With legislation mandating the sale of biofuel having now received parliamentary approval in NSW and Queensland, both state governments have begun work on implementation of the new legislation. This means it is now time for fuel sellers in the two states to consider how the new laws will affect their business, and to start preparing for the operation of the biofuel mandates from January 2017.
Shortly after Easter, the NSW Government provided formal approval (known as Royal Assent) of the Biofuels Amendment Bill 2016. This clears the way for the Government to force smaller fuel retailers (fewer than 20 sites) to sell ethanol-blended fuel and biodiesel-blended diesel in NSW.
Now that the legislation has been approved, both state governments have begun drafting the regulations that will be used to enforce this legislation, with the Queensland law to come into force from January 1, 2017. The date of commencement for the amended NSW law is yet to be determined, but all indications are that the law will likely come into effect around the same time as the Queensland legislation.
In effect, all fuel retailers now need to choose between applying for exemption from the biofuels mandate in each state, and making the necessary changes to their sites to accommodate the sale of ethanol blended fuel.
While the legislation in each state makes provision for exemptions from the requirement to sell ethanol-blended fuel (NSW retailers click here, Queensland retailers click here), fuel retailers will need to make a case to government for exemption that is largely developed around the capital cost of upgrades being uneconomic for the business and/or threatening the future commercial viability of the business.
Given the market is made up of sites both large and small, with varying sales volumes, the difference between what is deemed to be “economic” and what is “uneconomic” is subject to a degree of uncertainty – and ACAPMA is working with both governments to seek clarity on this matter as soon as practical.
It is worth noting that the legislation (and supporting statements from government) indicate that both governments will provide extra time for fuel retailers to upgrade their infrastructure, beyond the start date for the new laws, provided businesses submit a temporary application for exemption – and can demonstrate that they have made all reasonable efforts to comply by the published start date.
So what does all this mean?
Quite simply, it means that now is the time to give some thought to what site works are likely to be required to accommodate ethanol-blended fuel on your retail site. Ideally, all affected fuel retailers should secure:
- Formal advice from an appropriate service provider about the scope of works required to accommodate the sale of ethanol-blended fuel on each site.
- A quotation for the capital costs of the work involved.
- Advice on the likely duration of these works, including the time frame for council (and related) building approvals.
Having secured this information, fuel retailers should then be in a position to determine whether the cost of works required to sell ethanol (at each site) can be reasonably accommodated by the business.
The exact nature of works required is likely to be affected by the detail of the supporting regulations and so ACAPMA’s advice is that retailers should wait until the detail of the regulations is finalised by both governments, before committing to any works.”
The detail of the NSW regulations is expected to be known by the end of May 2016, and that of Queensland’s by the middle of the year.
Where retailers believe the quoted cost of works cannot reasonably be accommodated by the business, ACAPMA is developing a process to either guide the retailer through the application process for exemptions, or prepare and submit the application for exemption on behalf of the retailer (ACAPMA will levy a small one-off administration fee for this work on the basis of simply covering the costs involved with special rates for ACAPMA members).
ACAPMA accepts that this is an uncertain time for many fuel retailers in both states and is committed to providing all assistance necessary so that fuel retailers fully understand the options available to them.
The association is continuing to work with both governments to ensure the new regulations take due account of the need to minimise the compliance cost to fuel retailers – and protect those businesses that are vulnerable.
If these governments get it wrong, there may be significant increases in fuel prices to motorists and/or businesses will close – potentially depriving communities of ready access to transport fuel.
In addition, it’s important that fuel retailers make sure that those motorists who own vehicles that cannot use ethanol-blended fuel are aware of this fact and choose a product that is fit for purpose.