Fuel-miser motorists will soon get broader access to the latest petrol engine technology – as world-class premium unleaded is set to become the new normal – after the Federal Government pledged a $2 billion support package to prop up Australia’s two remaining oil refineries, and helped bring forward long overdue upgrades to produce cleaner unleaded fuel.
Within hours of the Federal Government announcing its unprecedented support package, energy giant Ampol (formerly Caltex) confirmed its Lytton Refinery near Brisbane would remain operational “subject to the government’s refining support package being successfully legislated as proposed”.
Ampol along with the Viva (formerly Shell) facility in Geelong are the last two oil refineries left in Australia. Two decades ago there were eight. In 2015 the number of refineries was culled to four, and in the space of the past six months, Australia has been left with just two.
It means cleaner unleaded petrol – with a maximum 10 parts per million of sulphur rather than our current standards of 50ppm for premium unleaded and 150ppm for regular unleaded – will flow from petrol bowsers from 2024 after upgrades are made in 2023.
The 2024 rollout of cleaner unleaded petrol is four years earlier than planned but still more than a decade after Europe mandated it. Australia switched to 10ppm diesel in 2009.
The car industry has welcomed the promise of unleaded petrol that meets modern standards.
Clean fuel protagonist Volkswagen, car industry lobby group the Federal Chamber of Automotive Industries (FCAI), and peak motoring club body the Australian Automobile Association (AAA), praised the long overdue switch to cleaner unleaded petrol, after a recent study ranked Australia 85th out of 100 countries for fuel quality.
Volkswagen Group Australia managing director Michael Bartsch said the Federal Government’s support was a “major development in aligning Australia with first-world fuel standards”.
“Volkswagen was the first and remains the foremost voice to call for the cleaning up of Australia’s highly sulphurous petrol,” Mr Bartsch said in a media statement.
The Volkswagen executive said the overhaul is “potentially a big step forward to enabling Volkswagen to introduce the world’s most advanced and efficient conventional engines”.
Although some European brands have already introduced a small number of models equipped with sensitive petrol particulate filters that are optimised to run on unleaded with 10ppm of sulphur content, the Federal Chamber of Automotive Industries (FCAI) said a broader range of cars were not being imported due to warranty concerns caused by Australia’s current fuel standards.
“The poor fuel standards in Australia relative to regions such as Europe and Asia have meant that some car companies have been unable to introduce some of the world’s best fuel efficient and environmentally friendly technologies to the Australian market,” FCAI Chief Executive Tony Weber said in a media statement.
“We now have an excellent opportunity to align Australian fuel quality with the rest of the world, encourage the delivery of the latest engine technology and take further steps on the road to reducing emissions.”
The peak body of motoring clubs such as the NRMA, RACV, RACQ, and affiliates from other states and territories – the Australian Automobile Association (AAA) – welcomed the switch to cleaner petrol but questioned whether the nation had a large enough supply in reserve.
AAA Managing Director Michael Bradley said in a media statement: “Australia’s efforts to reduce … emissions from its vehicle fleet have been held back by the fact we’re being sold engine technologies designed for the fuel markets of Libya, Argentina, and Iraq.”
The relatively high concentration of sulphur in Australian-refined fuel “impairs the performance of pollution-reduction technologies used in modern vehicles”, said the AAA.
“Singapore-based energy consultant, Stratas Advisors, last year ranked 100 countries by fuel quality, with Australia claiming 85th place,” the AAA added.
While the oil refinery subsidy will see taxpayers pay refiners to “clean up their fuel” and “maintain Australia’s refinery capacity”, the impact on fuel security remains unclear, said the AAA.
“Protecting Australia’s remaining (oil refineries) sounds like a security solution until you consider they imported 81 per cent of the crude they refined in 2018-19,” said Mr Bradley.
The AAA also highlighted data on the website of the oil refinery lobby group, the Australian Institute of Petroleum (AIP), which “raises questions about the subsidy’s security benefits”.
The AIP website says “refinery closures have not weakened Australia’s supply security” and “there is no significant difference in the supply risk between a crude and petroleum product shipment”.
So while the AAA praised plans to bring the quality of Australian unleaded into line with world’s best practice – without increasing prices at the bowser – Mr Bradley said: “Fuel security can be bought. But if we are to significantly improve Australian fuel security, we need an integrated approach to fuel production, storage, technology transition, energy diversification, and emissions reduction.”
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