Minor price rise expected if tighter standards are adopted

A report from the Ministerial Forum on Vehicle Emissions has suggested adopting stricter fuel standards in Australia, including tighter controls on sulphur.

Should they pass, proposed changes to the Fuel Quality Standards Act 2000 would make it easier for manufacturers to sell more efficient European cars reliant on higher-quality petrol than currently offered Down Under.

The Ministerial Forum is looking into three separate measures: adopting Euro 6 emissions standards, revising fuel economy rules and bringing our fuel quality into line with "best practice international fuel standards" from Europe.

The report argues "the quality of Australian fuel affects the quantity and type of emissions from our vehicles, and directly and indirectly influences the quality of the air we breathe", and says more stringent rules would open the door for "more advanced vehicle technologies with better emission control systems and more fuel-efficient engines".

Manufacturers argue our current fuel would cause higher emissions and reliability problems when used in the latest Euro 6 engines. Where European rules allow a maximum 10 parts-per-million (ppm) of sulphur, current local regulations allow 50ppm in premium unleaded and 150ppm in regular unleaded fuel.

A number of solutions to the problem have already been eliminated based on public feedback, leaving three potential courses of action for the Forum.

Option B would see 91RON gradually removed from sale as 95RON fuel with 10ppm sulphur becomes the 'base' option, and imposes a 35 per cent cap on 'aromatics' in fuel, while Option C would revise our standards but see 91RON – albeit with a 10ppm sulphur limit – retained.

Option F (Option A is the current scenario, D and E were eliminated) suggests a 10ppm sulphur limit on all fuel, with no further changes. Option D suggested we align standards with the Worldwide Fuel Charter, but a cost-benefit analysis showed it unlikely to deliver net benefit to the community, while E suggested we adopt global standards from 2020 onwards.

According to an independent consulting firm, options C and F could potentially deliver up to $614 million in 'positive net value' – and that's before the health benefits of cleaner air associated with better fuel are considered. The report says, higher-quality fuel could reduce health costs by $371 million in the short-term, and a whopping $418 million in the long-term.

The changes would likely cause a slight (likely around 2 cents/litre) bump in fuel prices, however, as a response to the "significant capital investment, and increased operating costs, to produce better petrol".

Federal Chamber of Automotive Industries chief executive, Tony Weber, told CarAdvice the most aggressive course of action (Option B) was favoured by the industry.

"Our preferred option would be Option B," Weber told CarAdvice. "It provides quality fuel with 10ppm sulphur and 35 per cent aromatics, which is what is needed to drive engines and today and the future. If we are going to be serious in the country about environmental change, that's the fuel we need."

As for the least drastic suggestion, Option F? Weber was quick to describe the proposed changes as "not sufficient". Beyond the fuel standards, Weber called for more aggressive CO2 targets and a "timely" rollout of Euro 6.

"We need certainty around these issues so the best products can be brought to Australia with clarity around what is the policy environment in which they will be sold."

The Department of the Environment and Energy is accepting public feedback into its report until March 8.