Yesterday, the NSW Baird Government introduced legislation seeking to expand the current legislative mandate for the sale of biofuels in NSW by making all retail fuel sites subject to the mandate. The move has been vigorously opposed by ACAPMA on the basis of the potential threat to the viability of smaller fuel retailers in NSW (less than 20 sites), the implicit threat to the more than 12,000 people employed in the NSW retail fuel market, and a likely upward pressure on retail fuel prices for NSW motorists.

Following months of hype the NSW Liberal Government introduced the Biofuels Amendment Bill 2016 (The Bill) to the Legislative Assembly yesterday and conducted the second reading in preparation for future debate.

The Bill which seeks to impose the requirement that 6% of all motor spirits sold must be ethanol on all service stations in the state will be held over in the legislative assembly for debate in the next week or so before being put to a vote, where it is understood the policy will have bipartisan support.

Key among the changes included within The Bill are to;

  • Expand the liability placed on fuel retailers to include all service station operators in NSW
  • Remove the obligation for wholesaler suppliers to comply with the 6% mandate
  • Require all fuel retailers and wholesale suppliers in NSW to provide information returns to the government on sales of all petrol grades and diesel
  • Give IPART the power to set the wholesale price of Ethanol

During the second reading of The Bill Minister for Innovation and Better Regulation Victor Dominello, who has been tasked with the passage of this legislation, eluded to what the government perceived as being the 4 key benefits of a ‘Strong’ biofuels market.

Despite the well-known negative effects of Ethanol (including price-power ratio and effects on existing infrastructure) and the negligible economic and environmental benefits to the NSW community, the Minister promoted the legislative amendment by stating that:

  • E10 is the most cost efficient fuel available in the market, despite its energy density differential with RULP E10 has the potential to be more cost effective when priced 3% lower than RULP
  • Ethanol has the potential to decrease Australia’s dependency on imported petrol through providing a blending alternative
  • The use of ethanol in ethanol blended petrol has the benefit of creating a use for an agricultural bi-product which would otherwise not be utilised
  • A successful biofuels market has the added benefit of supporting regional employment through the Manildra Groups ethanol refinery

The Minister was keen to point out the discernible benefits which could be derived from this policy while also pointing out that there would be business safeguards included within the regulation to provide some security to fuel retail operators who may find it uneconomical to comply with a legislation developed to benefit a monopoly producer while placing additional burdens on fuel operators.

ACAPMA was pleased to see that our position, which is fundamentally opposed to the introduction of an ethanol mandate due to the distortionary effects it has on a market, was noted within the Minister’s speech to clarify recent speculation.

While ACAPMA is not opposed to the sale of ethanol blended fuels, or indeed the sale of any alternative fuel options, ACAPMA is opposed to the implementation of legislation which seeks to provide a false market for a product to the benefit of one industry (Biofuels) while placing an economic burden on another (Fuel Retailers) with no discernible benefits to the consumer or the economy.

ACAPMA remains fundamentally opposed to the NSW Biofuels Mandate, however, we will continue to work with the NSW Government and other industry stakeholders in order to protect the interests of fuel retailers, wholesalers and distributors and by ensuring that there are adequate business protections included in the supporting Regulation (which will likely be finalised by 30 June 2016).

To find out more on ACAPMA’s policy position please click here, or contact ACAPMA on 1300 160 270.