This report investigates the future of fuel in the Australian transport industry. In 2003 crude oil based fuels make up almost 100 percent of the demand – 64 percent conventional petrol, 29 percent diesel, and the remaining 7 percent LPG (derived from crude oil refining).
The demand for imported crude oil is increasing as domestic reserves decline and the population steadily rises. The report discusses the capabilities of alternative fuels to replace conventional petroleum and diesel – particularly the abilities of renewable fuels. The alternatives discussed in this report are:
● LPG (Autogas) – derived from crude oil and natural gas.
● Ethanol – from sugarcane and wheat.
● Fisher-Tropsch diesel – from Australian black coal reserves.
● Biodiesel – from oilseed crops such as canola, soy bean, sunflower, etc.
● Hydrogen – produced from fossil fuels (steaming), and via electrolysis.
Each of the fuels had clear limitations and it was concluded that no single fuel would be capable of replacing petrol or diesel entirely.
LPG is produced when crude oil is ‘cracked’ and from natural gas, for motor vehicle engines LPG is a mixture of equal parts of propane and butane, otherwise known as Autogas. LPG is a fossil fuel, thus it is non-renewable. The limitation of LPG is its volume of production before the rate at which it is depleted is too high. At its current usage, domestic LPG will be sustainable for 40 years; any increase in production would decrease the life of LPG and would not be recommended
Australia has the capability of producing around 30 percent of the energy requirements from conventional petrol if all wheat and sugarcane biomass is converted to ethanol. The reality is that very little biomass is devoted to ethanol production. The government and ethanol industry is planning to produce 350 million litres of ethanol by 2010. This would account for 1.2 percent of the energy requirement currently fulfilled by petrol. Ethanol will initially be used for fuel blending e.g. E10 – 10 percent ethanol and 90 percent petrol, or E85 – 85 percent ethanol. The production level of ethanol will only be increased if it becomes economically feasible. – In other words, when the cost of importing crude oil import becomes too high. Then farmers would stand to profit more by supplying ethanol refineries than exporting the primary product.
Fisher-Tropsch (F-T) diesel can be produced from coal or natural gas it would be expected that if Australia were to adopt F-T diesel, it would be produced from coal, given the abundant coal resources in Australia. F-T diesel is capable of replacing conventional diesel, whilst maintaining coal exports and domestic power generation supplies for approximately 160 years. Given these statistics, this could possibly be a viable option for Australia.
On the negative side, F-T diesel from coal produces significant amounts of greenhouse gases (CO2). In a world that favours cleaner and more environmentally friendly solution to energy production; it is unlikely that Australia will adopt an F-T diesel program. Australia currently produces no F-T diesel. Therefore mass production of this would require huge capital investment in coal gasification and refining facilities.
Australia currently produces 3 to 5 million litres of biodiesel – not enough for any significant contribution to transport fuel requirements. Biodiesel could be capable of meeting at least 15 percent of the conventional diesel demand by 2020. Biodiesels contribution would be similar to ethanol, initially used for fuel blending with conventional diesel e.g. B5 – 4 percent biodiesel and 95 percent diesel, or B20 – 20 percent biodiesel.
Hydrogen has been dubbed by many as ‘the fuel of the future’, however a sustainable hydrogen economy will not be realised for decades. In the mean time, hydrogen could be produced using fossil fuels in a process called steaming. This will not significantly reduce CO2 emissions but it may provide a smoother transition to a hydrogen economy.
Renewable hydrogen will be generated from electrolysis; this requires electricity to split oxygen and hydrogen into separate molecules. A practical goal to facilitate this outcome in the future would be to produce electricity from renewable sources such as wind solar or hydro.
Hydrogen can be used in internal combustion engines, but in the future, fuel cells will probably be the engine of choice. Hydrogen operates at much lower temperatures and thus produces higher engine efficiency. The main advantage of hydrogen fuel cells is that water is the only by-product. Due to technological limitations of storage and hydrogen gas compression, fuel cell vehicles will not be mass-produced for decades. The success of a future hydrogen economy still depends on many more technology advancements.
This report also analyses fuel taxation and crude oil import trends in order to assess the economic and political aspects of fuel alternatives. Australian fuel still remains inexpensive, compared with the rest of the world. Australian tax on fuel (38.143 cent per litre) is the fourth lowest in the world. While crude oil imports are continuing to increase in Australia, some European countries are beginning to decrease their dependency on oil.
The conclusions reached in the report regarding the future of oil in Australia are:
● Fuel diversity among the transport industry should be encouraged – no single alternative fuel will have the capabilities of fulfilling the demand for crude oil.
● Crude oil could be phased out in three key stages. – The first being when biodiesel and ethanol are used for blending, E10, B5 etc. The second is when these fuel blends increase their percentage of renewable fuels, e.g. E85, B90. The third when, a sustainable hydrogen economy is created, where vehicles are powered by fuel cells. It will take several decades for these phases to be fully implemented.
● The Australian government needs to develop and ratify an energy policy. This would give more scope to alternative industries to gather investors based on a greater degree of security. The result needs to be the establishment of viable alternative fuel market.
● Crude oil is a very cheap form of energy. This has been directly responsible for an increase in the standard of living for those countries that can afford to purchase large quantities of crude oil. On the down side, as the price of oil increases, the standard of living will deteriorate proportionally.