The company, which is the state’s only producer of ethanol, has commissioned a review to determine whether its ethanol meets emissions standards set by the government regulator, the Office of Biofuels.

A report in The Sydney Morning Herald yesterday revealed that new modelling by the Productivity Commission had shown the ethanol produced by the Manildra Group was only 42 per cent more efficient than unleaded petrol, not 50 per cent more efficient as was the target set by the Office of Biofuels.

The South Coast Register contacted the office of the Manildra Group’s managing director John Honan yesterday but was told he was unavailable.

The SMH report stated that Manildra maintained its ethanol was produced from waste products and therefore virtually emissions-free.

But evidence has emerged to suggest Manildra’s production of ethanol has increasingly relied on the use of food products grown by the company, which the Productivity Commission says accounts for the growth in emissions.

According to the NSW Supreme Court, between 2006 and 2009, while the amount of flour Manildra manufactured for export fell 50 per cent, the amount it put into ethanol increased by 80 per cent.

The Department of Planning approved Manildra’s 2008 application to more than double the capacity of its ethanol plant at Nowra on the basis of an environmental assessment that its ethanol was 65 per cent waste.

The Office of Biofuels said Manildra told it 80 per cent of its ethanol was made from waste last year but admitted that Manildra’s ethanol has never been independently audited.

The SMH report said the new figures from the Productivity Commission contradicted Manildra’s estimates, which were largely relied upon in the former government’s decision-making process to phase out regular unleaded petrol.

From July, NSW petrol stations will no longer be permitted to sell regular unleaded petrol because the government wants to promote renewable biofuels.

A spokesman for the Energy Minister, Chris Hartcher, said the government would continue with its plans to ban unleaded petrol from July.

The findings of Manildra’s review are expected to be made public in the coming weeks.