Shorten’s choice: fuel standards or refineries

Labor must choose between postponing its vehicle emissions standards for 8 years or threatening the last four fuel refineries.

Opposition Leader Bill Shorten in Brisbane yesterday. Picture: AAP

Labor faces a choice between ­failing to implement its proposed new vehicle emissions standards for at least eight years — putting its electric vehicle target in doubt — or threatening the viability of the four remaining fuel refineries.

­Environment Minister Melissa Price moved quietly last week to postpone fuel standard improvements for Australian refiners until July 1, 2027, through a regulation that will stand unless Labor disallows it.

The move followed heavy lobbying by refineries, which had ­argued a more rapid introduction of new sulphur standards would force them out of business, slashing thousands of jobs and threatening the nation’s fuel security.

The car industry yesterday warned Labor would be unable to implement its new 105g of carbon dioxide per kilometre standard using the fuel currently available in Australia, putting off one of the key measures that will drive electric car uptake. Opposition energy spokesman Mark Butler yesterday refused to say whether Labor would overturn the regulation if it won government, saying it needed to consult with industry before making a decision.

Australian fuel standards are among the worst in the OECD, with a maximum 150 parts per million of sulphur for 91 octane fuel, and up to 50 ppm for premium 95 and 98 octane fuels.

Under the minister’s ruling, sulphur content will drop to the European standard of 10ppm in 2027. Refiners will continue to sell 91 octane fuel, which is no longer available in Europe, but it will have to meet the new sulphur standard.

The Federal Chamber of Automotive Industries chief executive Tony Weber said Australian drivers would not get access to low-emission engine technologies until they could buy better fuel.

“Without access to quality fuel, we have one hand tied behind our back in our ability to actually get better environmental outcomes out of our fleet,” Mr Weber said.

“The research and development being done around the world is for the big markets like the US and China, which together have more than 40 million sales a year. It’s not being done for markets selling 50,000 units.”

Australia has four remaining fuel refiners — ExxonMobil and Viva in Victoria, BP in Western Australia, and Caltex in Brisbane.

The Australian Institute of Petroleum told the government’s Ministerial Forum on Vehicle Emissions that the refiners would have to invest nearly $1 billion to deliver 10ppm sulphur petrol by 2027. It said those costs would rise significantly if the government wanted to achieve the higher standard earlier, in a move which “would threaten the economic viability of the remaining Australian refineries”.

AIP chief executive Paul Barrett said the minister’s decision acknowledged the substantial investments required by refiners to meet the new standard.

“The government fully understands the implications for local refineries related to this complex and challenging investment, and has decided on an appropriate timeframe for industry to investigate the most cost-effective solution and latest technology advancements to comply with the new standard,” Mr Barrett said.

Bill Shorten has committed Labor to lifting electric car sales from 0.2 per cent to 50 per cent of all cars sold by 2030, and phasing in the 105g CO2/km emissions standard for light vehicles in consultation with industry.

“The issue of how CO2 standards interact with fuel quality standards will be considered in these consultations,” Mr Butler told The Australian.

Ms Price said her fuel standards ruling would align the sulphur content of Australian fuel with the limits elsewhere in the world, providing “considerable health and environmental benefits”.

“The timing strikes a balance by ensuring significant health benefits for Australians and ensuring the Australian petroleum refining sector has sufficient time to rebuild for the future,” she said.

“It will involve a negligible increase in fuel costs when it commences in 2027.”

Scott Morrison yesterday continued his week-long attack on Labor’s EV and vehicle emissions policies, saying Australians wanted cars “with a bit of grunt”.

“There’s only two out of 20 top selling vehicles in this country that go anywhere near Labor’s (emissions) standard,” the PM said.

He said Mr Shorten would deprive Australians “of the sort of lifestyles that are supported by the vehicles they’re currently buying”.

The Australian Automobile Association welcomed the government’s decision on fuel standards, saying motorists would not be forced to pay more for premium fuel until they were ready.