National fuel quality standards
Key messages
- The Australian Government’s Cleaner Fuels Program is facilitating the introduction of advanced engine technologies. This program is delivering economic and environmental benefits through improvements in urban air quality, reductions in greenhouse gas emissions, and improvements in fuel efficiency.
- Cleaner fuels cost more to produce, require major refining industry investment and lead to higher greenhouse gas emissions from refineries.
- The introduction of new fuel quality standards means the relative environmental benefits of alternative fuels have reduced.
- For alternative fuels to compete in the market, they must be competitively priced, be reliably supplied and have consumer acceptance.
- Urban air quality impovements include reduced emissions of hydrocarbons and oxides of nitrogen (leading to significant reductions in smog) and reduced particulate emissions.
Reduction in vehicle emissions from cleaner fuels
AIP supports appropriate national fuel standards to facilitate the introduction of advanced engine technologies and so help address scientifically established environmental concerns.
AIP has worked closely with the motor vehicle industry and governments to ensure that standards are:
- consistent across Australia
- predictable, so that participants in the market have sufficient time to implement and adjust to the new standards.
Long lead times are required to make the necessary engineering changes to refineries and consistent application of policy is essential to provide the framework for refiners to recover their increased costs.
Cleaner fuels cost more to produce because of additional capital requirements (e.g. new/revamped desulfurisation units). Operating costs at refineries and through the distribution system are also higher. Australian refiners have invested in excess of $2 billion so far to implement the Cleaner Fuels Program. Product yields will generally be lower (e.g. due to lower benzene and higher octane requirements). Production of cleaner fuels is also more energy intensive (and therefore more carbon intensive).
The Fuel Quality Standards Act 2000 provides the framework for the regulation of fuel quality standards for Australia and is based on harmonising Australian fuel standards with European standards. The first round of changes in Australian fuel standards through to 2006 were comparable to Euro 4 standards for diesel and Euro 3 standards for petrol (although there were some variations in specifications for Australian conditions).
Further legislated fuel standards — 50 ppm sulfur premium unleaded petrol (PULP) (2008) and 10ppm sulfur diesel (2009) — will, when combined with the complementary engine technologies, address virtually all the outstanding national air quality issues attributable to vehicle emissions.
A further move to introduce 10 ppm sulfur petrol would be complex, expensive and increase refinery greenhouse gas emissions. AIP considers that the widespread availability of vehicle technology requiring this fuel should be clearly identified before considering such a move, noting that the vast majority of vehicles in Australia are unlikely to need the lower sulfur fuel and would not benefit from it. Any decision by government must be based on analysis of the full lifecycle costs and benefits.
Further reductions in hydrocarbon emissions are also being achieved in some urban areas through petrol vapour pressure controls and vapour recovery systems.
Alternative fuels
Alternative fuels that are used or have been proposed for use in Australian motor vehicles include:
For any alternative fuel to enter the fuel mix in a sustainable manner it must be competitively priced, have a reliable supply and be acceptable to consumers. Governments have decided to support alternative fuels for a variety of policy reasons, such as environmental performance and regional development. AIP believes that such assistance must be transparent, particularly where it has an impact on longterm investment in the fuels market. The perceived environmental advantages of alternative fuels need to be judged against sound scientific evidence and the dramatic reduction in vehicle emissions enabled by the Cleaner Fuels Program and the introduction of new vehicle technology.
The Australian Government policy on the use of ethanol in petrol includes: a 10 per cent cap on the level of ethanol in petrol; mandatory labeling of ethanol blends; and a future excise rate which reflects its energy content. A key driver for increased ethanol use will be enhanced consumer confidence. The industry is working closely with governments and other stakeholders to address barriers to greater use of biofuels in the retail and commercial fuels markets.
AIP member companies have well developed action plans to work towards delivering in excess of 350 ML of biofuels into the fuels market by 2010. The introduction of biofuels mandates in some states has done little to boost the prospects for biofuels, the major challenge continues to be the availability of competitively priced biofuels and appropriate infrastructure to meet mandated volumes.
