In 2007, the then NSW Government passed new laws to mandate the sale of ethanol and biodiesel blended fuels by the State’s larger fuel retailers.
The 2007 legislation was premised on the prohibition of the sale of regular unleaded petrol by January 2012 and required liable fuel retailers to sell 6% ethanol as a proportion of all petroleum product sales.
In practical terms, the achievement of this target requires that 6 out of every 10 customers (i.e. 60%) visiting the State’s service stations purchase E10.
Following a high-profile campaign by fuel retailers in 2011, led by ACAPMA, the NSW Coalition government later bowed to public pressure and rolled back the planned prohibition of the sale of regular unleaded petrol in NSW in 2012.
At the time, sales of E10 had already stalled at just 37% of all petrol sales.
Interestingly, sales of the higher priced premium petrol products were growing steadily in a market that was supposed to be price sensitive – suggesting that NSW motorist were shunning E10 in favour of ‘pure’ petrol blends given the reduced availability of regular unleaded petrol at many service stations.
In the following two-years, E10 sales fell from 37% of all petrol sales (July 2013) to 31% of all petrol sales (July 2015). That is, just 50% of the NSW Government’s ‘mandated’ target.
Over the same period, sales of ‘premium petrol’ increased from 37% to 45% of all petrol sales.
The decline in E10 sales over this period resulted in renewed lobbying (and alleged additional political donations to the NSW Coalition and Labour parties) by the State’s monopoly biofuels producer – the Manildra Group.
The intensity of this lobbying of both major political parties increased substantially in advance of the March 2015 NSW Election.
Soon after being elected, the NSW Government commenced work on an expansion of the NSW Biofuels mandate.
This action was reportedly to address the failed 2007 legislation, but you would be a mug if you believed that given the pressure that had been exerted by the State’s monopoly biofuels producer and political donor.
Despite protestations by the fuel retail industry about the substantial business risk to smaller fuel retailers (and the consequent risk of increased fuel prices flowing through to NSW motorists because of higher compliance costs) of an expanded mandate, the NSW Coalition Government pushed through changes to the Biofuels mandate with dedicated support from the State’s peak motoring body.
“Long story short, the NSW Coalition Government rammed through legislation with the support of the NSW Labor opposition to expand the failed 2007 mandate to smaller fuel retailers from 1 January 2017”, said ACAPMA CEO Mark McKenzie.
“This, despite strong and vocal opposition from MP’s within its own ranks, from the NSW Greens and from the fuel industry”, Mark added.
The new laws came into effect on 1 January 2017.
“Since that time, the administration of these new laws has been a shambles”, said Mark.
These shortfalls have been the subject of numerous news articles and stories in ACAPMAg and the general news media. They include a failure of NSW Fair Trading to provide timely responses to exemption applications and continued uncertainty surrounding an implied requirement for larger retailers to increase the number of E10 nozzles despite falling consumer demand.
In fact, a recent investigative story by News Limited noted that representatives of the NSW Department of Fair Trading had apparently gone to extraordinary lengths to defend the integrity of the new laws in the face of industry criticism led by ACAPMA (see http://acapmag.com.au/home/2017/10/fair-trading-bureaucrats-reluctant-sully-name-political-donor/)
It has also emerged that the State Government has been required to turn a ‘blind eye’ to the new biofuels laws given their inability to enforce them (See
“They can’t administer these laws because, under Common Law in this country, fuel retailers cannot be held legally responsible for the valid purchase decisions of their own customers”, said Mark.
“The poor administration of these expanded laws has increased regulatory uncertainty for fuel businesses in NSW and introduced distortions in market competition”, said Mark
But have the expanded biofuels laws worked in ‘lifting the purchase of E10 sales by NSW motorists.
“In a word… No!”, said Mark.
Analysis of petroleum sales statistics produced by the Australian Government’s Office of the Chief Economist reveals that sales of E10 has fallen from 25% of all petrol sales to 24% in the past year.
“Einstein once defined ‘insanity’ as the art of doing the same thing over and over again and expecting different results”, said Mark.
“That definition is very appropriate given the continued and mindless pursuit of the biofuels mandate by the NSW Government – including the expenditure of taxpayer funds to market the product of the State’s biofuels producers”, said Mark.
But then, perhaps Einstein wasn’t aware of the power of political donations in influencing government policy.
“The NSW Biofuels Legislation has failed on every account – it is one that should be abandoned”, said Mark.
“What is appalling in the face of this failure, and the consequent risk to both fuel businesses and NSW motorists, is the deafening silence on the part of the NSW opposition and the State’s peak motoring body”, said Mark.
Abandoning the biofuels laws doesn’t mean the end of biofuels. There is an established portion of motorists who will continue to buy E10 regardless of whether the legislation exists or not.
Equally, analysis of fuel consumer behaviours over the past year reveals that those who currently do not buy E10 now are not likely to buy it in the future.
“So, the NSW Government’s target of E10 sales accounting for 60% of all petrol sales is pure fantasy”, said Mark.
“In short, NSW motorists have sent a strong message to Government”, said Mark.
“That message is that they are the ones who decide what product they use in their own cars and that the Government has absolutely no place in telling them what petrol product they should buy”, said Mark.
It is time for the NSW Government to actually listen to the message coming from NSW motorists and abandon this insane piece of legislation.
“ACAPMA is preparing to highlight the failure of these laws in a concerted publicity campaign from early 2018 and maintain the campaign until these laws are repealed”, said Mark.