Ethanol in petrol--should you care? Depending on where you live, you may be utterly confused by this issue, or not have a clue what it's all about. Here's the lowdown. (Drivelines).

Publication: Choice (Chippendale, Australia)

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COPYRIGHT 2003 Australian Consumers' Association

Are you worried about damaging your car's engine by filling up with ethanol-blended petrol? Or confused because your local station has suddenly started displaying signs saying no ethanol is used in its petrol--and you have no idea what that's about? You're not alone.

WHAT IS IT ALL ABOUT, THEN?

Ethanol is an alcohol--in fact, it's the alcohol, the one that makes drinking and driving such a bad idea.

But it's also used for other purposes, such as an additive to petrol. In Brazil, for example, most cars have been modified to run on a blend of about 22% ethanol and 78% petrol. Some even use straight ethanol.

But petrol blended with similar ethanol concentrations has also been available in Australia--and used in cars that aren't modified for this purpose--for more than a decade, albeit only at a relatively small number of petrol stations (at about 200 sites in Sydney and Wollongong, for example).

In September 2002 the government introduced legislation designed to increase the amount of locally produced ethanol used as a fuel:

* Ethanol used as a fuel is taxed at the same rate as petrol (about 38 C/L), affecting both domestically produced and imported ethanol.

* But, initially for one year, domestically produced ethanol is being subsidised by 38 cents/L, in effect exempting Australian ethanol from the tax.

Ethanol produced in Australia costs about 55-75 cents/L. The government subsidy protects it from imported ethanol (which is cheaper without the tax, but much more expensive with), and also makes it cheaper per litre than petrol.

The government's objective is to increase the amount of ethanol blended with petrol sevenfold by 2010 compared to current levels. Why?

* One of the main declared reasons is to support regional development...

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