General Motors Holden is planning a major investment in ethanol production in Australia.

Holden’s Managing Director, Mark Reuss, says the company is in talks with the American firm, Coskata, to establish Australia’s first plant to produce cellulosic ethanol, made from non-edible plant material, for use in motor fuels.

The development of the plant will coincide with Holden’s production of the first locally-build cars to run on E85 (fuel made up of 85 per cent ethanol). E10 fuel is already widely available and can be used in many modern cars.

According to Mark Reuss, "Australia could lead the world in researching and developing vehicles powered by a range of alternative fuels. It (ethanol) is not the only answer but things like LPG, ethanol, maybe CNG (compressed natural gas) here, with the resources that Australia has, I think this country could really lead that."

The company also plans to import the Chevrolet Volt plug-in hybrid electric car to Australia by 2012.

Yesterdays half-yearly report from Natural Fuels Limited explained the closure of Australia’s largest biodiesel plant in Darwin. The plant opened in November 2006 and reached full capacity in March 2007, although there were continuing quality control problems.  Rapidly increasing feedstock prices have made the production of biodiesel uneconomic in Darwin. The plant will be used to refine glycerine until feedstock prices return to levels which permit economic production of biodiesel. Work will continue on resolving the quality control issues at the plant.

Natural Fuels’ Darwin plant

The closure of the Darwin plant follows the closure of two other biodiesel plants, one in Adelaide and the other near Bunbury, Western Australia, by Australian Renewable Fuels late last year. Max Ger, ARF’s acting General Manager, blamed the closures on the rapid increase in the price of tallow, which was the feedstock for the plants. The price of tallow soared from less than $600 a tonne to more than $900 a tonne within six months as a result of demand from China. Mr Ger also said that changes to the Fuel Tax Act by the former Federal Government "made it impossible for us to sell biodiesel to anyone but the oil majors" which gave the oil companies the power to control the biodiesel industry.

Another biofuel company, Agri Energy, has shelved plants for big ethanol plants at Swan Hill and Murtoa in Northern Victoria because of high grain prices. The company plans to continue with projects in the United States.

On a positive note for the industry, Tasmania’s first specialty biodiesel plant has been approved, to start operating as early as July. The plant, to be built at Cressy by Macquarie Oil,  will produce more than five million litres of fuel each year for the transport and marine industries. Because of the high price of more conventional feedstocks like canola, the Tasmanian plant will use poppy seed and, possibly, mustard and linseed oils.