What is AdBlue and why could an international shortage bring Australia’s economy to its knees?
For many people, terms like “supply chain” and “logistics” may be likely to cause the eyes to glaze over.
While the networks that provide the goods consumers buy at supermarkets may be taken for granted, they are absolutely crucial.
Putting to one side the farms and factories where the food and goods are produced, think of the trucks and trains and warehouses that ensure products are actually delivered.
It’s a system of extreme complexity and importance, and yet it’s at risk of grinding to a halt within weeks because of a shortage of an ingredient you’ve probably never heard of – AdBlue.
What is AdBlue?
Technically known as diesel exhaust fluid (DEF), AdBlue is ostensibly an anti-pollutant that’s added to most modern diesel engines.
The fluid, a mixture of the organic compound urea and deionised water, is injected from a separate small tank into a vehicle’s exhaust system to cut harmful emissions.
Essentially, tiny amounts of AdBlue are squirted on to the exhaust gases, turning the nitrogen oxides into nitrogen and water before they are vented from the vehicle.
For anyone with a diesel car, you might be familiar with the blue cap that sits alongside the cap for the fuel tank.
That’s the tank cap for AdBlue, which can be purchased at service stations and auto retailers.
Demand for AdBlue has risen as fuel standards – particularly in Europe – have become more strict.
Why is there a shortage?
A supply crunch of another product is causing the AdBlue problems.
Globally, stocks of the key ingredient, urea, are running dangerously low.
China is the world’s biggest producer of urea and in recent weeks has been moving to dramatically tighten its grip on supplies to keep a lid on surging prices.
That’s hit Australia particularly hard given we source up to 80 per cent of our urea supplies from the Middle Kingdom.
National Road Transport Association chief Warren Clark said there were a few theories about what drove China’s actions, but the most likely one was self-interest.
“We’ve heard things like the cost of fertiliser in China has internally gone up dramatically and a large portion of that is urea,” he told the ABC recently.
“So what they’ve said is that they do not want to export any urea to try and keep the price of local fertiliser down.
“It may be that there’s some sort of trade issue that they’ve got with other countries around the world.
“It’s not just Australia that’s being impacted by this, you know — the whole world is going to be impacted by the lack of this AdBlue chemical.”
When will the supply run out?
While it appears the trucking fleets in Australia and other countries will be able to keep running for the all-important Christmas period, there are fears matters will come to a head early next year.
Some major trucking companies are reportedly set to run out of supplies within weeks, while others have suggested stocks are unlikely to last beyond January.
It’s a similar story around the world.
Last month, South Korea resorted to the drastic step of importing 27,000 litres of urea solution from Australia after China cracked down on exports.
In Europe, where a high proportion of private cars are diesel, AdBlue is all but unavailable.
The tight market has sent prices of the additive soaring, with costs at the pump rising by as much as 10 per cent over two days last week.
“I had a member call the other day — they’ve got 250 prime movers, so they’re a big organisation,” Mr Clark said.
“A lot of their fuel they buy in bulk — they are basically out of AdBlue next week.
“We believe that there’s enough supply of it till about February next year.
“If this is not solved by then, then we have a major problem.”
What happens if supplies dry up?
In a worst case scenario, Australia’s economy would be brought to its knees.
Diesel trucks and cars that use AdBlue simply will not run without the chemical, according to British insurer AA, and would have to be parked until more supplies were found.
While that might sound like an inconvenience for a householder, it would be calamitous for the broader economy.
Trucks are indispensable to the smooth functioning of the economy and supply every business imaginable.
Most importantly, they supply businesses essential to the lives of almost every Australian, including supermarkets and fuel retailers.
Much of the heavy machinery used by agriculture, such as harvesters and tractors, is also fuelled by diesel.
Without the additive, activity on Australia’s farms would also be laid low.
What’s more, urea is not only a key ingredient in AdBlue — it’s just as important as a feedstock for fertilisers used in agriculture around the world.
The implication for consumers is that even if they can get their hands on many products – and that’s a big if – prices for many things are likely to shoot upwards.
Mr Clark says the implications are profound.
“So you’re not got anything getting delivered to supermarkets, you’ve got power not being generated,” he said.
“In South Australia, you’ve got tractors that can’t harvest, you’ve got hospitals that don’t have back-up generators, all this sort of thing.
“So it’s a major problem if it doesn’t get solved.”
Extracted from ABC