Lotfeeders have lambasted the latest proposed NSW Government campaign to encourage increased demand for E10 (fuel containing 10pc ethanol), saying that motorists know that the negatives associated with E10 fuel outweigh the positives.

Australian Lot Feeders Association president Don Mackay said motorists question the value proposition of the product, and this has been demonstrated by the fact that nationwide sales and retail outlets supplying E10 declined in 2011/12.

“The ACCC petrol monitoring report confirmed that Australian ethanol demand declined by 2pc over the financial year, while retail outlets selling the product reduced by 20pc,” Mr Mackay said.

“NSW is the only state where E10 consumption remained stable in 2011/12 and this was entirely because the State Government imposed mandate guarantees demand for the product by requiring that 6pc of all regular unleaded petrol sold in the state be blended with ethanol,” he said.

“The NSW Treasury has perhaps best summed up the issue by stating that the only beneficiary of the mandate is Manildra Biofuels which has been given a legislated monopoly and a captive market.”

“Why the NSW Government would want to encourage consumers to purchase more E10 when the Independent Pricing and Regulatory Tribunal has also confirmed that supply is unable to meet the current mandated demand is unfathomable,” Mr Mackay said.

ALFA has always taken an active stance in opposing ethanol mandates, on the basis of its unfair impact on feedgrain pricing, and the association’s concerns are shared by a “plethora of disparate groups who joined an alliance to advocate against their implementation,” he said.

“It is not just the big oil companies that are opposed to ethanol mandates but almost every representative body for farmers, service stations, motoring and marine groups, fuel distributors, consumers, welfare bodies, environmentalists, stock feed manufacturers, intensive livestock industries and even biofuels.”

With the majority of ethanol for the NSW mandate derived from grain, ALFA has always been concerned that during low grain production years, the artificial and inflexible demand created by the mandate would inflate grain and hence food prices.

“Ethanol mandates also increase fuel prices, as 30pc of cars, 70pc of motorbikes and all marine, mower, whipper snipper, leaf blowers and other small engines are not E10 compatible,” Mr Mackay said.

“That forces owners to pay up to 12c/litre more for premium unleaded petrol. Motorists with E10 compatible vehicles are also worse-off, as it needs to be at priced at least 3.5c/litre less than regular unleaded petrol in order to offset its poorer fuel economy. In 2011/12 the ACCC determined that the average price differential was only 1.8c/litre,” he said.

“The reality is that every other Government in Australia has rejected or removed ethanol mandates due to the costs and risks outweighing any purported benefit.”

“With consumers and motorists not benefiting from the mandate, you have to question why the NSW Government doesn’t drop the policy,” Mr Mackay said.