As the NSW and Queensland Governments gear up for new biofuels regulations from next year, questions are now being asked about the environmental risks posed by the use of biofuels in underground storage tanks at service stations.

Can a service station operator, for example, safely store ethanol in a steel tank without risk of the ethanol in the fuel separating and creating a corrosive layer that eventually damages the tank to the point of allowing fuel to leak into the ground?

If not, can a fuel retail business – of any size – be reasonably forced to make an investment of $750,000 or more per site to replace one or more their existing underground tanks to remove any risk of environmental damage.

These are critical questions.

And ones that both the NSW and Queensland Governments must now grapple with as they consider the grounds for the exemption of fuel retail businesses from new biofuels laws.

Failure to adequately consider these issues risks promotion of one public policy objective (i.e. increased sale of biofuels) at the cost of another public policy objective (i.e. protection of the natural environment).

If the USA experience with long term storage of biofuels is anything to go by, then there are no easy answers to these questions.

The lack of any whole-of-industry standards for the underground storage of biofuels, both in Australia and within international jurisdictions, means that there is no agreement on the minimum acceptable approach.

As a result of increasing concern about the possible corrosive effects of biofuel blends on underground storage systems – and the consequent environmental risk of ground contamination – the USEPA introduced revised guidelines for the storage of biofuel blends last year (https://www.epa.gov/ust/alternative-fuels-and-underground-storage-tanks-usts#tab-1).

This revision included the introduction of specific requirements for ensuring improved compatibility of underground storage tanks with ethanol blended fuels – both for E10 and for higher petrol ethanol blends like E20.

“While much of the focus of these changes is on compatibility of underground storage tanks with ethanol-petrol blends, recent USEPA Research has also identified issues with accelerated corrosion of diesel tanks and suspects that biodiesel may be a culprit”, said ACAPMA CEO Mark McKenzie.

While not having isolated the exact source of the problem, the USEPA suspects that the increased biological activity generated by the introduction of biodiesel in mineral diesel may be increasing the incidence of micro-biological influenced corrosion (https://www.epa.gov/newsreleases/epa-research-shows-moderate-or-severe-corrosion-majority-diesel-fuel-underground-0).

“These developments really beg the question of whether we truly understand the nature of the environmental risks associated with increased underground storage of biofuels”, said Mark.

In the absence of any definitive guidelines – and the lack of government grants for upgrade of storage tanks as adopted in the USA – the quantum of risk is largely unknown to both industry and government.

In effect, the NSW and QLD governments will need to balance their desire to sell more biofuel against the risk of environmental damage and/or putting service stations out of business by not providing exemptions where tank replacement may be desirable/required.

“We firmly believe that ethanol blended fuel must not be used in steel tanks that utilise isopthalic rubber seals but beyond that the situation is very unclear, said Mark.

“Problems have also been observed with older type steel tanks and single-walled fibreglass tanks, though these problems appear to be due the phase separation (for E10) and microbiological activity (for Biodiesel) at the bottom of underground storage tanks (http://www.steeltank.com/Portals/0/About_Us/Steel%20Facts%20No.%206-Newer%20fuels%20and%20storage%20tank%20corrosion%20v.1.pdf), said Mark.

In short, government and industry should ideally adopt a precautionary principle with respect to the underground storage of biofuels in the future.

If either state government does not adopt such an approach to the consideration of exemptions for service station operators who simply cannot afford to implement precautionary upgrades to tank storage systems for the storage of biofuels, then one of two problems could occur. Either:

  • the business could simply cease to operate, resulting in the loss of a market competitor and/or ease of access to fuel for local communities; or
  • the business could elect to utilise existing infrastructure, in the absence of any definitive information precluding the use of specific tank storage systems, possibly increasing the risk of groundwater contamination.

“This is not an issue that can simply be sheeted home to industry as it is one of the Government’s making”, said Mark.

Both the NSW and QLD Governments have introduced new laws that will require increased storage of biofuels despite having no demonstrable knowledge of the potential long term environmental risks of groundwater contamination.

Unfortunately, we as industry don’t have enough experience with these fuels to provide definitive guidance either.

As a consequence, there is a need for both industry and government to tread carefully on this issue in the immediate future.