As many readers of this newsletter will be aware, ACAPMA was (and remains) staunchly opposed to the expanded biofuels laws that were introduced by the NSW Government during 2016.

ACAPMA’s opposition is premised in the fact that the new laws are environmentally and economically unjustified and are likely to increase the costs of selling fuel in NSW – costs that will ultimately be borne by NSW motorists in the form of higher average fuel prices.

Further these laws come in the face of 5 years of declining biofuels sales under the previous mandate and appear to be largely motivated by the NSW Government’s desire to reward a significant political donor.

Under normal circumstance, the balances and checks afforded by a Parliament provide protection from poor lawmaking by encouraging critical assessment by the opposition party. But in this particular case, it appears that NSW Labour has also been a beneficiary of significant donations from the State’s monopoly ethanol producer.

“In fact, and somewhat ironically, the only political force to challenge these ridiculous and unjustified laws is the NSW Greens casting real doubt on government claims about the environmental benefits of biofuels”, said ACAPMA CEO Mark McKenzie.

Regardless of the dubious circumstances surrounding the development of these new laws, they have been passed by the NSW parliament and formally took effect on 1 January 2017.

“Consequently, our industry must now comply with the new laws until common sense prevails and they are repealed by a future NSW Government”, said Mark.

Over the last 2 months, affected fuel retailers received an email from NSW Fair Trading notifying them of their obligations under the new biofuels laws.

Fuel retailers that have become liable under the new laws for the first time have been automatically exempted from compliance with the new laws for the March 2017 quarter but are still required to report fuel sales volumes.

Under the new laws, all fuel sellers operating sites that sell more than 3.6ML of petrol (all grades) and diesel are classified as Volume Fuel Sellers. These Volume Fuel Sellers are required to make ‘all reasonable efforts’ to sell ensure that:

  • 6% of all petrol sold is ethanol (i.e. sold as a maximum 10% blend with petrol)
  • 2% of all diesel sold is biodiesel (i.e. typically sold as a 5% blend with biodiesel).

“From 1 April 2017, all liable fuel retailers are somehow expected to cajole a minimum of 60% of their petrol customers to sell E10”, said Mark.

“The absurdity of this target is obvious when you consider that the state-wide consumption of E10 is just 25%, despite the previous biofuels mandate having been in operation for 7 years”, Mark continued.

When it comes to biodiesel, the target is even more preposterous as it is not currently possible to purchase biodiesel in NSW.

Perhaps more importantly, there appear to be strong and substantial grounds for challenging the NSW biofuels laws on the basis that a fuel retailer cannot be held legally responsible for the individual purchase decisions of their customers.

The NSW Government has tried to get around this inherent legal weakness in their legislation by introducing a legal requirement for affected fuel retailers to make “all reasonable efforts” to meet the biofuels targets.

“The definition of ‘all reasonable efforts’ has been the subject of intense debate between the fuel industry and the NSW Government over the past 8 months – and the situation still remains largely unclear”, said Mark.

To provide some clarity on this issue, the NSW Government issued a Biofuels Exemption Framework which sets out some grounds for affected retailers to secure an exemption from compliance.

These Exemption Guidelines can be downloaded at: http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/Businesses/Biofuels_industry/Biofuels_mandate_exemption_framework.pdf

Affected fuel retailers are encouraged to examine these exemption guidelines closely and consider whether there are grounds for applying for an exemption from the new laws.

Businesses that believe there are grounds for exemption are encouraged to submit an exemption application as soon as possible.

“Any fuel retailer who is confused about the new laws, or whether there are any likely grounds for exemption, is strongly encouraged to contact me directly”, said Mark.

There have also been some suggestions that the NSW Government believes it is ‘reasonable’ to force fuel retailers to ensure that there are a similar number of nozzles for E10 as for other grades of petrol on the forecourt of each liable site.

“ACAPMA considers this latter interpretation to be wholly unreasonable in the face of limited demand, bordering on a material restraint of trade, said Mark.

ACAPMA is therefore interested in hearing from any business who believes that their exemption application has been unreasonably refused or any business that has been directed by any NSW Government official to increase the number of E10 nozzles on their forecourt.

“This information will be used to compile a portfolio of evidence for use in a public campaign to expose the industry and consumer detriment arising from these ridiculous laws”, said Mark.

Further information can be obtained by contacting ACAPMA on 1300 160 270 or by emailing Mark McKenzie directly at markm@acapma.com.au.