Biofuels: why we don’t need them

Biofuels come in two basic forms: ethanol produced from agricultural crops such as sugar or grains and mostly used as a partial replacement or additive to petrol; and biodiesel derived from animal fat or vegetable oils produced by plants such as safflower, rape or palm oil.

Biofuels seem unlikely to be widely used or play a major part in reducing net CO2 emissions or replace fossil fuels burned by internal combustion engines, for the following reasons:

• they are a half-way fuel of limited use by existing engines;
• alternative, more efficient and cheaper fuel is available for vehicle propulsion;
• most internal combustion engines are likely to be largely replaced within ten years;
• biofuels produced in large quantities create market distortions and food scarcity; and
• their production may damage the environment and habitat for flora and fauna.

Most vehicle engines presently in use can not use ethanol by itself or, in some cases, even as an additive to petrol. Even a petrol mix containing 10 per cent ethanol can cause corrosion of fuel pipes and pumps in some vehicles. True these can be replaced with materials impervious to the corrosive effects of ethanol and this might be done were it considered a cost-effective measure. But this is not the case.

The difference in price between petrol and a 10 per cent ethanol-petrol mix is commonly no more than 2¢ per litre. This is insufficient to justify the cost of changing to corrosion resistant materials. The growing number of vehicles in use, combined with a finite and decreasing supply of oil from underground, makes it certain that the price of diesel and petrol will continue to increase.

If not replaced in part and eventually entirely, the price of these fuels will become unaffordable, particularly for passenger travel by car, within the next three and five years. The widespread availability of an alternative fuel, electricity, makes it certain that electric cars will be produced and used in ever increasing numbers, particularly for commuting in and around major urban areas. Electricity is far more efficient and very much cheaper to use than petrol or diesel, even at present prices.

Spurred by the need to curb CO2 emissions and the rising cost of fossil fuels, it is predicted that the electric motor will replace the internal combustion engine within ten years. There are also compelling economic and political reasons for this to occur.

Battery technology has recently made important break-throughs enabling the production of smaller, lighter, more durable batteries able to hold a much larger charge, ten times greater than conventional vehicle batteries. Importantly, these batteries can be rapidly recharged, in the case of vehicle batteries within minutes rather than hours and manufactured more cheaply.

On-going research by CSIRO, MIT, and others increases the likelihood of further improvements being made in the next three to five years. These improvements will encourage the development and greater use of electric vehicles for commuter and long distance travel.

As a result of these developments, all major car manufacturers include in their range of products at least one model of an electric car. Commercial availability of better performing batteries by 2012 is expected to increase both market size and competition between makers of electric vehicles, resulting in falling prices for new vehicles and the production of conversion kits making it possible to convert many existing vehicles to run on electricity.

Australia currently uses in excess of 20 billion litres of petrol and 10 billion litres of diesel a year. To replace even 10 per cent of these volumes with biofuels produced in Australia would require diversion of land growing food crops for human consumption to fuel production to such an extent that it would distort domestic and export food markets. Availability of food crops would decline, forcing up the price.

As a result of those increases, farmers would quite sensibly use more of their land to increase production of crops which gave them the highest returns. This would entail taking out of production crops fetching a lower price. The latter would in turn become scarce and rise in price until a new price equilibrium for agricultural food crops was found.