise and it is then granted back to them, allowing them to compete with the cheaper oil products and provide an opportunity for the industry to develop on a sustainable basis while it continues to grow.

The Government was to undertake a review of the taxation and grant arrangements for ethanol, biodiesel, renewable diesel and methanol after 30 June 2021. However in the 2014 Federal Budget, the government announced changes to the excise rates of ethanol and biodiesel, along with the scrapping of the Ethanol Production Grants program and the Cleaner Fuels Grant Scheme. These changes if legislated will impact Australia’s budding biofuels industry and reduce their ability to grow and therefore reduce their ability to reach the economies of scale required to deliver cheaper future fuels.

The BAA continues to liaise with the government to impress upon them the importance of biofuels in any low carbon, low emission plan for Australia’s future. We are hopeful that the government will recognize the importance of this industry and support it into the future.