Biodiesel Prices in Australia

Biodiesel Prices in Australia

Introduction

Fossil fuels have developed environmental pollution on the planet as they don't create a chain of renewable energy in their production cycle. This and limited supply of fossil fuel has influenced the research and development in the areas of bio-diesel production. Bio-diesel is produced from vegetables oils, waste oils and animal fats know as tallow. Tallow is a by-product produced from processing industry of meat. The energy contained in bio-diesel is slightly lower as compared to bio-diesel but this difference is negligible when it is used in vehicles by blending it with diesel. The Australian government has taken significant steps to facilitate the use of bio-diesel and have been working to establish blending standards. This paper will analyze the current wholesale prices of bio-fuel in Australia and its future outlook. The research will review factors which effect on the prices of bio-diesel, the investment being made in Australia for its mass production and the future price trends. The supply of biodiesel is limited in Australia and this paper will aim to ascertain the potential demand of biodiesel. The potential demand and supply can also effect the future prices of biodiesel. The paper will also identify mass consumers of bio-fuel in Australia. The demand and supply of biodiesel will increase but the key to profitability will remain the cost effectiveness of production process.

Discussion

All bio-fuels are blended with conventional fuels such as petrol or diesel so that they can be used as the motor vehicle fuels. One of the key driving forces for active investment in the bio-fuels, are government incentives and relaxation in taxation which the Australian government continues to offer.

Figure 1: Illustrates the contribution of Renewable Fuels in Vehicle emissions

Current Price of Bio-Diesel in Australia

The prices of the bio-fuels are estimated using the prices of other petroleum products and the taxes applied on them. According to the policies of 2010-11, the bio-fuels are not subjected to excises and when they are sold in the retail market. They receive a significant price premium of approximate 38 cents per liter in comparison to petrol and diesel. Since the biodiesel is supported under the Australian governments Cleaner Fuels Grants Scheme, the producers of bio-diesel and importers receive tax exemption equal to (38.143 c/L) as per the rates prescribed on 30th June 2011. The government as per policy has imitated the reduction in the provided exemption to ...