Consultation paper and Determination - Wholesale price for fuel ethanol - 1 March 2024

Wholesale price of 161.9 c/L for fuel ethanol from 1 March 2024

IPART has determined that a reasonable wholesale price for fuel ethanol starting from 1 March 2024 is 161.9 cents per litre (excluding GST), down from 169.2 cents in September 2023. The fall in the price in March is mainly due to a significant reduction in the mill-gate price

We welcome your feedback on the impact of our price determinations

We welcome your feedback on the following:

1. Is IPART’s determined wholesale price of ethanol having an impact on the retail market for E10? If so, what is the impact?
2. How have the wholesale and retail markets for ethanol changed in recent years, including any changes to the competitive dynamics in these markets?

Under the Biofuels Act, fuel sellers must ensure that ethanol accounts for at least 6% of the total volume of petrol sold in a quarter (the “ethanol mandate”). This means that 60% of fuel sales are required to be E10 (which is made up of 10% ethanol, and 90% unleaded fuel). However, this level has never been reached. E10 sales across NSW have fallen from a high of around 39% of fuel sales in 2011 down to 22% in 2023. 

All of the retailers have exemptions from meeting the mandate on various grounds. For example, retailers can be exempt if they make a petrol-ethanol blend available and as accessible to customers as any other type of petrol.

One of the grounds for receiving an exemption is if ethanol producers sell ethanol into the market for more than the price determined by IPART.  We set the price of wholesale ethanol based on how much it would cost to import it from overseas (“the import parity price” or “IPP”). In previous review periods, this was higher than buying ethanol locally, largely because domestic excise rates are around 30% of the excise rate for imported fuel (currently around 16 cents for domestic excise compared to 50 cents for imported fuel).

Since IPART began determining wholesale prices, only one exemption has been sought on the grounds that the wholesale price of ethanol has exceeded IPART’s determined price in August 2023.