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Fuel Security Bennett Clayton submission to the Standing Committee of Primary Industries and Resources

Bennett Clayton submission (edited) to the Standing Committee of Primary Industries and Resources.

The full document is Here

 

 

18 September 2009
Committee Secretary
Standing Committee on Primary Industries and Resources
PO Box 6021
House of Representatives
Parliament House
CANBERRA ACT 2600
AUSTRALIA
Dear Sir,
Re. Inquiry into the role of government in assisting Australian farmers to adapt to the impacts of climate change
We write to make the committee aware of Commonwealth regulatory and taxation measures that act as disincentives for
the take up of alternative technologies in the farming sector, and to suggest measures that would enable the
Commonwealth to assist farmers to adapt to the impacts of climate change.
Bennett Clayton Pty Ltd is an engine technology company that specialises in converting diesel engines into alternative
fuels including LPG, LNG and Bio-alcohols (methanol and ethanol). Bennett Clayton conversions deliver a range of
economic and environmental benefits.
The economic benefits include:
• The reuse of existing diesel engines leveraging the embedded economic and energy value in the engine as well as
the vehicle or appliance being used
• Cheaper operations as converted engines operate on cheaper fuel, perform better and need less maintenance
• Savings to the public purse as the costs of health care reduce with reduced emissions
• Improved fuel security as an imported fuel (diesel) is replaced with a local (LPG, LNG or bio-alcohols)
• Growth of a green automotive industry creating a number of new green jobs in manufacturing parts; engine
conversion; installation and maintenance.
The environmental benefits include:
• Reuse of existing engines and extended life of vehicles
• Reduced emissions of greenhouse gases (GHG)
• Reduced emissions of regulated pollutants including HC, Co, NOx, PM10, etc
• Reduced emissions of unregulated pollutants including PM2.5
• Near-Carbon neutral operation where bio-alcohols are used
Bennett Clayton is currently working with farmers in the Riverina to develop alternatives to diesel engines used by rice
farmers to pump water from deep bores. Bennett Clayton has invested significant R&D in developing a conversion for a
commonly used engine (John Deere 6068) from diesel to LPG.
In the first instance LPG was chosen as a locally available fuel, and the technology has been structured for easy local
manufacture. The converted engines are essentially ready to operate on renewable fuels (methanol or ethanol) that
could in future be produced locally from local farm products (lignocellulose).
1The converted engines have been very successful, reducing the cost of operating the pumps from $51 per megalitre of
water pumped to $38 per megalitre of water pumped (on current fuel prices). The engines have also shows emissions
reductions of up to 94% (Particulates and NOx).
The following chart shows operating costs at various loads before and after conversion from Diesel to LPG, and costs
using Unrebated market cost of Diesel, Diesel cost after $0.38/litre rebate, and Market price for LPG. Tests were
conducted when the market price of Diesel was $1.25/litre and LPG $0.48/litre.

2These changes can have a very significant impact in the farm irrigation sector, both by offering farmers greater
efficiency, and by reducing emissions. As the engines are essentially ready for renewable bio-alcohols, farmers could
transition to an on-farm produced bio-alcohol (e.g. methanol) fuel as soon as production technology, currently in
development, becomes available.
ABARE reports an estimated 142,000 licensed bores in Australia. In addition, there are at least that many surface
pumps. The vast majority of these pumps are diesel-powered as electricity is only viable if the pump is near power
infrastructure, and wind is mostly suitable for low-flow applications.
These alternative fuel engines have demonstrated reliability, having operated in the field for thousands of hours. They
exhibit extremely low emissions, and reduced CO2 production. They are more economical than diesels, both in fuel cost,
and in maintenance.
They are built in Australia with Australian technology, and are ideally suited for manufacture in rural centers, creating
jobs (in green manufacturing and in service) and local economic development.
Diesel Fuel rebate
However, the take up of these engines in the market is hampered by the distortion created by the Commonwealth diesel
fuel rebate. Farmers enjoy a Commonwealth Government rebate of about 38c per litre for diesel fuel used on the farm.
On an even playing field, alternative fuel engines are very competitive and would be taken up more rapidly.
We are asking that the diesel fuel rebate scheme be changed to a fuel rebate scheme, with the rebate applied to a fuel
in proportion to its energy content.
This would mean that in round figures diesel would attract a rebate of 38cents, LPG 24 cents, Methanol 18 cents and
Ethanol 23 cents.
These rebates would provide parity to diesel, and remove a major objection and barrier to the adoption of cleaner,
friendlier and ultimately carbon negative fuels.
This small change will have a significant impact on emissions, and CO2 production as well as providing industry
development and employment in regional areas.
With a rebate based on energy content, take up of alternative fuels would bring no additional cost to the Commonwealth
as increased payments for alternative fuel rebates would be offset by reduction in payments of the diesel fuel rebate.
The Commonwealth would in addition derive benefits in the areas of fuel security (as LPG and Bio-alcohols are locally
produced whilst diesel is fully imported); green industry jobs created in rural areas; reduction in emissions, and
supporting farmers in adapting to the impacts of climate change.
Research and Development
Bennett Clayton is a small Australian company that brings together proven capabilities and technologies with the
purpose of developing alternative fuel engines. The current R&D is funded wholly from private sources. The company is
strongly motivated by social corporate responsibility as well as by commercial interests.
The technology being commercialised by Bennett Clayton has applications wherever diesel powered engines are
currently used (including agriculture, transport, power generation etc.) and could deliver enormous environmental
benefits. The technology has significant export potential.
The pace of research and development is dictated by the availability of funds and could be significantly accelerated
through additional funds.
3Whilst the company can go to the market for these funds, it has chosen in the first instance not to pursue that option and
instead seek to develop a local industry that attempts to develop manufacturing facilities in rural centres, something that
would not necessarily make commercial sense to a large multi-national or to a financial institution.
To this end we have approached a number of Government departments, both Commonwealth and State, and we have
briefed a large number of public servants and politicians.
Whilst we get a polite, sometimes even enthusiastic, reception and soothing noises of support, we find that access to
Government R&D funding programs is structured in such a manner that small, innovative companies always lose out to
large corporates in the competition for public R&D grants.
A strong suggestion to the Committee is that it examines ways to improve access to government R&D grants for small
innovative start up companies that can demonstrate the viability of their technology.
A small investment in these businesses is very likely to deliver a disproportionate, real and on the ground, benefit. In this
case the benefit would accrue to farmers facing the impact of climate change and rural communities in need of economic
activity.
For information, I attach a short paper reporting results of testing by the University of South Australia on the
implementation of this technology on a heavy transport prime mover. These results clearly demonstrate the potential of
this technology and how, with relatively modest investment in R&D, results commensurate with years of Diesel engine
development are achieved.
Yours sincerely,
Marcus Clayton
Chief Executive Officer