The Albanese government is being urged by officials to raise quality standards on selected unleaded petrol, increasing the cost to consumers but potentially giving car buyers access to more efficient European engines and models.

A cost-benefit analysis commissioned by the Department of Climate Change, Energy, the Environment and Water recommends Labor forces refiners, importers and retailers to limit environmentally harmful levels of aromatic hydrocarbons in 95-octane petrol to no more than 35 per cent.