Fuel standards are in the firing line

Volkswagen Australia managing director, Michael Bartsch, has called for Australia's fuel standards and emissions testing to be dragged into line with the latest European rules, lest we become a "dumping ground" for old engine technology.

Speaking at a briefing in Sydney this week, the executive said our current fuel standards put Australia at risk of becoming a "second-tier" market, and argued the transition to higher-quality, lower-sulphur fuel was as important as the switch from leaded to unleaded petrol.

"We’re becoming outsiders," Bartsch (pictured below) told journalists. "It won’t be long before vehicles are going to have to be produced purely for these really poor sulphur content countries," he said, speaking of Australia's fuel standards.

At the moment, local regulations allow 50 parts per million (ppm) of sulphur in premium unleaded, and 150ppm in regular unleaded petrol. European rules allow a maximum of 10ppm. We're ranked 70th in the world for fuel quality, largely due to this sulphur content.

With WLTP (Worldwide harmonised Light vehicle Test Protocol) and Euro 6.2 emissions rules coming into force overseas, ever more advanced emissions-cutting and fuel-saving technologies are being fitted to petrol engines apace. Volkswagen said our market is already missing out on engines from Europe because of our fuel, although it didn't go into detail.

Bartsch argues our fuel simply doesn't support the latest technology, and the problem is only going to get worse.

"If we don’t move with the time, then ultimately it will become dearer here – it will become dearer from a couple of points of view," he said.

"There’s always an opportunity cost when you don’t get real choice, so we’re going to lose choice here in Australia, and diversity in range.

"What that will do, it will give a competitive advantage to people who aren’t moving. On top of that... we’re going to be working in a smaller pool – cars being homologated specifically for the market – that will come at an additional cost," he elaborated.

A recent proposal by the Ministerial Forum on Vehicle Emissions suggested three possible courses of action to tackle our fuel quality, having ruled out adopting global best practice by 2020.

One option would see 91RON gradually removed from sale and replaced with 95RON featuring 10ppm sulphur as our base option, while another would impose the same sulphur cap, but maintain 91RON on the petrol station forecourt. A third option suggested a blanket 10ppm cap on all fuel, with no further changes. The proposal also offers timelines ranging from 2022 to 2027 for the rollout.

The FCAI (Federal Chamber of Automotive Industries) told CarAdvice it favoured the most aggressive course of action when the Forum's report was released, arguing "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."

That approach isn't favoured by all. The Australian Automobile Association (AAA) says "aggressive targets are likely to have a significant impact on what consumers can buy and what features they have", and argues that removing regular unleaded fuel from local forecourts would cost the 'average household' an extra $423 per year.

We contacted the AAA for comment, but it didn't reply in time for publishing. We'll update the story when it becomes available.

Rather than rushing low-sulphur fuel to market, the organisation also wants the government to analyse its impact on emissions from older vehicles. It called on the transition to be managed so the cost of bringing higher-quality fuel Down Under isn't passed on to motorists. The AAA is calling for a staged rollout of low-sulphur fuel between 2023 and 2027, based on feedback from Australia's four major oil refineries.

Bartsch didn't pull any punches when addressing this point of view, suggesting the AAA and fuel companies are misleading the public on the issue.

"The fuel companies are pulling wool over people’s eyes, the AAA is pulling wool over people’s eyes as to what the real-world environment is," he told assembled press.

"We'll start seeing a lot of options drop off in terms of powertrains and engines that we can get," he later argued, prompted about the timeline laid out by the AAA.

"What you’ll start seeing is that we’ll start getting lower common denominator products and... we’ll start paying more for the cars, because they’ll start doing special testing and special engine runs, and keeping old model lines alive, and putting old engines down the production line to keep a few markets going," Bartsch explained.

"How long do you think that's sustainable for a country that only sells a million cars a year. It's not sustainable."