Time for the ethanol chat. I’m pretty sure there’s gunna be a fatwah. (Said the actress to the bishop...)
My comments in this report relate to Australian ethanol - which is mainly produced from wheat. In the US they use corn, and in South America they use sugar cane. And the energy economics vary as a result.
At the risk of being totally parochial, we don’t have a famine problem in Australia. We have some poverty, but there’s enough arable land.
Here in ‘Straya, farmers are going to grow what they can grow on their land, and they’re going to sell it to the highest bidder. If part of that market is for ethanol production - fine by me.
At an ethanol factory, the wheat gets separated into its two constituents - starch and gluten. They ferment the starch to produce the ethanol, and they sell the gluten into the food industry.
The first big problem is: ethanol’s not green. All that marketing bullshit - clean, green leaves coming out of the petrol bowser? It’s A-grade bullshit. We produce ethanol here, using coal and diesel. It’s environmentally disgraceful.
Here in Shitsville, there’s effectively an ethanol monopoly - it’s all made by Manildra. The company operates one large ethanol plant in Bomaderry on the South Coast. Coal and wheat roll in at one end, and ethanol pours out the other.
Manildra is privately owned by a rich dude named Dick Honan through his personal company Honan Holdings. He’s a prolific political donor - kicking the tin to the tune of $179,000 in the 2014-15 financial year.
According to the ABC’s Four Corners, Manildra made $4.3 million in donations over the past two decades - straight in the favour bank. Personal opinion.
On fundamentals, Manildra seems like a pretty shitty business. I don’t know why they bother. Total income on sales for 2013-14 was a staggering $1.2 billion for Honan Holdings, according to Fairfax, but the taxable income was just $35 million - that’s a margin of less than three per cent. That’s terribly thin.
This means the income tax payable was just $6.6 million. On $1.2 billion in sales. To put this in perspective, if your taxable income here in Shitsville is $100,000 per year for the total sale of your labour to your employer, and you paid tax on that at the same rate as Manildra, the impost of income tax to you would be $500. Annually.
Mr Honan appears to be rather the regular at meetings with the big end of town. According to Fairfax Media he met with then NSW Premier Mike Baird and other cabinet ministers on 20 occasions in the lead-up to the government compelling small filling station operators to sell e10 for the first time.
Here’s what the NSW Treasury said about that in 2012:
“Beyond Manildra it is difficult to identify a net benefit for any other segment of society.”
The ACCC said in 2013 that e10 had (quote) “reduced consumer choice” and resulted in (quote) “significantly higher prices”.
Even the Greens weren’t convinced. The late Greens MP John Kaye said:
“There's no evidence that requiring motorists to use ethanol-blended fuels has any net greenhouse gas gain or much in the way of air quality improvement.”
It kinda sucks when you can’t sell an allegedly sustainable fuel to the Greens.
Yet, none of this convinced the Premier.
In February this year the NSW Planning Assessment Commission approved the reopening of one of the state’s shittiest coal mines so that the dodgy output can be trucked to - you guessed it - Manildra’s ethanol plant in Bomaderry.
The Planning Assessment Commission said in 2014 that operating the mine would be:
“Incompatible with the significant conservation of the site”
The allegedly independent agency rejected that previous non-Manildra mining proposal saying open cut mining there posed:
“Unacceptable risks and impacts, and only limited short-term benefits.”
I wonder what changed. Because soon, it seems, 20 filthy, stinking coal trucks every single day will stuff themselves full of low quality shit coal, and head across the the Blue Mountains to the Manildra ethanol plant - which has breached its EPA licence more than 2000 times, according to the Financial Review - to keep those boilers ticking over and that clean, green ethanol flowing.
According to Fairfax Media, Manildra has development applications in play, which will see the plant expand from 126 million litres to 300 million annually. Do you suppose there’s really any doubt that this plan will get the green light?
When it does, I can guarantee you that it will be a great deal - for Manildra.