National Fuel Quality Standards Regulation Impact Statement 1 ...

een included as they are not considered viable options at this stage to achieve the
objectives in the required timeframe.
5. IMPACT (COSTS AND BENEFITS) OF PREFERRED OPTION
This assessment of the costs and benefits of the preferred option addresses the impact of
the framework legislation proposed for regulating national fuel quality standards.
Regulations specifying the actual standards for various fuel parameters will be developed
under the framework legislation later in 2000. A separate Regulation Impact Statement
will address the regulations.
A Commonwealth proposal for the fuel parameter standards was outlined in three
discussion papers released in May 2000 for a two-month public comment period. In the
absence of a final recommendation for fuel quality standards, this proposal is used as the
basis for estimating the costs and benefits of the preferred option.
This section briefly recounts the preferred option, summarises and outlines the costs and
benefits of the option and addresses the impacts on affected parties.
5.1 OUTLINE OF THE PREFERRED OPTION
The preferred option is to set national fuel quality standards by means of Commonwealth
regulation. The legislation will provide the framework for a national standards regime
with the levels for each of the parameters in petrol and diesel specified in regulations
under the Act.
As described in section 4.7, national fuel quality standards will:
- apply equally to importers and domestic refiners;
- introduce from 2002 the fuel quality standards required by vehicles complying with the
new ADRs (see timetable under section 5.5.2);
- be monitored and enforced along the fuel chain of supply;
- be consistent across the nation, allowing exceptions in specified circumstances, for
example to meet varying climatic conditions.
5.2 SUMMARY OF ASSESSMENT
In summary, the analysis of costs and benefits found that there would be considerable
health and environmental benefits from moving to cleaner fuel standards, with an overall
net benefit to Australia. The analysis estimated the net health benefits from the
introduction of high fuel standards to be between $1577M and $2180M. This assessment
is not altered by the potential macroeconomic impact of higher fuel prices, which would
only be transitory before market forces re-balance the impacts.
The analysis is outlined in the Table 5.1 below. Option D corresponds to the fuel
standards and timetable proposed for discussion by the Commonwealth.