Premier & Cabinet

Premier's Memorandum

M2007-16 Biofuels and Other Alternative Fuels - NSW Government Commitments


Updates Memorandum no. M2006-05, Circular no. 1999-15 and Circular no. 2002-45. Superseded by M2012-08.

Detailed Outline

On 1 October 2007, the Biofuel (Ethanol Content) Act 2007 and Biofuel (Ethanol Content) Regulation 2007 commenced. The Act requires primary wholesalers to ensure that ethanol makes up at least 2% of the total volume of petrol sold or delivered in New South Wales. This does not mean that all petrol that is sold must contain at least 2% ethanol, but it does mean that 10% ethanol blended petrol (E10) will become much more widely available.  A fact sheet providing more details on E10 and biodiesel is attached to this Memorandum.

Since 1 July 2006, all executive officers and public service staff who drive Government-owned vehicles whether in their daily duties or as part of their remuneration package have been required to use E10 blends (or other alternative fuels) where this is practicable, available and cost effective. Fulfilling this requirement will soon be much more practicable as all major oil companies are now offering E10, and the number of service stations at which it is available is increasing rapidly. Correspondingly, rapid increases in the usage of E10 by all New South Wales Government agencies are, therefore, expected.

The Government's biofuel website, contains links on where E10 can be purchased.

The current fuel contract for the NSW Government (C366- Fuel and Associated Products) provides for Ethanol (at pump) and Biofuels (in bulk). United and Caltex are currently on contract with the Government and are providing E10 at a number of outlets. 

E10 Unleaded is suitable for use in most new and many older cars, utes and vans without affecting the manufacturer's warranty. All new Australian made cars and most new imported cars can use E10. However E10 may not be suitable for all Government-owned vehicles and should not be used if the manufacturer has stated that it will void vehicle warranties, or damage the vehicle in some way.

The StateFleet home page ( under the tab “Managing Your Fleet – Fuel” has a link to the Federal Chamber of Automotive Industries site which identifies those vehicles that can and cannot use E10.  StateFleet managed vehicles with a Caltex card can already purchase E10 and United cards are available on request. Other agencies should obtain fuel cards direct from suppliers on the contract.

Morris Iemma
Issued : Office of Biofuels
Contact: Greg McDowall, Director
Email: [email protected]
Date: 19 October 2007

This Memorandum updates Memorandum no. M2006-05, Circular no. 1999-15 and Circular no. 2002-45

What is ethanol?
Ethanol (CH3CH2OH) is an alcohol, an oxygenated, organic carbon compound. It is produced in Australia from by-products such as wheat starch and C molasses. Ethanol is considered a renewable fuel when produced from agricultural sources. Ethanol can be used as an alternative fuel, petrol extender or octane enhancer. Octane is critical in the proper combustion of petrol. From 1 March 2004 the Commonwealth Government limited the level of ethanol in petrol in Australia to a maximum of 10%.

Where do vehicles fill up in NSW? Is there a distribution network?
In NSW, BP, Caltex, Mobil, Shell and Park Petroleum now all supply ethanol blended petrol. There are also about 130 independent retailers selling ethanol blends in NSW.

What is the impact of the use of ethanol on engine damage?
At a 10% level, there is little likelihood of damage in new vehicles. According to the Federated Chamber of Automotive Industries, most new and many older vehicle models can run on 10% ethanol blended petrol (E10). However there are some technical reasons why some models, particularly pre-1986 models, cannot or should not use E10. Fleet managers should check that manufacturers' warranties are not voided by the use of E10.

What are the environmental impacts of the use of ethanol?
Greenhouse gas emission benefits from ethanol vary according to the fuel source and how it was produced. In general, lifecycle greenhouse gas emissions from 10% ethanol blends are slightly lower (1-4%) compared to neat petrol once their lower fuel economy is taken into account (i.e. 2-3% lower fuel economy for 10% ethanol blends compared to neat petrol). Further reductions generally require use of cogeneration to supply heat and power for ethanol production.

The environmental impacts of ethanol, normally blended with petrol at 10% (E10) volume, are mixed. Compared with petrol, tailpipe emissions of carbon monoxide are lower. However, ozone precursor emissions of oxides of nitrogen and evaporative emissions from volatile organic compounds are higher. In terms of air toxics, tailpipe emissions contain lower levels of 1,3 butadiene, benzene, toluene and xylene but higher levels of aldehydes. At present little data is available regarding the impact of 10% ethanol blends on tailpipe emissions on particle emissions.

Ethanol can also be blended with diesel fuel by the addition of a co-solvent. Emission benefits include a decrease in particle emissions. However, there is currently a lack of supply outlets for this fuel.


What is biodiesel?
Biodiesel is fuel produced from vegetable oils and/or animal fats by the process of esterification. Biodiesel can be manufactured from virgin oils (eg. canola, mustard, soy or palm oils) or waste oils (eg. spent cooking oils and tallow after meat processing). Current biodiesel production in Australia is based on tallow and waste vegetable oil.

What are the advantages of the use of biodiesel?
Biodiesel is a renewable fuel, and on a life cycle basis produces much less greenhouse gas emissions compared to diesel. Reduced particulate emissions are also a significant environmental advantage of biodiesel. Generally, studies of biodiesel indicate slightly higher emissions of oxides of nitrogen compared to ultra low sulphur diesel fuel.

Biodiesel is biodegradable and non-toxic, thus it has significant operational health and safety advantages, as well as being favourable for use in marine environments where there is a potential for spills. The toxic polycyclic aromatic hydrocarbon content of exhaust emissions is reduced. The absence of sulphur also avoids contamination of exhaust oxidation catalysts.

What is the impact of the use of biodiesel on engines?
Engines should not require any modification to run on biodiesel that meets the Australian fuel standard. However, it is important to check with vehicle manufacturer/supplier to ensure that the vehicle warranty covers the use of biodiesel blends (eg 5%, 20% or 100%) biodiesel. Note that biodiesel should not be stored for extended periods between uses.



Not Mandatory

AR Details

Date Issued
Nov 20, 2007
Review Date
Nov 20, 2017
Replaced By


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Department of Premier and Cabinet