THE NSW government's plan to ban regular unleaded fuel has been thrown into doubt by the revelation that the state's only ethanol producer, Manildra, has failed the government's clean fuel test, with its ethanol producing more greenhouse gas emissions than previously thought.
New modelling by the Productivity Commission has shown the ethanol produced by the Manildra Group is only 42 per cent more efficient than unleaded petrol, falling short of the target set by the government regulator, Office of Biofuels, which says ethanol should have 50 per cent lower greenhouse gas emissions than fossil fuels.
Manildra maintains its ethanol is produced from waste products and therefore virtually emissions-free, a line supported by the previous NSW Labor government which originally legislated to replace unleaded fuel with ethanol blended fuel.
But evidence has emerged to suggest Manildra's production of ethanol has increasingly relied on the use of food products grown by the company, which the Productivity Commission says accounts for the growth in emissions.
According to the NSW Supreme Court, between 2006 and 2009, while the amount of flour Manildra manufactured for export fell 50 per cent, the amount it put into ethanol increased by 80 per cent.
The Department of Planning approved Manildra's 2008 application to more than double the capacity of its ethanol plant at Nowra on the basis of an environmental assessment that its ethanol was 65 per cent waste.
But the report was based on figures provided by Manildra. The consultants, GHD, who wrote the document, stated it ''[did] not represent, warrant or guarantee the assessment''.
The Office of Biofuels said Manildra told it 80 per cent of its ethanol was made from waste last year but admitted that Manildra's ethanol has never been independently audited.
The new figures from the Productivity Commission contradict Manildra's estimates, which were largely relied on in the former government's decision-making process to phase out regular unleaded petrol.
From July, NSW petrol stations will no longer be permitted to sell regular unleaded petrol because the government wants to promote renewable biofuels. The decision has divided experts over its benefits.
An Australian Competition and Consumer Commission report last month warned of a ''significant impact'' on consumers, particularly those whose cars could not run on ethanol-blended petrol and were forced to use more expensive premium unleaded petrol. Motoring experts say it is still a more expensive option because it is less fuel efficient over a given distance than regular unleaded.
Manildra has commissioned a review, to be conducted by consultants NCS International, to determine whether its ethanol meets the 50 per cent standard. The findings are expected to be made public in the coming weeks.
A spokesman for the Energy Minister, Chris Hartcher, said the government would continue with its plans to ban unleaded petrol from July.
Manildra did not return requests for comment.