FUELS RUSH IN

Ky Chow, Sky News Business Reporter

30 July 2010

Julian Segal from Caltex even brought props. A remote control toy car, a home beer kit and a bottle of champers were all part of his presentation to a business lunch about the need for the government to start supporting biofuels and other energy sources.

For those who came in late - Caltex isn't just the petrol station where you can use your Woollies card with. It's Australia's biggest oil refiner, but is increasingly focused on its "marketing" activities - namely selling stuff to you and I through its Caltex/Woolies service stations. This isn't just petrol, of course, but also the eclectic market offerings of Tim Tams, Mars Bars and motor oil.

So what's the big boss doing pushing ethanol fuel? And lots of it, too. Not only does Mr Segal want to see more of that E10 stuff, but also E85. He spent a little less time talking about pure electric power (you can probably take a guess what his "bit" was with the toy car now), hydrogen and other biofuels.

As he would tell me in our interview later, they've got to think about the shareholders. And notwithstanding this week's arrival in Australia of the first Tesla Roadster (as far as I know, still the only electric car that "ordinary" people can buy), there's not much money to be made in the more exciting alternative energy yet.

So that brings us to ethanol - fuel made from biological stuff like corn, molasses, sugar cane...food crops, really. It's been controversial to say the least, since in a world where a ridiculous percentage starve, the idea of mulching up corn to turn into 4WD fuels is a bit stomach churning to some.

Segal says that's not an issue in Australia, and says even globally we need to think of it like paper - the corn for making this stuff (American farm lobby, anyone?) is grown in special plantations so it doesn't reduce the amount of corn in supermarket produce aisles. He didn't say much about the benefits to world hunger were the corn from those special plantations also used for food. There's also plenty of evidence out there that many farmers are indeed switching their crop choices to ethanol bearing crops for the sole purpose of selling it as fuel.

I don't want to be too harsh on Mr Segal, who has a solid reputation from his days at Incitec Pivot and has met me enough times to recommend that I read Tolstoy (I'm getting to it). After all, his job is to save the world only to the extent that shareholders care - which isn't a whole lot, unfortunately.

So he's being realistic when he urges the Government to put together a White Paper on Energy, with incentives and disincentives. He even hints Caltex would be happy to not just sell biofuels, but make them, should the Government help out.

As for the problem of ethanol replacing food, he says that's mainly a first generation of technology issue. The next stage will see ethanol made from stuff we would turf out anyway - grass, woodchips, even waste one day - and Segal says we need to invest more in Gen One (even with the nasties) so that we can get to Gen Two ASAP.

It reminds me of the complaints about electric cars that plug into our regular electricity socket - sure they drain from the coal fired grid like all our other gadgets, but we need to keep developing the technology. Short term pain for long term gain.

But while Segal talks about a need for consumer incentives and disincentives, Caltex' noble aspirations start to break down a little are when he talks about his opposition to an ETS that includes motorists. He claims that the government would cut the excise anyway, turning it into a dream for tax accountants but useless for modifying behaviour. He switches to "I-don't-speculate" mode when I ask him if he'd support it if the excise wasn't dropped.

Still, company CEOs are like politicians - some of them probably would love to do the socially responsible thing - if we would let them. No matter what political correctness allows into the mainstream media, ultimately if the public aren't convinced, leaders find out and adjust accordingly. That's what governments are elected for, and why CEOs are chosen by their shareholders. We'd all do well to remember that we are all agents for change for the better.

The sooner we do, the more of a hurry the big institutions will be in to get the giant wheels turning. And in a more sustainable way, too.

Twitter: @KyBusiness

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