National Fuel Quality Standards Regulation Impact Statement 1 ...

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# Euro 4 for petrol has yet to be formally defined. These estimated levels were provided to Coffey Geosciences by the Australian Institute of Petroleum Despite differences to the Commonwealth proposed fuel standards, Scenario 4 from the Fuel Quality Review provides the best available estimate of the potential costs to the refining industry of Commonwealth regulation of national fuel standards. Some costs, particularly those associated with Euro 4 standards for olefins and aromatics (not included in the Commonwealth proposal) are overstated. The capital investment cost to refiners of achieving Euro 4 standards under Scenario 4 of the fuel Quality Review is $1320 million (M) above what is already planned. At one refinery, a substantial proportion of the investment required to achieve Euro 4 diesel and petrol is already committed in existing programs. Excluding this refiner, capital investment per refinery averages $185M. Under Scenario 4 operating expenditure would increase by a total of $136M pa for the production of Euro 4 fuels, an average of $17M pa per refinery. Allowing a capital charge at 20% per annum, the average extra capital plus operating costs for local refining of Euro 4 fuels would be: * Euro 4 Diesel 1.5 c/L * Euro 4 Petrol 1.1 c/L. The potential overstatement of costs due to levels of stringency not involved in the Commonwealth proposal include: * $100M capital expenditure and 0.2c/l to achieve 1% benzene compared to 3%; and * $170M capital expenditure and 0.9c/l operating costs at two refineries for achieving 14% olefins compared to 16%. In addition, technological advances for refinery production processes may generate savings in the cost of production that may drive down any increase in the price of fuel. However, the actual impact on prices to consumers will be dependent on the companies’ handling of any cost savings. 5.5.3 IMPACT ON FUEL IMPORTERS AND DISTRIBUTORS Importers In order to ensure the availability of higher quality fuels for use in road transport throughout Australia, it is necessary to establish clear, attainable standards that do not discriminate between domestic fuel producers and importers. The national standards will, therefore, provide a level of consistency for importers, enabling them to supply the same fuel throughout the country. The impact on independents and importers (Burmah, Liberty Oil, Gull Petroleum, Woolworths Petrol Plus, etc) will vary depending on readily available supply in the
egion. It would appear that Euro 2 and 3 specifications are readily available or will be from 2001, but supply of Euro 4 at this point in time is restricted to export orientated refineries in India and South East Asia. Euro 4 will not be introduced into Europe until 2005, when it is expected that this fuel will be more widely available. While higher quality fuels are in limited supply, the cost of obtaining them will be greater than that of sourcing fuel of the current quality sold in Australia. Information about the likely cost increases to importers is limited. Distributors Distributors purchase fuel from the major refining companies and, increasingly, from importers, and then transport it to regional service stations and fuel depots as well as primary producers and mining companies. There are currently about 200 large distributors that represent 40% of product distribution in Australia with 90% of this to regional areas. Commonwealth legislation regulating fuel quality will also provide national consistency for distributors. Consultation with the Australian Petroleum Agents and Distributors Association (APADA) has indicated that distributors are very supportive of the introduction of national standards. APADA pointed out that State boundaries are not observed in fuel distribution and some distributors traverse three States. State-specific legislation is, therefore, an issue of concern for distributors as it would increase their compliance costs. The main issue for distributors resulting from the introduction of Commonwealth fuel quality legislation would be the potential requirement for additional investment if extra storage tanks were needed to ensure any fuel mixing did not occur. This would be a requirement if the number of grades of fuel increased, but that is not envisaged in the Government’s proposal. 5.5.4 IMPACT ON FUEL RETAILERS The impact on fuel retailers will relate mainly to ensuring that they receive only fuel that meets the specified standards, that any forecourt additives for sale have been approved under the legislation and that they keep the appropriate records and paperwork. Some of the small fuel retailers, particularly in rural and remote areas have limited or no storage and dispensing facilities for premium unleaded petrol (PULP). This could potentially cause some difficulties when PULP becomes the standard fuel. However, it is anticipated that the facilities used for leaded petrol may be replaced with PULP when leaded petrol is phased out in 2002. 5.5.5 IMPACT ON THE AUTOMOTIVE INDUSTRY The most significant impact of Commonwealth fuel quality legislation on the automotive industry will be the certainty it provides in ensuring that fuel of the appropriate specifications will be widely available in Australia. This is essential to enable deployment of the advanced emissions control technology to meet tighter emissions
Page 1 and 2: 1 Introduction National Fuel Qualit
Page 3 and 4: Table 2.2 Greenhouse gas emissions
Page 5 and 6: of fossil fuels. Another significan
Page 7 and 8: interactions with the terrestrial a
Page 9 and 10: enhance the quality of conventional
Page 11 and 12: Summary A business as usual approac
Page 13 and 14: 500ppm limit on the sulfur content
Page 15 and 16: protection to all Australians where
Page 17 and 18: 4.5.1 Advantages and Disadvantages
Page 19 and 20: The Commonwealth proposal for fuel
Page 21 and 22: Table 5.1: Net Benefits of adopting
Page 23 and 24: It is probable that these increased
Page 25 and 26: direct injection. It is claimed tha
Page 27: that modelled in the Fuel Quality R
Page 31 and 32: taking into account the objectives
Page 33 and 34: sulfur for both petrol and diesel a
Page 35 and 36: Auto-Oil Programme (1995) Informal
Page 37 and 38: FORS (1997) LPG In-service Vehicle
Page 39 and 40: ______ (1999) Air Emissions Invento
Page 41 and 42: Table A3.2 Regular unleaded petrol
Page 43 and 44: Table A3.3: Premium unleaded petrol
Page 45 and 46: APPENDIX 2: Summary of Assessment o
Page 47 and 48: APPENDIX 4 LIST OF STAKEHOLDERS * A
Page 49: * NRMA * NSW Cabinet Office * Premi

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