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Discussion paper


In 2016, an independent review of the Fuel Quality Standards Act 2000 found that the regulation of the quality of fuel supplied in Australia had led to a quantifiable reduction in the level of pollutants and emissions arising from the use of fuel.

Following this review, the Australian Government committed to retaining and amending the Fuel Quality Standards Act 2000 to maintain these environmental and health benefits. A review of the legislative instruments made under the Fuel Quality Standards Act 2000, which are due to sunset (cease to have effect) in 2019, formed part of this commitment.

The Department of the Environment and Energy has released this discussion paper to seek stakeholder views on proposed policy alternatives in relation to legal instruments made under the Fuel Quality Standards Act 2000 .Input provided from stakeholders will inform the final set of policy alternatives to be analysed and costed by the Department in 2017.

The fuel standards aim to reduce pollutants and emissions that contribute to health and environmental problems, ensure engine operability, and facilitate new technologies. The policy problem which is the subject of this discussion paper consists of a number of elements, and can be summarised as follows:

• Motor vehicle emissions can be split into two categories: noxious emissions which affect human health and the environment and contribute to respiratory illness, cardiovascular diseases and cancer, and greenhouse gas emissions which contribute to climate change.

• Petrol fuelled light vehicle emissions are one of the major causes of air pollution in urban Australia. Our expanding vehicle fleet, increasing urbanisation and aging population mean that further action is needed to improve air quality and reduce the health impacts of air pollution.

• Improving fuel quality can help reduce the level of noxious emissions, which improves air quality and health outcomes.

• Some advanced vehicle technologies (including advanced emissions control systems and certain fuel efficient engine technologies) require higher quality fuel to work effectively. The quality of fuel influences which engine and emission control technologies can be supplied to the Australian market.

The Australian Government established a Ministerial Forum in October 2015 to coordinate a whole-of-government approach to reduce motor vehicle emissions that harm human health and contribute to greenhouse gas emissions. This discussion paper forms part of this comprehensive package of measures. The Department of Infrastructure and Regional Development is considering the proposed introduction of Euro 6/VI vehicle emission standards for light and heavy vehicles to reduce noxious emissions, and fuel efficiency standards to reduce carbon dioxide emissions. These activities will be subject to their own regulation impact assessments and are out of scope for this discussion paper, as seen in Figure 1 on page 5.

There are proven links between pollutants found in vehicle emissions and a range of human health problems (both short and long term). Air pollutants can have a significant impact on the cardio–-respiratory system. Individuals with pre-existing respiratory conditions, such as asthma and allergies, are especially vulnerable to air pollutants. The effects on human health can include reduced lung function, ischemic heart disease, stroke, respiratory illnesses, and lung cancer. 1 The cost of premature deaths due to outdoor air pollution in Australia in 2010 has been estimated to be up to $7.8 billion and in OECD countries, it is suggested that road transportaccounts for approximately half of the cost of these preventable deaths. 2 With increasing vehicle numbers and use, these costs are likely to increase as the Australian population grows and ages. Between 2010 and 2015, the motor fleet in Australia grew at an average rate of 2.4 per cent making vehicles a growing source of air pollution. 3

Good vehicle design and fuel standards work together to reduce vehicle emissions and improve air quality. Without appropriate fuel quality, the emission control technologies within vehicles do not operate as intended. Fuel quality may also influence which engine and emissions control technologies are incorporated into vehicles supplied to the Australian market. The quality of Australian fuel may limit the supply of some existing advanced technologies in use in other vehicle markets.

The human health impacts from exposure to noxious vehicle emissions are an external cost to society which is largely beyond the control of communities and individual businesses. A recent review of the Fuel Quality Standards Act 2000 found that there is a strong case for continued government action in regulating fuel quality, based on the health risks associated with noxious emissions from vehicles and the benefits associated with international harmonisation of fuel standards.

Fuel standards are currently in place for a range of fuel types used in Australia, including petrol, diesel, auto gas(LPG), biodiesel and ethanol (E85). Each fuel standard is made up of a list of parameters, which set an upper and/or lower limit on the substances permitted in that type of fuel. In addition to the fuel standards, there are information standards in place for petrol and E85 which set labelling requirements where these fuels are supplied.

There are two fuel parameters of particular concern: sulfur and octane in petrol. Catalytic converters in vehicles are designed to filter emissions and reduce noxious substances emitted from vehicles. Sulfur clogs the catalytic converters making them less effective. Higher octane fuels can be used in high compression engines petrol engines which are more fuel efficient and produce less greenhouse gas emissions.

This paper discusses five alternative policy approaches for updating existing fuel standards.

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