Tight supply of essential diesel exhaust emissions additive sends prices skyrocketing.
If you’ve been scanning the headlines recently and seeing stories about a shortage of AdBlue and the adverse impacts this may have on our road transport sector, you might well be wondering, “what the hell is AdBlue and what’s all the fuss about?”
AdBlue is the proprietary name for a widely used urea-based diesel exhaust fluid (DEF) that acts as an anti-pollution control measure in many modern diesel engines.
Injecting AdBlue into the exhaust system of certain diesel-powered vehicle helps limit the amount of toxic nitrogen oxides released in the exhaust gases.
In Australia, AdBlue is used mainly by trucks but there is a small percentage of diesel-powered passenger vehicles that also use the technology, including vehicles made by Audi, BMW, Ford, Jaguar, Land Rover and Volkswagen.
The AdBlue additive in passenger vehicles is typically poured into a separate filler located alongside the main diesel fuel tank filler and is used at a rate of roughly one litre per thousand kilometres.
This means it is usually refilled by your dealer or mechanic during scheduled vehicle servicing.
However, because drivers may also need to top up the system themselves from time to time, AdBlue is sold at service stations, vehicle dealers and automotive retail outlets.
Because AdBlue is urea-based and urea is a nitrogen-based fertiliser that requires a lot of natural gas to manufacture, its price is tied to the price of oil.
If the price of oil goes up, as it did significantly during 2021, then the price of urea also goes up.
Coupled with a global shortage of refined urea, due to manufacturers having either shut down production due to staffing or supply chain issues or being directed to focus their supply on domestic markets, this has led to a classic supply and demand imbalance, which is driving up prices in Australia.
China is one of the world’s largest producers of urea and supplies around 80% of Australia’s requirements.
But faced with the rising global prices of fertiliser, China has capped exports to try and keep a lid on prices in its domestic economy.
This has created something of a feedback loop, with even less supply driving even higher prices in Australia.
In December, the Australian Government responded to the looming shortage of AdBlue by securing additional supply from Indonesia and striking a deal with local fertiliser manufacturer Incitec Pivot to significantly increase domestic production of the technical-grade urea required to make AdBlue.
A Federal Government taskforce has also been established to seek other supply avenues.
Meanwhile, the road transport industry is bearing the brunt of the AdBlue shortage and price rises because trucks are the heaviest users of AdBlue and its use in trucks is mandated for emissions purposes.
The ABC reported the price of AdBlue had quadrupled in some parts of the country and there were reports of price gouging in some areas.
Despite this, there are currently no expected issues with diesel-powered light vehicles, including 4x4s, with most of the manufacturers of vehicles requiring Adblue confirming they have enough stock available through dealers to carry through well into 2022.
So, while it’s unlikely that the country will run out of AdBlue altogether and the shortage is not going to significantly impact passenger vehicles in the short term, the soaring costs of AdBlue does have the potential to affect the cost of everyday goods like groceries, due to higher transport costs.
If you are the owner of a vehicle that requires Adblue and are concerned about its availability, it’s recommended that you first consult your dealer.
This would be especially prudent if holiday road travel is planned and there is any uncertainty about your vehicle’s DEF tank levels.
The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.