Yesterday, the Queensland Energy Minister (the Hon. Mark Bailey MP) made a series of statements relating to the intended operation of the Queensland Biofuels Mandate (https://www.legislation.qld.gov.au/LEGISLTN/ACTS/2015/15AC031.pdf).

This mandate will commence operation on 1 January 2016.

When the Legislation was passed in December of last year, fuel retail businesses with less than 10 sites (i.e. 9 or fewer) were automatically exempted from the mandate. If, however, one or more of the sites operated by these smaller retail businesses sold in excess of 1M litres of petrol per year then those particular sites would still be liable under the mandate.

In a worthy concession offered to industry, Minister Bailey announced yesterday that the Queensland Government would increase the threshold for liability from the original threshold of 250,000 litres (of petrol sales per site per quarter) to 500,000 litres.

“The threshold for liability of individual sites operated by smaller retailers has been a subject of robust conversation between ACAPMA and the Queensland Government since it was passed into legislation in December of last year”, said ACAPMA CEO Mark McKenzie.

“While we would prefer not to have any mandate at all, the decision of the Queensland Government to double the threshold for liability for smaller retailers is a welcome one and will result in a substantial number of smaller retailers being rightly excused from the mandate”, said Mark.

The Minister also released the Biofuels Exemption Guideline (https://acapmag.com.au/wp-content/uploads/2016/09/Qld-Government-Biofuels-Mandate-Exemptions-Guideline-August-2016.pdf) yesterday. This Guideline – which is applicable for sites operated by both big and small fuel retailers – will be delivered to all registered fuel sellers in Queensland on Monday, 5 September 2016.

The Biofuels Exemption Guideline will be used by the Queensland Government to determine whether there are grounds for individual businesses with sites selling more than 2M litres of petrol per year per site to be either partly exempted (i.e. selected sites) or wholly exempted (i.e. all sites) from the Biofuels Mandate.

Exemption of fuel retail businesses will be considered on a case by case basis and will require fuel retailers to lodge an application for exemption that is developed around one or more of the grounds listed in the Biofuels Exemption Guideline.

Apart from an exemption based around the fuel retailer’s inability to secure a sufficient supply of biofuels, there are a number of additional grounds for exemption that are called ‘Other Extraordinary Circumstances’. These circumstances include:

  • Lease terms: Situations may arise where the fuel retailer is leasing the site and the nature of any capital improvement works required to accommodate the storage and sale of biofuels makes such investment unreasonable over the remainder of the lease term.
  • Site constraints: Exemptions may be given in cases where specific site constraints make it impractical for the business to carry out works needed for the storage and sale of biofuels.
  • Demand: If customer demand for biofuels at a particular fuel facility or fuel seller is particularly low and cannot be addressed by efforts to promote sales, then an exemption may be provided to the fuel seller (e.g. fuel seller located at a Marina)
  • Logistics: Exemptions may be offered to fuel sellers in regional areas where disruptions in supply are caused by logistical issues associated with the bulk transport of fuels on unsealed roads during the wet season.
  • Lead times: Situations where the lead times for essential improvements required for the storage and sales of biofuels do not support achievement of the commencement date, may also be considered as grounds for possible exemption.
  • Unexpected sales: This exemption can be pursued where a fuel seller has had higher than normal sales in a quarter (e.g. holiday season) that exceed the threshold for liability but has had successive ‘normal’ quarters where sales have been below the threshold.
  • Extraordinary and unreasonable cost of compliance: This exemption is based on consideration of the ratio between the cost of capital works required to support the sale of biofuels (i.e. ethanol blended fuel) and the volume of annual fuel sold. The higher the ratio, the more likely it is that the fuel seller will receive an exemption.
  • Access to finance: If the fuel seller is able to demonstrate that they simply cannot secure finance for essential improvement works required for the storage and sale of biofuels at their site, then they would have grounds for applying for an exemption from the mandate.

“The Biofuels Exemption Guideline is fairly comprehensive and fuel retailers are encouraged to study the Guidelines carefully once they are received from the Government next week”, said Mark.

“All in all, the Queensland Government has taken the time to work with our industry to ensure that all of the reasonable safeguards that could be put in place to protect against adverse business and economic circumstances, have been put in place”, said Mark.

“Once again, while we would prefer not to have a mandate, we believe that the Government has adopted a fair and reasonable approach for the achievement of their biofuel objectives”, said Mark.

Over the next two months, ACAPMA will be working with affected Queensland retailers to ensure that there is a consistent understanding of the mandate and the associated Exemption Guidelines.

“Having the Exemption Guidelines is just part of the challenge – ensuring that these Guidelines are applied consistently and equitably in a highly competitive marketplace is the real challenge for government and industry alike”, said Mark.

Further information about this matter can be obtained by emailing the ACAPMA Secretariat via communications@acapma.com.au or calling 1300 150 270.

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