National Fuel Quality Standards Regulation Impact Statement 1 ...

4.5.1 Advantages and Disadvantages
The uptake of LPG and CNG is largely limited to urban areas, particular engine types and
vehicle fleets. As outlined above, there are a number of major logistical barriers to the
wider adoption of alternative fuels, and as such, alternative fuels are not considered a
viable options (at this stage) to achieve the objectives in the required timeframe.
The Commonwealth Government currently exempts both LPG and CNG from fuel excise
as a means of encouraging their development as alternative fuels. The Government is not
able to mandate the use of specific fuels, as it would be contrary to competition
principles. As indicated above, the alternative fuels network has a limited capacity to
supply the fleet, and thus the use of alternative fuels, in itself, is not sufficient to deliver
significant reductions in total emissions from the road vehicle fleet.
Summary
The increased use of alternative fuels has the potential to reduce emission from motor
vehicles. The Government has in place a number of policy options to encourage the use
of alternative fuels, such as the CNG Infrastructure Program, the Alternative Fuels
Conversion Program, the Diesel and the Alternative Fuel Grants Scheme (which
maintains the relative price of LPG and CNG compared to diesel), and the favourable
excise treatment of LPG and CNG.
However, the current capacity for switching to alternative fuels is limited, and their
consideration as an option to achieve a national approach for fuel quality standards is not
practicable at this stage. Should a significant transition to alternative fuels be achieved in
the future (as the Commonwealth’s alternative fuels program seeks to achieve), then
alternative fuels use will have a greater impact on improved environmental outcomes.
Alternative fuels will probably have a neutral or positive impact on competition and
trade. However, the relatively limited current penetration of alternative fuels in the
Australian market means that at present they have limited value in addressing
environmental concerns.
While the proposed national fuel quality standards focus on petrol and diesel, it is
envisaged that standards for alternative fuels would be considered for inclusion at a
future date under the proposed framework legislation.
4.6 LIMITING VEHICLE TRAVEL (Option 6)
In order to address transport sourced urban air pollution and greenhouse emissions, there
is ultimately a need to deal with the underlying issue of increasing vehicle travel,
particularly as the emission and fuel consumption reductions achievable from
technological improvements to vehicles and fuels become progressively smaller.
Mechanisms to limit vehicle use include fiscal policies (to reflect true costs of transport),
transport planning, traffic management (Auto-Oil, 1995) and travel demand management.