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Australia faces supply chain crisis over diesel additive shortage

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Australia is facing a potential supply chain crisis if it cannot source the fuel additive ‘AdBlue’ before stock runs out in February 2022.

The world is experiencing an acute shortage of urea (the critical ingredient of AdBlue) after one of the largest producers in China banned global exports in a bid to protect the domestic Chinese fertiliser market.

Urea is used to create diesel exhaust fluid, also known as AdBlue, which is required for most diesel vehicles built after 2015 to run properly. AdBlue is a mix of 32% high-quality urea and 68% de-ionised water which was incorporated to reduce emissions. Use of AdBlue varies of 1 L per 563 – 965 km.

Australia does not manufacture high-quality urea (only low quality, not suitable for AdBlue).

If a vehicle runs out of AdBlue, it will revert to ‘limp mode’. The majority of diesel vehicles on the road in Australia come with a Selective Catalytic Reduction (SCR) system which uses AdBlue to convert nitrogen oxides in the fuel to water and nitrogen in an effort to significantly reduce emissions.

The Australian trucking industry, which forms the backbone of the food supply chain, uses hundreds of thousands of litres of AdBlue every week. It is also required for critical agricultural machinery and diesel four-wheel drives.

As soon as it gets out there that the AdBlue [shortage] isn’t just going to stop all the trucks, it’s also going to stop all the shelves being restocked, their servos being restocked, everyone’s going to go, ‘I really should fill up my tank and fill up my toilet paper. And everything is going to go in a day,” said Lydon Watson, CEO of Don Watson Transport.

It’s not going to deplete over the course of a couple of weeks, or months. The population will skin it dry in a day.”

While technically possible to disable the SCR system, it is presently illegal to do so and would require politicians to issue a legal clarification.

The government is aware of the concerns around the supply and availability of AdBlue, and is continuing to monitor the situation while working with industry,” said a spokesperson for the Deputy Prime Minister and Transport Minister Barnaby Joyce.

Truck operators are being encouraged to operate as normal despite industry concerns.

An urgent meeting will take place between industry leaders and the Department of Infrastructure, Transport, Regional Development and Communications on Wednesday.

Older trucks are not at risk, as they do not have ‘environmentally friendly’ efficiency systems attached to their engines and will continue to operate as normal.

Other countries across the world are experiencing similar problems. Both Europe and America face imminent shortages, while South Korean authorities have started rationing their supply to extend it for as long as possible. Officials fear that if they cannot secure more urea soon, the South Korean economy could be brought to a crashing halt.

There are more than 10 million diesel vehicles in Korea, and we have only three months’ stock of urea at maximum. If the shortage of urea continues longer-term, all production of goods and services can be affected,” said Kim Sei-wan, who is a professor of economics at Ewha Womans University in Seoul.

Urea is not a difficult chemical to produce but South Korea, like many other countries in the world, found it cheaper to import it from China and shut their domestic factories.

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