Despite ACAPMA’s best advocacy efforts over the past 18 months, new laws mandating the sale of biofuels will take effect in both NSW and QLD.

These laws amount to an artificial market intervention by both State Governments in an attempt to deliver benefits to the small number of producers that exist in each state – much of it in the face of a motoring community that has long shunned biofuels.

Nonetheless, the laws have been passed and it is essential that fuel retail businesses understand what it means for their business in the future.

The laws in each State differ markedly.

Below is a brief summary of how they will operate in each State.

Queensland

  • The new law will commence on 1 January 2017
  • Liability is determined on the basis of the size of the business (i.e. Business basis) for larger retailers and on an individual site basis for smaller retailers.
  • Fuel retail businesses operating 10 or more sites must comply with the mandate
  • Fuel retail businesses with 9 sites or less, will only be liable for the mandate for any individual sites selling more than 500,000 litres of petrol (all grades) per quarter – equivalent to 2ML per year.
  • Compliance means that the fuel business must make ‘all reasonable efforts’ to meet the following targets:
    • Convert 3% of their unleaded petrol volume to ethanol from 1 January 2017, rising to 4% from 1 July 2018. Given that ethanol is marketed as a 10% blend with unleaded petrol (i.e. E10), this means that a business must make all reasonable efforts to convert 30% of their unleaded petrol sales to E10 (Note that Premium petrol sales are not included in the volume target)
    • Convert 0.5% of diesel volume to biodiesel. Given that Biodiesel is marketed as a 5% blend with diesel, this means that sales of B5 must account for 10% of biodiesel sales
  • The government has worked with ACAPMA to develop a comprehensive list of business safeguards to ensure that businesses that cannot reasonably comply with the new laws are exempted on either a whole-of-business level or a partial level (i.e. exclusion of individual sites). Reasons for exemption range from high conversion costs, long lead time for improvement works, and operating from a site that is owned by a third party (i.e. tenanted site)
  • Making ‘reasonable efforts’ is open to interpretation but basically means that the business must make biofuels available on their forecourts and advertise the price of E10 on their price boards.
  • Given that the law is applied on a business basis, affected businesses need not make provision for biofuels at each and every site – the decision as to which sites are to sell biofuels is being left to the business, but the business will still need to demonstrate that exclusion of individual sites represents making all ‘reasonable efforts’ to comply with the volume targets that have been set.

ALL fuel retailers in Queensland are strongly urged to take account of the new laws and make themselves familiar with the specific grounds for exemption.

If you believe that your business is eligible for an exemption, then you must make an application for an exemption and now is the time to apply.

Further information about the grounds for exemption, including details of how to apply via the online form, can be found at https://www.dews.qld.gov.au/electricity/renewables/fuels/mandate.

New South Wales

Unlike Queensland, the New South Wales Government’s handling of the new laws has been poor.

Despite being less than three months out from the commencement of the new laws, the Baird NSW Government has still not reduced the details of the new laws and the business safeguards that it proposes to put in place to protect vulnerable businesses.

Nonetheless, here is what we do know:

  • The new law will commence on 1 January 2017
  • Liability is determined on the basis of fuel volumes sold at individual sites (i.e. site basis)
  • Any fuel retail business operating a retail site selling more than 3.6ML of fuel per year (i.e. all grades of petrol and diesel) is required to comply with the mandate.
  • Compliance means that the fuel business must make ‘all reasonable efforts’ to meet the following targets:
    1. Convert 6% of their petrol volume (all grades) to ethanol from 1 January 2017. Given that ethanol is marketed as a 10% blend with unleaded petrol (i.e. E10), this means that a business must make all reasonable efforts to convert 60% of their petrol sales(all grades) to E10.
    2. Convert 0.5% of diesel volume to biodiesel. Given that Biodiesel is marketed as a 5% blend with diesel, this means that sales of B5 must account for 10% of biodiesel sales
  • Making ‘reasonable efforts’ to sell biofuels remains uncertain at this stage and will not be known until such time as the Baird Government gets around to finalising and releasing the new Biofuels Regulation. At its most basic level, it means making E10 available on the forecourt and advertising the price on the price board at each site
  • Given that the NSW Legislation is being applied on a site basis, EVERY site owned by the business that exceeds the 3.6ML threshold must make biofuels available unless an exemption has been secured from the NSW Government.

Details of the Biofuels Regulation and Biofuels Exemption Guideline have not yet been released by the NSW Government.

ACAPMA understands, however, that retail sites NOT currently selling biofuels will likely be exempted from compliance during the first quarter of 2017 (i.e. will be required to comply from 1 April 2016) unless otherwise exempted.

Summary

If you are a fuel retailer in Queensland or NSW, the new laws have the potential to affect your business. ACAPMA therefore recommends that businesses make sure they understand the new laws and, if appropriate, take immediate steps to apply for an exemption if required.

It is worth noting that under both laws, a fuel retailer cannot actually force a customer to purchase biofuels and therefore there remains a significant question about the enforceability of these laws under Common Law provisions -which will ultimately have to be tested by precedent.

In the meantime, the ability to make fuel retailers accountable for the purchase decisions of their customers comes down to an interpretation of whether the fuel retailer is making ‘reasonable efforts’ to make biofuels available. What that means in practice is yet to be determined.

“Nonetheless, the Queensland Government has worked cooperatively with ACAPMA and other industry stakeholders to develop an approach that achieves the government’s objectives whilst simultaneously putting in safeguards to protect small fuel retail businesses and the people they employ”, said ACAPMA CEO Mark McKenzie.

“The NSW Government, by comparison, have proven themselves to be inept – the result of this ineptitude is clearly evidenced by the fact that less than 3 months out from the start of new laws that will potentially destroy some small businesses and related employment, we still do not have details on how the regulation will operate, said Mark.

Members seeking more information about the biofuels laws should email assist@acapma.com.au.

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