There are substantive environmental, economic and social reasons why ethanol should be rigorously evaluated as a credible diversification opportunity for regional Australia.

That is according to Professor Bob Miles, of CQU's Institute for Sustainable Regional Development (ISRD), who presented a paper at the 2005 International Ethanol Conference in Brisbane recently.

More than 300 national and international leaders in the ethanol industry attended the conference.

Professor Miles said that, with the right policy framework, potential exists to "develop this new industry, build smart and sustainable jobs as well as providing a credible diversification opportunity for regional Australia".

He said it was clear from the level of international interest and capital investment that the ethanol industry was well-established and like to continue to grow substantially.

Regional Australia was well-placed to be an active player in the anticipated ethanol growth phase as a large-scale producer of grain and sugar.

"With Australia facing a significant imbalance in terms of trade, from an (oil) import replacement strategy it makes sense to move toward a policy of self-reliance," he said.

"Commercial investment in ethanol in Australia without government intervention is expected to be limited to the grains sector. However there is a substantive case for sugar-based production to be considered.

"Issues (for sugar-based ethanol) include production efficiency of the industry, year-round continuity of supply of cane as a feed stock, the effect of subsidies .. as well as the trade-off and opportunity costs in lost export earnings from sugar.".