The entry of the two supermarkets into the Australian fuel retail industry 20 years ago resulted in a substantial change in the primary offering of traditional ‘service stations’. This change saw our industry non-fuel offerings grow beyond simple ‘chips, chocs and drinks’ to include grocery and café items. This change saw our industry become known as the ‘Petrol & Convenience Retail’ sector and has seen one of our major brands, 7-Eleven, become one of the largest retailers of coffee in the country -2nd only to McDonalds.

Twenty years on, our industry is on the cusp of yet another transformation. This change is expected to have a major impact on all elements of the downstream fuel supply chain (i.e. fuel distribution, fuel wholesaling, asset management services, and product suppliers) as fuel retail businesses adapt their fuel and non-fuel offerings under the new banner of ‘Low Carbon Mobility and Convenience’.

This observation raises two key questions. How fast will our industry need to adapt to projected declines in annual revenues from conventional fuels? And how should fuel businesses best respond to this decline?

There is considerable uncertainty about the degree to which Net Zero 2050 and the associated low carbon mobility agenda will be delivered in practice. The challenge is no longer an environmental one as the national policy decision has been made. It is essentially an economic and engineering challenge of a magnitude and scale that has never been tackled in the modern world before.

An apolitical collaboration of Australian and overseas universities (the Net Zero 2050 Project) detailed the magnitude of the clean energy transition challenge in a report released late last month. The report, entitled How to Make Net Zero Happen in Australia, concluded that in order to achieve the Australian Governments 2050 goal of net zero, Australia needs to spend an additional $1.5 Trillion on the clean energy transition before 2030 – and an additional $6-$7 trillion by 2050.

The scale of the economic challenge highlighted in this report has been likened to the reconstruction of Europe after World War II.

The report raises a some very obvious questions for all of us. Can we afford the goals that have been set? If not, what is the alternative? Is the clean energy transition going to be a contest of ‘survival of the fittest’, with richer households able to afford the cost of the transition and continuing their normal lives while less wealthy households experience a decline in their standard of living as they grapple with the rising costs and limited availability of traditional forms of energy? Are there smarter alternatives to renewables (e.g. Nuclear)? What does this all mean for the businesses currently serving the transport energy needs (i.e. fuel and energy) of Australian households and businesses now?

Unfortunately, there are no easy answers to any of these questions. But one thing is for sure. The survival of our industry in the future will depend upon the degree to which we can successfully

navigate the uncertainty associated with the sheer economic magnitude and societal cost of the Net Zero 2050 transition over the next 25 years or so.

Australia’s commitment to the realization of Net Zero by 2050, coupled with the long tail nature of our industry’s high-value fuel assets, means that this is not an industry conversation for later – it is a conversation for now.

“Our industry has too much invested to simply sit on the sidelines and watch the demand for our conventional products change. We must engage positively in this debate with traditional and non-traditional stakeholders to ensure that our businesses – and the more than 60,000 Australians that rely on them for their livelihood, survive and thrive in this new frontier”, said ACAPMA CEO Mark Mckenzie.

That is why this year’s Asia Pacific Fuel Industry Forum – ACAPMA’s annual industry conference – is being advanced under the umbrella theme of “Positioning for the Future”, added Mark.

To be held at the Brisbane Conference and Exhibition Centre in just over a week (www.apfiforum.com.au), the 2023 Forum will seek to advance one of the most critical conversations our industry has faced in more than 60 years, namely: How best to adapt to the Net Zero 2050 agenda?

Day 1 of the Conference (5 September 2023) will focus on industry opportunities in low carbon mobility, often described as the energy diversification approach. This approach seeks to develop commercially viable low carbon offerings for clean technology vehicles via investment in EV charging, early-stage hydrogen refueling infrastructure, and the production and distribution of carbon-neutral synthetic fuels.

The strategy is particularly challenging as it requires substantial financial investment well ahead of demand. It therefore requires patient investment against a backdrop of significant uncertainty about the realization of a commercial return in the future.

That said, some of our bigger businesses have already begun implementation of elements of this strategy and there are some interesting early lessons.

The APFI Forum brings together a quality line-up of speakers on Day 1 to provide their perspectives on low carbon mobility strategy and how our industry might respond in the future. These speakers include leaders of our own industry, as well as senior representatives from the electricity supply and Hydrogen industry, namely:

Day 2 of the conference (6 September 2023) will focus on the opportunities to ‘turbocharge’ our current convenience offerings – and further venture into hospitality offerings. This represents an approach that can reasonably be described as the revenue diversification approach.

This strategy seeks to offset projected declines in conventional fuel revenues by growing revenues from the expansion of traditional convenience offerings in areas such as hospitality and new services delivery that create new customer missions for service station businesses (Mr David McLean, CEO of HUBBED, will discuss one of these at the Business Breakfast on Day 1 of the conference).

This approach, however, brings substantial cultural challenges and requires a full-scale commitment to small format retail via reconfiguration of bricks and mortar assets and investment in workforce skills.

A quality line-up of national and international speakers will bring their perspectives to bear on this second strategy during Day 2, in what amounts to the biggest Association conversation on convenience strategy in a decade, including:

Both strategies have significant merit. But they also have significant challenges to their market realization at scale. That is why we have dedicated the 2023 event to deep conversations of both of these strategies this year – it is a comprehensive industry conversation that we must start now”, said Mark.

But the challenges ahead of us are not constrained to fuel retail businesses. They will also impact the future operation of fuel distribution/wholesale businesses and the petroleum contracting industry, who will need to adapt to multi-energy forecourts and equipment.

The afternoon of Day 1 marks a return of the ever-popular Contractors Forum where participants will be invited to discuss current issues like labour force and skill challenges as well as share some perspective on how best to deal with the upcoming transformation.

The afternoon of Day 2 will see the conduct of a new dedicated session focusing on the key issues facing fuel distribution and wholesale businesses. Led by Sarah Simpson (Chair of the AMPOL National Distributors Association), this session will discuss current business challenges and looming changes to IR that may well further challenge the operations of these businesses in the future.

 

If you are interested in participating in this vital national industry debate, or simply getting some ideas about how others are positioning their business for the future, join us at the 2023 Asia Pacific Fuel Industry Forum which will be held in Brisbane between 4 and 6 September 2023.

There is just one week to go!

REGISTER NOW at www.apfiforum.com.

“It is only through the sharing of ideas and perspectives that we can work collectively to ensure that our industry, and all the businesses that operate within it, remains vibrant in the face of the powerful forces that are going to reshape the needs of our customers to 2030 and beyond”, concluded Mark.

ACAPMA

SHARE THIS ARTICLE: