Cleaner air from improved fuel quality standards

Australia's air quality, particularly in urban areas, is adversely affected by noxious emissions from motor vehicles. The amount and type of these emissions and greenhouse gas emissions are determined by vehicle technology and the quality of hydrocarbon fuels. The preference of the expert Intergovernmental Panel on Climate Change is that zero emission electric or renewable fuel vehicles ought to prevail that would eliminate noxious and greenhouse gas emissions and improve people's health and the environment.

Until zero or low emission vehicles prevail, the Australian Government can specify the fuel quality standards under the Fuel Quality Standards Act 2000. If these standards were international best practice, then they would achieve beneficial outcomes for Australians by ensuring engine operability, maximising vehicle performance and reducing noxious and greenhouse gas emissions to achieve health benefits. But Australia's petrol quality is the worst in the OECD. While other countries are improving their fuel quality, the Australian Government recently reviewed the standards and is not making any meaningful changes to Australia's poor petrol standards until 2027. This has significant consequences for vehicles, motorists and ordinary Australians.

Australia imports all its vehicles and is also a net importer of crude oil and many refined products. Internationally harmonising Australia's fuel quality is necessary as new vehicles are designed to use the quality fuels recommended by vehicle manufacturers; the benchmark being those supplied in Europe. As diesel emissions are carcinogenic, Australia should also consider following the lead of Paris, Mexico City, Madrid and Athens, which are banning diesel vehicles from 2025.

Diesel and other fuels aside, Australia's petrol quality is particularly problematic.

Petrol Quality

The Federal Chamber of Automotive Industries, representing vehicle manufacturers, has recently stated that EN228 quality petrol must be readily available to allow the importation of better vehicles, improve vehicle performance, improve fuel efficiency and reduce noxious and greenhouse gas emissions.

Australia has required that petrol vehicles meet Euro 5 emission standards since 2013. Vehicle manufacturers then use Euro 5 quality, i.e. EN228, petrol to certify their vehicles as Euro 5 compliant. So far so good. However Australian petrol, ranked 73 in the world based on sulfur content, does not meet Euro 5 requirements. There can be no guarantee that any post-2013 petrol vehicles are now meeting Euro 5 emission standards on Australian roads. This situation is unacceptable: a government would not tolerate food or electrical wiring that does not meet specifications and likewise should reject sub-standard fuel quality.

The current Euro 5 standard and a proposed more stringent Euro 6 standard are important because they impose limits on vehicular emissions of carbon monoxide, nitrogen oxides, volatile organic compounds and particulate matter. It is well-known that many types of respiratory illnesses (including asthma), heart disease, strokes and cancers would be prevented if emissions were reduced and these standards were met.

Euro 6 quality petrol must have less than 10 parts per million sulfur (to improve vehicle catalyst performance and reduce emissions), less than 35 percent aromatics (to reduce harmful emissions and combustion chamber deposits) and a minimum 95 RON (for use in fuel efficient, higher compression ratio engines). Australia's regulated petrol limits compare poorly, with premium 95 RON petrol having a maximum 50 parts per million sulfur and 45 percent aromatics. Worse still is 91 RON (regular unleaded) petrol with up to 150 parts per million sulfur and 45 percent aromatics. Predictably, many vehicle manufacturers do not import their best quality vehicles into Australia.

Perversely however, many vehicle manufacturers inform new car buyers that their post-2013 vehicles, designed to use Euro 5 quality petrol, can use inferior 91 RON petrol. They do this to compete in a market where cheap, poor quality 91 RON petrol would be used by some motorists regardless of any manufacturer recommendations. The Government must ensure that new motorists use petrol that will allow their vehicles to meet, or have the best chance of meeting, regulated Euro 5 or Euro 6 emission standards. The current petrol standard fails motorists.

Cost of reducing sulfur and aromatics

What should Australia's petrol quality be, given that Euro 6 quality petrol is available for import now? The Australian Institute of Petroleum, representing Australia's four oil refineries, has insisted that its members could reduce nothing other than petrol sulfur content by 2027. The Government was taken by oil industry lobbying. However, some refineries could upgrade before 2027, given that other countries (including the USA and New Zealand) reduced sulfur and aromatics and addressed all other parameters in refined petrol within three years. Australia's petrol quality will remain the worst in the OECD (until 2027), increased emissions will worsen health outcomes, and Australia will remain an import sanctuary for lesser quality vehicles. Even the Government's analysis indicates greater net benefits occur with earlier introduction of Euro 6 quality petrol.

Australia's four ageing refineries are inefficient. Combined, they produce less than half the refined fuel produced by India's Jamnagar refinery. Would all four refineries be operating in 2027 anyhow? Governments welcome that our refineries employ people, but at what cost? The Government's analysis indicates that if Euro 6 quality petrol were to be supplied, the health benefits would be at least $370 million per year. Australians and their health budget are effectively subsidising local refineries (three of which are multinational operations) to continue refining poor quality petrol.

A reduction in petrol's sulfur content would only cost motorists one cent per litre for a few years, if Australia's multinational refineries choose to pass this cost to motorists. If the Government wanted to support refineries, it could fund refinery upgrades from savings to the health budget. The health benefits would be ongoing, and motorists and the environment could benefit from fuel efficiency improvements. Other matters are manageable, but one significant technical problem remains. Removing sulfur and aromatics from petrol reduces its octane value.