What’s the alternative to oil?

This appeared in Fast Thinking magazine in 2006, way back in the days when Blair and Bush were in power, and oil was expensive. Ten years later, we don’t seem to be any further along in moving to alternative energy.

My grandfather used to run his truck on charcoal during World War II. As my mother remembers it, everyone’s faces would be black by the time they got to town, thanks to the sooty emissions from the tailpipe. Fortunately, the oil price eventually dropped and granddad went back to petrol, much to the relief of his kids.

But oil brings a multitude of problems in its wake, from polluting emissions to threats to international stability, as oil money pours into some of the world’s worst regimes. You know that oil is on the nose when even George W. Bush was quoted as saying that America has to get off its “addiction to oil”.

Unfortunately, there’s nothing yet available that’s as efficient as oil. “Nothing is the saviour,” says David Lamb, the CSIRO’s Low Emissions Transport Leader. “If you took all the potential saviours and put them in a heap, they still couldn’t get to the height of the heap that represents oil.

Yet finding an alternative is becoming an imperative, so here’s a run-through of what’s on the drawing board.


Ethanol is the most widely used alternative fuel in the world and is produced from sugar crops like beet or corn, or from starch crops. The sugar is fermented by yeast, and the result is ethanol and carbon dioxide.

“When you make a biofuel, you have to plant it, fertilise it, nurture it, harvest it and transport it,” says the CSIRO’s Lamb. “Then you have to distil it, package it and deliver it.” He says that if you added up all of that energy consumption, “you’d find the net result is a tiny bit better than burning oil” from a pollution point of view. He argues that while Australia has a future in ethanol, there isn’t enough arable land for it to be the whole solution.

“One of the key arguments against ethanol is that if you use cereal and corn crops, you’re taking it away from humans and animals,” says Dr Philip Bell, a researcher with a company called Microbiogen. He agrees there’s no point in swapping food security for fuel security—so his company has been working on this very problem.

Most crop plants end up as waste; only the seeds from wheat are used, for example, and the rest is discarded. But Microbiogen has bred new strains of yeast that can break down lignocellulose—the stuff that strengthens cells—into ethanol, turning that waste into fuel. “Basically you can use any plant material,” says Bell. “The waste from the Queensland sugar industry is a significant source that could replace Queensland’s petroleum use.”

Although Microbiogen have found the secret for spinning straw into ethanol, they haven’t been as successful at spinning it into gold. “There’s very little funding for this in Australia,” says CEO Dr Paul Attfield. “In March we went to London and New York and were virtually offered twofold the amount of money we were looking for, immediately. The degree of understanding of the importance of this is higher overseas.”

Natural gas

Compressed natural gas is a great fuel, because it doesn’t give off lots of polluting emissions and there’s no reason why it should leak. Plus, it’s cheap. “There are millions of natural gas passenger vehicles worldwide,” says Tony Middleton, the managing director of Advanced Engine Components, a Perth-based company that has developed technology to run engines on natural gas. “There are almost one million natural gas powered motorcars in Pakistan alone.”

The main barrier to using natural gas in Australia has been the cost of converting or replacing vehicles, but Middleton says it’s being dismantled. “You can buy natural gas powered vehicles, or you can convert them,” he says. “The issue with passenger cars is that the weight and volume of a natural gas cylinder takes up a fair bit of boot space, but that’s been overcome in the Mercedes Benz E-series.”

Gas has proved itself in public transport. “The decision has been made here in Western Australia that all new buses would be natural gas powered,” says Middleton. “We have 35 buses here with our technology, as well as buses in Sydney and in Brisbane.”

But natural gas isn’t readily available at service stations. “It’s your classic chicken and egg problem,” says Middleton. He thinks it’s one that’s easily solved. “What’s happened in Germany is that the sellers of natural gas took the initiative and made it available at service stations. Now wherever you drive in Europe you can find natural gas.”

David Lamb doesn’t think it’s going to be quite that easy here. “Most of our gas is in the northwest shelf, so you’ve got to get it down here,” he says. “But let’s assume you can get it down here. That would make good sense, but at the moment all the gas we’ve found is sold already to Japan and Korea, so we’ll have to find some more.”


The Federal Government set itself the target of producing 350 million litres of biofuels a year by 2010, a tiny percentage of the 14 billion litres of petrodiesel being consumed at present.

“Biodiesel is modified animal fat or vegetable oil,” says Adrian Lake, head of the Biodiesel Network. “It’s made through a fairly simple chemical process, where you remove the glycerine and replace it with alcohol so it’s suitable to run in a modern engine.”

Lake says it’s as powerful as regular diesel, plus or minus ten per cent, and that it can be made from animal fats, cooking fats, canola oil, cottonseed oil or a variety of feedstocks. “When you create a seed crop for biodiesel, you’ve got more meal which is a byproduct, which is perfectly suitable for meal for livestock.”

Dr Len Humphreys, CEO of the Australian Biodiesel Group, which has the country’s largest biodiesel plant, says there’s huge pent up demand for biodiesel, and that existing plants can produce 550-650 million litres a year. The major issue is pricing. “In July the government brought out a fuel tax bill,” he says. “In fairness it simplified the way that fossil fuel rebates and excise is applied, but as a side effect it’s complicated biodiesel.”

He says there is now a different excise regime depending on whether you’re on or off the road, and in or out of town. “For agricultural applications like farming, mining or marine there is no rebate on biodiesel,” says Humphreys. “Whereas if they use fossil diesel they get a rebate of 38 cents.”

