Announcement date
21 December 2023
Link to announcement
Joint media release: Cleaner fuel and cars leads to multi-billion dollar health and fuel savings | Ministers (dcceew.gov.au)
Problem being addressed
The current quality of Australia’s fuel has been identified as a barrier to light vehicle manufacturers in Australia offering the lower emissions engine technologies available overseas. The main benefit of cleaner fuel and consequent adoption of cleaner engine technologies is anticipated to be reduced levels of noxious exhaust emissions, especially fine particulates, benzene and nitrogen oxides, which cause air pollution and harm human health. Industry consultation and cost-benefit analysis undertaken through the Regulation Impact Statement (RIS) process identified that a substantial transition period, while delaying the health benefits, would be valuable to maintain the viability of Australian oil refineries.
Proposal
The objective of this policy is to improve the quality of Australia’s petrol without compromising our fuel security. The 2018 RIS considered four options:
Option A: No changes to the fuel standards
Option B: Revisions based on Hart Report and/or to harmonise with the EU
Option C: Revisions retaining low-octane petrol
Option F: Reduction of sulfur to 10 ppm in all petrol by 2027
Assessed Impact Analysis outcome
The Department of the Environment and Energy prepared and certified a RIS, which was assessed by the then Office of Best Practice Regulation as compliant with the Government’s RIS requirements and consistent with best practice.
Regulatory burden
The RIS estimates average annual regulatory costs at $346 million. Reduction of the pool average for aromatics content across grades of petrol from 42 per cent to 35 per cent from 1 January 2022 and the maximum allowable level of sulfur for all grades of petrol to 10 mg/kg from 1 July 2027. A number of more minor changes for petrol and diesel also take effect from 1 October 2019.
Addendum (December 2023)
As an outcome of the RIS, on 18 March 2019, the then Minister for the Environment made new fuel quality standards for petrol and automotive diesel under the Fuel Quality Standards Act 2000. The main changes were to petrol quality, with a maximum sulfur level of 10 mg/kg to apply from 1 July 2027 and a reduction in pool average aromatics content to apply from 1 January 2022. At that time, the aromatics content limit for petrol was also proposed to be reviewed by 2022. The outcome of the 2022 review of aromatics has been analysed separately in the Improving Australia’s fuel and vehicle emissions standards Impact Analysis.
In July 2022 the Minister for Climate Change and Energy, the Hon Chris Bowen MP, amended the petrol standard to bring forward the 10mg/kg sulfur limit in petrol from 2027 to 15 December 2024.
DCCEEW has confirmed that disruptions in global supply chains have impacted completion timeframes for the Australian refineries’ infrastructure upgrades to produce ultra-low sulfur petrol. The refineries will be unable to supply ultra-low sulfur petrol to the Australian market until these upgrades are complete. To account for the changed circumstances, and to align the transition with other fuel quality changes being implemented in 2025, the Government has announced its intention to change the start date of the policy from December 2024 to December 2025.
OIA notes that the 2018 RIS quantified the net benefit and regulatory burden for a range of implementation dates between 2022 and 2027.