The Australian Institute of Petroleum (AIP) welcomes the Australian Government’s decision on a new fuel quality standard for petrol.

The new petrol standard will reduce the maximum allowable levels of sulfur in all grades of petrol to 10ppm sulfur from 1 July 2027, which requires AIP member companies to invest up to $1 billion in refinery upgrades to meet this new fuel quality standard.

AIP CEO, Mr Paul Barrett said “the Government fully understands the implications for local refineries related to this complex and challenging investment, and has decided on an appropriate timeframe for industry to investigate the most cost effective solution and latest technology advancements to comply with the new standard.”

AIP and its members support the improvements in fuel standards, and acknowledge the consultative approach over a number of years taken by the Australian Government on this initiative, involving coordination across the fuels and motor vehicle industries and with the national motoring body.

This consultation has resulted in a timeline which provides the best balance between delivering environmental improvements and minimising any impacts on consumers, whilst providing long term policy certainty to the local refining industry to facilitate potential investment and business decisions.  It also provides certainty for the vehicle industry over the next decade to facilitate the introduction of the latest vehicle technologies.

AIP public submissions throughout the review process have consistently demonstrated that the sulfur and aromatic levels in petrol available to Australian motorists are already substantially below the regulated limits.  Importantly, the Industry has committed to report to Government annually to safeguard this existing fuel quality over the transition period to the commencement of the new petrol standard.

The Government’s decision also includes concrete steps by industry and the Government along the implementation timeframe to demonstrate ongoing progress.  This includes a substantial review in 2022, to determine aromatic limits in petrol from 2027, when there will be greater clarity in the market and regulatory environment internationally for both the refining and car industries.

“This Government decision, in particular the timeframe provided, acknowledges the very significant investment that would need to be made by the Australian refining industry whilst meeting the challenges of continuing strong competitive pressures from larger refineries in the Asia Pacific region.  It highlights the importance the Government places on the economic contribution of domestic refineries, particularly in their local communities, and in supporting supply reliability and security to the local market”, said Mr Barrett.

Press Release by AIP