Eight years ago, the NSW Government – motivated by an openly acknowledged desire to reward the State’s monopoly biofuels producer for past political donations – introduced biofuels laws that required NSW fuel retailers to achieve 6% substitution of ethanol for all petrol sold across the State.
Given that ethanol is sold as a 10% blend with petrol (i.e. E10), the practical achievement of this mandate means that that E10 must account for a minimum 60% of all petrol sales in NSW.
“The ridiculousness of this target is evidenced by the fact that, despite more than 8 years of operation of the mandate, E10 sales are a bit over a third of the government’s target”, said ACAPMA CEO Mark McKenzie.
A review of the latest version of the Australian Petroleum Statistics (http://www.environment.gov.au/energy/publications/petroleum-statistics-may-2017) indicates that the share of E10 sales, as a percentage of all petrol sales in NSW, was just 24.6% in May 2017.
Moreover, the Australian Government’s same statistics reveals that E10 sales in NSW have fallen from a high of 39% in December 2010 to just 24.6% in May 2017.
This decline in E10 sales is despite a substantial investment being imposed on fuel retailers by the NSW Government as they reconfigure fuel storage and dispensing infrastructure to sell E10.
“Clearly, NSW motorists are voting with their feet by shunning E10 which is interesting when you consider that the State’s motoring body – the NRMA – continues to be the strongest non-government advocate for the continuance of the laws”, said Mark.
In fact, the NRMA’s strong and open support is even more curious considering statements made by the ACCC earlier this year which suggested that NSW motorists were paying $85M more in annual fuel costs than they would be without a biofuels mandate (The ACCC’s rationale is built around the fact that as unleaded fuel pumps are replaced with E10 pumps, motorists choose to purchase the higher cost premium fuels rather than put E10 in their cars).
“Strangely, the NRMA who frequently (and often wrongly) bleat about average petrol prices being too high, did not make a single statement on this issue”, said Mark.
So, in the face of all this evidence, you would have thought that sanity would prevail and the NSW Government would have terminated the mandate.
But no. Not in NSW.
The NSW Government elected to extend the mandate to fuel retailers with less than 20 sites as of 1 July 2017, effectively capturing all fuel retail sites that sold more than 3.6ML of liquid fuels (i.e. petrol and diesel) per year.
Thankfully, the NSW Government put in place an exemption framework designed to protect fuel retailers against a series of potential adverse economic, employment and environmental risks.
But unfortunately, this process too appears to have failed.
ACAPMA understands that despite the NSW Government having received many biofuel exemption applications (both from large retailers not achieving the mandate and from smaller retailers seeking exemption from a requirement to sell biofuels – the NSW Government has not issued a single exemption.
“This is despite the new laws having operated for more than 7 months now”, said Mark.
Wikipedia provides a colloquial definition of a blackhole as being ‘a place where money or lost items apparently disappear without trace’.
“This definition appropriately defines the way the NSW Government is managing the biofuels exemption process – exemption applications are lodged as legally required but nothing comes out”, said Mark.
“Fuel retailers are being forced into submitting exemption applications on time by public servants who are just doing their job, yet the NSW Government is failing to consider and respond to these applications at all”, said Mark.
The result is that all fuel retailers – large and small – remain in limbo as the NSW Government stumbles along from one biofuels disaster to the next.
“Technically, all fuel retailers are in breach of the laws surround the fuel mandate – but not for any reason of their own doing”, said Mark.
So now we have a situation where (a) consumer consumption of E10 is steadily declining, (b) fuel retailers are spending money on infrastructure to sell a fuel no one wants, and (c) the government is failing in its duty to administer the program in accordance with the safeguards that were set out in the legislation.
“The whole thing is a monumental farce”, said Mark.
“It is time to make the only call that can reasonably be made and kill off this mandate”, said Mark.