Humphreys says the biodiesel industry needs stimulus and support if it’s to reach critical mass. “It was starting to get that before the new tax regime came out,” he says. He adds that the Australian Biodiesel Group is exporting its technology to Canada and the USA. “A lot of international technology developed in large economies, where they had the luxury of developing expensive plants,” he says. “We had to be lean in our thinking about how to build and develop our plants, which makes us exceptionally innovative.”


“Every car maker has electric research programs,” says Lamb. “Ford in Detroit, BMW in Munich, Mercedes Benz in Stuttgart… everybody has their own version of hybrid packaging.”

He thinks hybrid cars are a step in the right direction. “If we used gas to make electricity, and at the station they captured the gas going up the flue and sent it down the line to cars at home, you could throw your petrol engine out the window,” he says.

Ultimately, however, he believes the future lies in hydrogen-powered vehicles. “A hydrogen car will produce its own electricity on board,” he says. “We need to improve our energy storage so we can eventually throw away the internal combustion engine.”

Lamb says our ability to store energy is getting better all the time, as evidenced by the average mobile phone, but that there are practical difficulties to overcome before hydrogen cars become a reality. “We can make fuel cell cars, but building with infrastructure to cope with hydrogen, a gaseous explosive, requires massive changes to infrastructure,” he says. How long would that take? “About forty years.”

So why don’t we start now? Lamb sounds a bit grumpy when he says, “we haven’t got a planning authority that looks far enough into the future that says this is the most sensible way to go.”

When can we drive the car of the future?

One of the themes that’s emerging is the need for government leadership on alternative fuels, particularly on distribution. “Support from government and the recognition that biofuels has a part to play has been lacklustre,” says Adrian Lake. “It’s a curious ostrich position they’ve taken.”

Lake says that biofuels manufacture could offer a “multi-billion dollar regional opportunity for rural Australia”, but it needs government involvement to create incentives and infrastructure. “From the Federal level, we’d like to see the government acknowledge that we need to set a more realistic target than 350 million litres a year.”

He says the industry has made many submissions and recommendations to government, without success. “They listen politely and then turn back to their studies which say oil prices are going to go back down again,” he says. “They believe [biofuels] would become a subsidised industry.”

Where do the petroleum companies sit in all this? They are the ones, after all, who already have access to a national distribution system. And companies like Caltex are already selling petrol with 10% ethanol. Unfortunately, trying to get answers isn’t easy. In response to Fast Thinking’s queries, Caltex sent the following:

Fast Thinking:             What plans have you got to expand distribution?

Caltex:                         Caltex is committed to the Australian Government’s biofuels supply target of 350 million litres by 2010 and has agreed on an action plan to contribute to this industry target.

Fast Thinking:             Do you see a time when the pricing of alternatives will become more competitive?

Caltex:                         The ability for biofuels to be competitively priced depends on a number of factors including the price of petroleum products, cost of biofuels production, infrastructure costs, fuel taxation, reliability of biofuels supply and consumer attitudes towards purchasing biofuel blended products.

Fast Thinking:             Any research you’re doing you’re willing to discuss?

Caltex:                         Caltex does not wish to discuss research it may be undertaking on biofuels.

And so on.

Australian Greens Senator Christine Milne recently moved for a Senate enquiry into energy supplies, which she only got, she says, after the government initially opposed it. “The four major oil companies operating in Australia have a very friendly relationship with the Federal Government. They desperately want to keep control of the distribution network,” she says.

Milne says she would like to see the government mandate for fuel efficiency standards and offer incentives to help people convert. “The first thing they should do is reverse the decision on fuel taxation, so they put the least amount of tax on the most carbon friendly alternative fuels,” she says.

Of course, the Greens aren’t just concerned about oil prices; they have a conservation agenda, too. Could Milne be championing alternative fuels—and the push for better public transport infrastructure—because she wants to change the way we live? “Oh yes, if the Greens had their way, we’d go back to drinking thistle broth,” she says impatiently. “It’s not true. Oil is a security nightmare. Tony Blair is in an absolute panic. Europe is in a panic because Russia turned off the gas for five minutes. What are we doing to oil proof ourselves?”

Milne says that countries like China have ensured their long-term supply by entering contracts with Iran and African regimes. “Australia hasn’t,” she says. “We have no long-term country contracts.” Not only that, but we’re not protecting the energy we already have. “Australia has just signed up to a long-term gas contract with China at a fixed price,” she says. “The whole world is laughing at us. Gas follows the price of oil but our pricing is fixed!”

Milne says one of the unfortunate consequences of staying committed to oil is that Australia is losing the economic benefits that come with alternatives. “The government’s promoting the Free Trade Agreement with China so we can sell them cars,” she says. “But we can’t, because China has a mandatory fuel efficiency standard that cars made in Australia will not meet.”

So what will we do if the oil does run out, or if it becomes prohibitively expensive? “We will liquefy coal,” says Milne. “The emissions are the same as conventional oil. It’s madness and we should invest in new technologies that utilise waste.”

Lamb says liquefied coal is bound to have a future because Australia has so much coal. “At the moment the technology has an emissions problem. We can reduce or eliminate it, but the big question is at what cost?”

He says that the Germans are one of the leaders of the technology, because they had to make oil from coal during the Second World War. Just like granddad.