Fuel Standard (Petrol) Determination 2001 and the Fuel Standard (Automotive Diesel) Determination 2001

Regulation Impact Statement
Environment Australia, 2001

3. Objectives

3.1 Primary Objective

The Government's primary objective in mandating fuel quality standards is to reduce the adverse effects of motor vehicle emissions on urban air quality, human health, and the enhanced greenhouse effect.

3.2 Related Government Policies and Their Objectives

The Prime Minister's 1997 statement, Safeguarding the Future: Australia's Response to Climate Change sets out an Environmental Strategy for the Motor Vehicle Industry. The objective of the strategy is threefold - to enhance the environmental performance of the automotive industry; to reduce air pollution and improve the health of our cities; and to reduce greenhouse gas emissions. The adoption of new and emerging vehicle engine and emission control technologies is central to Government objectives with respect to the improved management of both noxious and greenhouse gas emissions. If the Government is to achieve these objectives it will also be necessary to ensure that the appropriate fuel is widely available in Australia.

The Measures for a Better Environment (MBE) package was announced by the Prime Minister in May 1999 as part of the New Tax System for Australia. It consists of a series of initiatives, many of them directed at the transport sector, to improve the management of noxious (air pollutant) and greenhouse gases. It establishes a timetable for the introduction of internationally harmonised vehicle emission standards and foreshadows changes to the composition of transport fuel.

Diesel specifications identified in MBE include a minimum standard of 500ppm sulfur in road transport fuel from the end of 2002 and the introduction of a 'mandatory fuel standard of 50ppm (through a NEPM, equivalent legislative device or by use of the definition in the diesel fuel credit scheme) in 2006'. It also noted the requirement for high octane and low sulfur levels in petrol. High-octane petrol enables higher thermal efficiencies to be achieved, while low sulfur content is essential for the deployment of advanced fuel efficiency technologies, such as direct injection, both of which help achieve reduced fuel consumption.

The Downstream Petroleum Products Action Agenda was released in November 1999. The Agenda identifies the Government's strong preference for the development of nationally consistent fuel specifications, noting that there are 'clear competition benefits from having a nationally consistent approach to fuel standards'. It also advises that the Government will ensure that fuel specifications apply and are enforced equally to imports and domestically produced fuels.