Councils stall E85 - United

INDEPENDENT fuel retailer United Petroleum is blaming local councils for delaying the roll-out of ethanol-based E85 pumps in Australia to service the small number of Saab ‘BioPower’ being sold here.

Eight months after Saab launched its BioPower models in Australia, there is still only one commercial outlet here – United’s Rozelle service station in Sydney opened two months ago – and still no timeframe for the projected Melbourne site that was due to be operational by last February.

However, with GM Holden last week flagging its intention of introducing E85-compatible Commodores within the next few years, United is pressing ahead with its plans to open more pumps in Melbourne, Brisbane, Adelaide and Hobart.

United Petroleum general manager David Szymczak told GoAuto yesterday that the company’s plans were being held up by getting the necessary council permits to install new E85 tanks.

“We’ve been delayed in Victoria with some of our permits and so forth, and we’re working through that currently,” Mr Szymczak said. “We’re still going down the track of rolling out E85 – it’s just taking longer than we thought.

“We’ve got plans to go into Melbourne, Adelaide and Brisbane. And we currently do E10 in Tasmania, so that’s not out of the question as well.

“With every site, you have local councils and you issues that you need to work through and Rozelle was the first one that we were able to get up and running easily, so we’ve done that and we’re working on the others.”

Left: United Petroleum general manager David Szymczak and the Rozelle service station in Sydney.

Mr Szymczak said that each site required an investment of between $50,000 and $200,000 to install the small E85 tanks and pumping equipment.

Demand has been very low at Rozelle, with only two or three cars a day being filled with E85.

However, Mr Szymczak said that United is the market leader for E10 (10 per cent ethanol and 90 per cent petrol) and was determined to be in on the ground floor with E85 (85 per cent ethanol).

He welcomed Holden’s intention to offer a ‘Flex-Fuel’ Commodore, saying it was necessary for the big manufacturers to drive E85 demand and make it commercially viable for fuel producers, wholesalers and service stations.

“It really is in the hands of the Holdens and the Fords of Australia for this sort of thing to take off,” Mr Szymczak said.

“I think if Holden go down the Flex-Fuel route with Commodore, I think it will take off in a big way, definitely.

“They have been in contact with me asking a few questions about E85. Given that we sell the most ethanol in Australia, we’ve got some expertise, so they ring from time to time to talk about that and I believe they’re after some E85 in order to do some testing, so I think they’re moving ahead.

“From our perspective, we want to be in E85 because we want to be an early entrant into the market. We see that it will come, but it’s really years off.

“It’s really in the hands of the manufacturers. There’s no point rolling out E85 across the country when there are no cars to use it. By the same token, manufacturers will say there’s no point in producing E85 cars until there’s supply, so it’s a bit of chicken and egg thing. We’re just in that early stage in Australia.

“United was really the first company to really get into E10 in a big way across Australia and, as a consequence, the ethanol industry has really taken off here. Prior to that, it was really just a few independents here and there.

“I think E85 will come, but it’s a way off. It’s a bit like LPG. If you look back in history, LPG started as almost a boutique sort of thing and it really took the taxi drivers to pick it up in a big way for the LPG industry to really take off.” While being frustrated by local government, United has resolved all other regulatory issues involved with selling a new type of fuel in Australia.

“There were issues with things like working out what sort of dispensing pump you can use and then getting permits and so forth in Australia to use that because it’s specific gear, but all that’s been worked through.

“From the point of view of the federal government and state governments, we worked through that earlier in the year so we’ve got all those people onside and supportive, so that’s not an issue for us.” Mr Szymczak said Australian ethanol is produced from by-products and therefore avoids the international social debate raging over substituting food production for fuel.

Whereas most foreign ethanol is produced from crops, local producers CSR in Queensland and Manildra in New South Wales respectively use molasses (a by-product of sugar production) and starch (a by-product from milling flour).

There has been no shortage of supply and a new plant is also set to start production soon at Dalby in Queensland.

Although the federal government subsidises locally-produced ethanol by dropping its 38-cent fuel excise, the local producers are not doing consumers any favours on price.

“The ethanol producers have put up their prices quite substantially,” said Mr Szymczak. “They’re seeing that oil prices are rising and they can charge more for the product, so they do. That’s something that’s in the hands of the ethanol producers, not us.” As a result, E85 at Rozelle this week was priced at 124.9c a litre – well up on United’s own projection of less than a dollar early this year – compared with 159.7c for regular petrol.

With fuel consumption of Saab’s BioPower models running at up to 30 per cent more on E85 than regular petrol, owners are actually paying more to derive the environmental benefits of this alternative fuel.

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