On 1 January 2017, laws came into effect requiring eligible fuel retailers to sell a minimum amount of biofuels. The laws provided a grace period for compliance from 1 January 2017 to 31 March 2018 with legal compliance required from 1 April 2017.
Eligible fuel retailers are fuel retail business operating more than 10 retail sites – or any retailer with 10 or less10 sites where one or more of those sites sells more than 500,000 litres of motor spirit in quarter – must retail a minimum amount of biofuels (all fuel wholesalers are required to sell a minimum amount of biodiesel).
Originally, the minimum amount required was 3% of ethanol as a proportion of all regular unleaded petrol sales (Given that ethanol is sold in a 10% blend with petrol – E10 – this means that E10 sales must account for at least 30% of regular unleaded petrol and E10 sales combined).
In the 18 months since the legislation was introduced, fuel retail businesses that could not reasonably store and retail biofuels were able to apply for an exemption from the mandate altogether – and that process continues to be available today. (Guidelines on the process for securing an exemption from selling biofuels can be found at www.dews.qld.gov.au).
On the 1 of July this year, the minimum requirement for sales of E10 increased from 3% to 4%.
ACAPMA has always maintained that, in the face of the NSW Biofuels Mandate experience showing a substitution rate that is just 2.1% after more than 11 years of operation, the increase to 4% was unrealistic.
Nonetheless, the legislation is now in place and ACAPMA is aware that the Queensland Government has started to push back on fuel retailers who, despite storing and stocking E10, are not achieving the minimum required sales target.
“The first point to say here is that the suggestion that a fuel retailer can be held accountable for the purchase decisions of their customers is an absurdity – so at best, the Government’s goal is an aspirational target that would likely to be difficult to enforce under common law”, said ACAPMA CEO Mark McKenzie
Mindful of this fact, the Queensland Biofuels legislation stipulates that the fuel retailer must exercise all reasonable steps to sell the required volume of biofuels – and if they fail to do so, they could potentially be prosecuted under the legislation.
“The key difficulty is, of course, what constitutes ‘reasonable steps’ – a question that is being increasingly asked of ACAPMA by its’ members, added Mark.
Unfortunately, there is no easy answer as ‘reasonable steps’ can only be truly ascertained in a court of law.
And so, the integrity of the current legislation relies upon industry and government working collaboratively to develop a workable understanding of what constitutes ‘reasonable steps’ from the perspective of a fuel retailer (and fuel wholesaler).
“Suffice to say that this is proving to be a challenging conversation, but it remains a constructive one between ACAPMA and the Government”, said Mark
“From our perspective, we believe that a fuel retailer can only reasonably be asked to provide the fuel on the forecourt and then ensure that the rate board stipulates the price of E10”, Mark added.
“These are the measures that a fuel retailer takes with all other fuels and we believe that, at least from an industry practice perspective, any requirements beyond making the product available and visible on the forecourt is unreasonable”, continued Mark.
ACAPMA is aware of recent cases where fuel retailers have been asked to consider additional actions relating to the distribution of marketing information about E10 at point of sale and/or educating their staff on the benefits of E10.
We believe that these steps go outside the bounds of what is expected of a fuel retailer who is selling a choice of fuel products – the marketing task is one for the fuel producers which in this case is the biofuel producer.
“In the case of the Queensland mandate, the government has shouldered the marketing task with the E10 OK Campaign, but it is simply not reasonable to ask fuel retailers to market the product”, said Mark
“It is also unreasonable, at least in our view, for service station staff to provide motorists with advice about vehicle compatibility with E10 as it opens up an unreasonable liability risk for the fuel retail businesses”, said Mark
ACAPMA will continue to work constructively with the Queensland to better understand the interpretation of ‘reasonable steps’ within the context of the Biofuels Mandate and communicate progress on this matter in due course.
In the meantime, member businesses who are concerned that they are being asked by the Government to undertake actions that are considered to be onerous and/or unreasonable should contact the ACAPMA Secretariat on 1300 160 270 or email firstname.lastname@example.org