Economic assessment of Commonwealth and state biofuel policies: final report

30 Oct 2018

The objectives of this project were to determine the market impact and influences of biofuel mandates on the feedlot sector and the broader Australian community.

The current state of play in the Australian biofuels industry and interactions with agriculture are presented. This material is accompanied by a detailed history of Commonwealth, Queensland and New South Wales biofuels policies and governments' justifications for these policies. The justifications are critically analysed.

ACIL Allen Consulting Pty Ltd (ACIL Allen) examined the economic impact of biofuels policy and its interactions at state and national levels through a comprehensive literature review and qualitative economic analysis (economic reasoning). In addition, it used these techniques and econometric modelling to determine the impact of biofuels mandates on feed grain prices using available data. Official data was available up to 2016-17 and ACIL Allen forecasted estimates out to December 2017. It should be noted that the Queensland mandate was not introduced until 1 January 2017. This means that any findings regarding the effects in Queensland are preliminary, and a longer data time series is needed to verify what the impacts will be on sorghum, sugar cane and/or wheat starch. Further, climatic conditions have recently changed, and parts of New South Wales and Queensland are now in drought. This effect is not captured in this analysis due to lack of data for the period after 30 June 2017.

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