The state government was told a year ago there was not enough ethanol in Australia to fulfil its law requiring that ethanol make up 6 per cent of all petrol in NSW.The Herald revealed this month that oil companies have been unable to source enough ethanol to comply with state law.
Senior government figures had warned last year that the 6 per cent targets, adopted in September, were unachievable, emails obtained by the Herald under freedom of information laws show.
”There is insufficient current and planned [ethanol] production to meet a 6 per cent target,” a director at the Department of Resources and Energy wrote to the Energy Minister’s office on June 23 last year.
The former government passed legislation in 2007 to progressively increase the mandated amount of ethanol in regular unleaded petrol from 2 to 10 per cent, arguing the biofuel was environmentally friendly.
The new government inherited the law with the mandate set at 4 per cent.
Cabinet leaks showed the government was split on whether to proceed with further increases.
Members of the Nationals backed a 10 per cent quota, citing benefits to regional development, and overcame the objections of senior Liberals who questioned the economics of the policy.
The issue came to public attention earlier this year, when the Premier froze ethanol levels at 6 per cent. He overturned plans for a 10 per cent mandate after it was revealed 750,000 motorists drove cars incompatible with ethanol and would have been forced to pay for premium petrol.
Government emails reveal the depth of Liberal opposition to the policy when the Coalition took power. The Energy Minister, Chris Hartcher, had planned to suspend ethanol increases for a year and kill further increases with a parliamentary inquiry that would have revealed the inability of manufacturers to supply enough ethanol.
So advanced were these plans that Mr Hartcher’s office drafted legislation, terms of reference for an inquiry and a press release.
“We don’t want to reach a situation where industry is unable to meet demand,” Mr Hartcher was to have said in a June 15 draft release. “This would ultimately impact businesses and consumers, placing upward pressure on petrol prices.”
Two weeks later the minister announced a very different approach. Instead of a year, the ethanol increase would be suspended for three months. Instead of an inquiry, the government would “consult with stakeholder groups”.
The Greens MLC John Kaye said the change of tack reflected the dynamics of the coalition party room: “It’s hardly surprising the Nationals didn’t want a free-ranging parliamentary inquiry. This is about pork barrelling a major donor.”
In the 2010-11 financial year, Manildra, the sole producer of ethanol in NSW, donated $200,000 to the NSW Liberal and National parties and $40,000 to NSW Labor.
Mr Hartcher’s office said he was unable to answer questions about why or when he abandoned the inquiry because he was on leave. Emails show his plans were dropped hurriedly and after his office asked Manildra Group for advice.
The day after the suspension was finalised, his media adviser wrote to the Premier’s office and characterised the submission of the legislation as: “Very last minute I can assure you!”
