The Australian Federal Government today announced a $49.5 million package of measures to secure domestic supply of Diesel Exhaust Fluid (DEF).
These precautionary measures, welcomed by industry, come as the transport sector faces future supply chain uncertainties.
According to Minister for Climate Change and Energy Chris Bowen, who made the announcement, the $49.5 million investment over four years provides a comprehensive package that will help shore up market resilience.
The funding will establish an emergency stockpile of Technical Grade Urea (TGU) which is the critical component of DEF.
It will also support sovereign manufacturing capability and increase much sought after transparency in the market.
The input that has made AdBlue scarce, urea, is also crucial for fertilisers that underpin global food production.
The move to build a DEF stockpile is also expected to help ensure the durability of Australia’s road transport industry given ongoing market volatility surrounding DEF including AdBlue.
Critical to the operation of many trucking and other diesel vehicles, DEF lowers noxious emissions which are considered harmful to people and the environment.
“While the market is currently well-supplied, we need to put in place measures to deliver certainty and provide back-up in case of disruption,” said Bowen.
“We are also monitoring and engaging with industry to ensure the market is functioning properly and the supply chains are delivering,” he said.
The package includes a government controlled strategic stockpile of 7500 tonnes of TGU providing an additional five weeks of supply beyond industry stock levels in case of a supply shortage.
A competitive grants program to support sovereign capability and manufacturing projects that will look to produce TGU domestically was also announced.
The Federal Government will also seek collection of voluntary data provided by industry to enhance market awareness of TGU and DEF domestic stocks.
The majority of DEF in Australia is used in trucks, large passenger buses, diesel passenger vehicles, and some agricultural, mining and other off-road equipment.
The National Road Transport Association has given a resounding thumbs-up to the Federal Government’s announcement according to NatRoad CEO Warren Clark.
“NatRoad has been relentless in its campaign for the Government to secure supplies of this essential product, without which most of the country’s trucks will shudder to a halt,” he said.
“This four-year funding package over four years will establish an emergency stockpile of Technical Grade Urea, the key ingredient of AdBlue,” said Clark.
“Equally important, it will help establish a new sovereign manufacturing capability with the imminent closure of the only local plant, and increase market transparency.”
Incitec Pivot, which plans on shutting its doors by year’s end, currently supplies around ten per cent of the Australian market for AdBlue.
Until now it was the only Australian manufacturer to make the solution from urea melt with the remaining 90 per cent of AdBlue product presently on the market at the mercy of imports of technical grade urea.
In January, the consumer watchdog began investigating AdBlue price gouging after its price surged following the shortages of refined urea.
According to Clark the retail price of AdBlue was still too high.
“The Government needs to keep engaging with industry and that includes road transport operators who are at the coal-face,” he said.
“The Government’s commitment to collection of voluntary data from industry is a step in the right direction,” Clark continued.
“The Australian Competition and Consumer Commission needs to increase its scrutiny and apply its powers where gouging is occurring.
“Providing grants to manufacturers to start up local production won’t solve all the issues overnight but it puts us on the right track.”
Road Freight NSW CEO Simon O’Hara also issued a statement on behalf of the organisation.
“We welcome this commitment from the PM Anthony Albanese and from Minister Chris Bowen to address the supply of AdBlue and particularly ensuring that we have sovereign manufacturing capability,” he said.
“RFNSW has long raised concerns about the supply of AdBlue and our ongoing supply into 2023, particularly with Incitec Pivot shutting up operations.”