BIOFUELS – AT WHAT COST?

The report analyzes Australian government support for biofuels, finding that total transfers reached approximately A$ 95 million in 2006–07. It argues that the industry is heavily subsidized compared to other sectors, with effective rates of assistance often exceeding 100%. The authors conclude that these subsidies are not cost-effective for reducing greenhouse gas emissions or displacing fossil fuels, as the cost per tonne of CO2-equivalent avoided is significantly higher than purchasing carbon offsets on international exchanges.

• In the 2006–07 financial year, Australian federal and state governments provided approximately A$ 95 million in total transfers to support biofuels, consisting of A$ 55 million for ethanol and A$ 40 million for biodiesel.
• The biofuel industry receives significantly higher support than other Australian sectors; effective rates of assistance (ERAs) for most biofuels were 100% or more, whereas the average ERA for agriculture and manufacturing was around 5%.
• The primary mechanism of support is an excise tax rebate that exactly offsets the A$ 0.38143 fuel excise duty for domestic producers, though this is not available for imported ethanol.
• Subsidies for biofuels are not cost-effective for displacing fossil fuels; the cost to displace a litre of gasoline or diesel equivalent is often similar to the wholesale price of the petroleum fuels being displaced.
• Using biofuels to reduce greenhouse gas emissions is inefficient compared to market-based offsets. For example, the cost of reducing one tonne of CO2 through wheat-based ethanol could purchase over 20 tonnes of offsets on the European Climate Exchange or 140 tonnes on the Chicago Climate Exchange.
• The long-term viability of the industry is precarious due to high feedstock price volatility and the cyclical nature of Australian droughts, which led several biodiesel plants to suspend production in 2007.
• While the federal government has resisted national blending mandates, some states have implemented them: New South Wales requires a 10% ethanol blend by 2011, and Queensland requires 5% by 2011.
• The report identifies an 'ad hoc' nature to biofuel support, where individual plants, especially those linked to the sugar industry, have accessed multiple overlapping government grant sources.

APA

Quirke, D., Steenblik, R., & Warner, B. (2008). BIOFUELS – AT WHAT COST? International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/biofuels_subsidies_aus.pdf

Chicago

Quirke, Derek, Ronald Steenblik, and Bob Warner. BIOFUELS – AT WHAT COST? International Institute for Sustainable Development, 2008. https://www.iisd.org/system/files/publications/biofuels_subsidies_aus.pdf.

Wikipedia

{{cite report |last1=Quirke |first1=Derek |last2=Steenblik |first2=Ronald |last3=Warner |first3=Bob |title=BIOFUELS – AT WHAT COST? |publisher=International Institute for Sustainable Development |date=April 2008 |url=https://www.iisd.org/system/files/publications/biofuels_subsidies_aus.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{quirke2008biofuels, author = {Quirke, Derek and Steenblik, Ronald and Warner, Bob}, title = {{BIOFUELS – AT WHAT COST?}}, institution = {International Institute for Sustainable Development}, year = {2008}, month = apr, url = {https://www.iisd.org/system/files/publications/biofuels_subsidies_aus.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }