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IPART’s role in fuel ethanol

Under the NSW Biofuels Act 2007 (Biofuels Act), fuel sellers must ensure that ethanol accounts for at least 6% of the total volume of petrol sold in a quarter (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).

IPART has two ongoing roles under the Biofuels Act, which are:

  1. to determine, and periodically review, a ‘reasonable wholesale price’ for ethanol for use in the production of petrol-ethanol blends such as E10
  2. to monitor the retail market (including prices) for petrol-ethanol blend and make reports to the Minister for Fair Trading (the Minister) on the effect of a determination of the reasonable price for wholesale ethanol.

The current determined wholesale price and the model that we use to calculate this price here.

Previous wholesale price determinations from 2017 to 2022 are shown further down the page.

Why we set the wholesale price for ethanol

Fuel sellers can be exempt from the meeting the ethanol mandate on various grounds. Since 2017, one of the grounds of exemption is that the wholesale price of fuel ethanol paid by retailers exceeds the reasonable wholesale price determined by IPART.

How we set prices

Our approach to determining wholesale prices depends on the level of competition in the retail and wholesale markets. Where there is effective competition in one or both of these markets, it will protect customers from excessive prices.

In the NSW retail market, around 20% of the fuel sold is E10. E10 competes with regular unleaded petrol (“U91”), and premium fuels, which limits the price that suppliers can charge for ethanol. If the wholesale price of ethanol is too high, the retail price of E10 would rise relative to other fuels and customers would switch fuels.

Because this competition protects customers from excessive wholesale prices, we set wholesale prices based on an estimate of the market price of importing ethanol (the “import parity price” or “IPP”). This approach reduces the risk of the determined wholesale price being set too low, which could impact the financial viability of ethanol suppliers and discourage new entry.

The wholesale price that we determine is based on a nine-month average (to one month prior to the commencement of the pricing period) of weekly import parity price estimates based on the lowest cost origin for ethanol from either the US or Brazil.

We adopted this approach in 2016, taking into account the matters in the Biofuels Act, and after extensive consultation with stakeholders. Since then, we have periodically reviewed our approach and sought stakeholder feedback. More information on our methodology, and why we consider it is the most appropriate approach is available in our 2021 ethanol market monitoring report.

 

Historical price determinations

Pricing Period Wholesale Price Determination
1 January 2022 to 31 December 2022 Determination - Wholesale price for fuel ethanol - 2022
1 January 2021 to 31 December 2021 Determination - Wholesale price for fuel ethanol - 2021
1 January 2020 to 31 December 2020 Determination - Wholesale price for fuel ethanol - 2020
1 October 2019 to 31 December 2019 Determination - Wholesale price for fuel ethanol Q4/2019
1 July 2019 to 30 September 2019 Determination - Wholesale price for fuel ethanol Q3/2019
1 April 2019 to 30 June 2019 Determination - Wholesale price for fuel ethanol Q2/2019
1 January 2019 to 31 March 2019 Determination - Wholesale price for fuel ethanol Q1/2019
1 October 2018 to 31 December 2018 Determination - Wholesale price for fuel ethanol Q4/2018
1 July 2018 to 30 September 2018 Determination - Wholesale price for fuel ethanol Q3/2018
1 April 2018 to 30 June 2018 Determination - Wholesale price for fuel ethanol Q2/2018
1 January 2018 to 31 March 2018 Determination - Wholesale price for fuel ethanol Q1/2018
1 October 2017 to 31 December 2017 Determination - Wholesale price for fuel ethanol Q4/2017
1 July 2017 to 30 September 2017 Determination - Wholesale price for fuel ethanol Q3/2017
1 April 2017 to 30 June 2017 Determination - Wholesale price for fuel ethanol Q2/2017
1 January 2017 to 31 March 2017 Final Report - Maximum price for wholesale ethanol in NSW - December 2016