National Fuel Quality Standards Regulation Impact Statement 1 ...

address environmental issues (ie the reduction of harmful emissions from the use of the
fuel) except indirectly. The Australian Standards address a number of fuel properties not
generally considered significant in terms of emissions management, while omitting others
known to be significant in this respect. In addition, these standards do not deal adequately
with fuel specifications required for the deployment of advanced engine and vehicle
technologies that would facilitate the delivery of reduced fuel consumption by vehicles.
4.1.1 Advantages and disadvantages
The current system does not provide for national consistency in terms of fuel
composition. The actual properties of petrol and diesel fuel produced by each Australian
refinery differ between refineries and, to a variable extent, from the specifications in the
Australian Standards (Appendix 1). Little information is available on the quality of
imported fuel.
In 1998, Environment Australia commissioned Coffey Geosciences Pty Ltd to undertake
a Review of Fuel Quality Requirements for Australian Transport to inform the process
for developing fuel quality standards. The Review modelled the air quality outcomes (in
terms of emissions reductions) from a range of scenarios, including a Business as Usual
(BaU) option. It found that there would be substantial improvements in air quality over
time from harmonisation with European fuel standards. For some pollutants, reductions
of up to 60% in emissions are predicted over the BaU option for the period 2000 to 2020.
Modelling results showed clear differences in emissions reductions over time from the
vehicle fleet between BaU (Scenario 1) and increasing compliance with Euro fuel quality
standards (Scenarios 2-6).
For example, under the BaU scenario, emissions of fine particulate matter are estimated
to decrease by 10% as the current ADRs take effect, and then to increase again from 2010
as diesel vehicle use grows. In relation to oxides of nitrogen, the projected improvement
in emissions under BaU is estimated as a 17% reduction between 2000 and 2010 as the
ADRs take effect, while compliance with Euro standards gives estimated reductions of
approximately 34% for the same period.
The investment necessary on the part of the existing Australian refineries to meet tighter
fuel specifications varies considerably, but is in all cases significant. The majority of the
refineries, whose profit margins are already reduced due to the state of the global market,
are unlikely to voluntarily undertake the investment necessary to produce low sulfur fuels
within the timeframe set by the new vehicle emission standards ADRs.
The announcement by the Commonwealth Government of the Measures for a Better
Environmentinitiative, which foreshadowed changes to the sulfur content of petrol and
diesel, has led to a number of States introducing or proposing to introduce State-specific
fuel quality legislation. This has already taken place in Western Australia and
Queensland. As noted earlier this appears likely to result in different standards in
different jurisdictions. There are associated competition problems with this approach -
raising effective barriers for refiners and importers to interstate markets and raising
compliance costs.