Diesel Vs. Biodiesel – How The Biodiesel Industry Failed

Diesel fuel has been the main choice of transportation and industry transport services, as well as regular consumers for decades. This is due to fact diesel engines last longer than spark-ignition engines in demanding applications and the diesel fuel offers a greater power density than other fuels, therefore packing more power per volume. The farming and construction industries benefit greatly from the efficiency and high power. Refined from crude oil, diesel fuels tend to produce many harmful emissions when burned. The cost for more power has been harmful pollutants to the environment and as such, Australians had taken more interest in alternative fuels in recent times. Among the most popular has been biodiesel.

Certain biodiesel’s emit less air pollutants and greenhouse gases than petroleum based diesel. In addition, most biofuels are renewable, biodegradable and non-toxic. This fuel is produced from animal fats and vegetable oils, and sometimes recycled cooking oil and is a cheaper alternative to petroleum diesel.

The use of biodiesel paved the way for a reduction on  the world’s reliance on fossil fuels, and as an alternative energy source, it is fairly easy to process. While its nitrogen dioxide emission has been found to be high, its other emissions are lower than petroleum based diesel fuels. With all its benefits for the environment and consumer’s wallets however, the Australian biodiesel industry is in ‘free fall’, according to the annual biofuel report by APAC Biofuel Consultants. The collapse of the industry is disappointing considering the clean green future it promised. So the question in everyone’s mind is: what has caused this failure?

Well, there are several possible reasons for this, and some will be discussed below.

 

Consumer Interest:

While alternative options to petroleum diesel were in demand due to the fuel’s high prices, following the fall of crude oil prices in 2014, motorist and industries have essentially shunned the use of alternative fuels in recent years. Amid a sudden drop in demand internationally, the prices of crude oil fell significantly a few years ago and as such the price of regular diesel was at an all-new low. The biodiesel industry has been beating them on price up to that point and the drop made an impact on biofuel deals. One Australian company stated they lost 40,000L of biodiesel sales in one week.

 

Government Incentives:

In 2016, one of the biggest biodiesel companies in Australia, Australian Renewable Fuels collapsed, halting production on three processing plants across the country. On top of the competitive oil prices, the company stated the federal budget changes of 2014 as one of their downfalls. The changes to biodiesel taxation were made within the report, with the government axing the Cleaner Fuels Grant Scheme, meaning domestically produced biodiesel, which previously paid no excise, now had rising overheads. One biodiesel plant in Queensland, named EcoTech, commented their volume may be expected to decline as much as 90% in the coming decade.

Therefore, at this point in the Australian economy, consumers and the government are more focused on the prices relating to alternative fuels. While government mandates are being introduced to ensure the continuation of biodiesel, the opportunities for its growth are limited.