A/G ASSISTANT SECRETARY, ENERGY SECURITY BRANCH
DEPARTMENT OF THE ENVIRONMENT AND ENERGY
NOTICE UNDER SECTION 17A OF THE FUEL QUALITY STANDARDS ACT 2000 CONCERNING AN APPROVAL TO VARY THE FUEL STANDARD (AUTOMOTIVE DIESEL) DETERMINATION 2001 GRANTED UNDER SECTION 13 OF THAT ACT
I, James Hetherington, A/g Assistant Secretary, Energy Security Branch, delegate of the Minister for the Environment and Energy, provide the following information concerning my decision to grant an approval under section 13 of the Fuel Quality Standards Act 2000.
Name of approval holder
IOR Energy Pty Ltd
Period of operation
The approval comes into force on 1 January 2018 and remains in force until 31 December 2019.
Details of the approval
The approval varies the fuel standard for diesel set out in the Fuel Standard (Automotive Diesel) Determination 2001 (the Diesel Determination) so that:
- Automotive diesel containing a minimum density of 800 kg/m3 and maximum sulfur content of 50 mg/kg will be taken to comply with the relevant parameters specified in the Diesel Determination in respect of the supply of automotive diesel under contract to commercial road users until 31 December 2019.
The approval applies to automotive diesel supplied by the approval holder and the regulated persons specified in Annexure 1 of the approval.
The approval is granted subject to the conditions specified in section 17 of the Act and the conditions specified in Annexure 2 of the approval.
Summary of reasons for the approval
Having consulted with the Fuel Standards Consultative Committee as required by section 24A of the Act, I grant the approval as provided for in section 15 of the Act for the following reasons:
a) The protection of the environment
The fuel appears to be of a high environmental quality with low aromatics, high cetane and low particulates in emissions. Aside from its sulfur content, it seems to be a relatively clean fuel that would contribute to reducing some toxic emissions and the protection of the environment.
The regional production and distribution of the fuel reduces the whole-of-life footprint in comparison to transporting the locally sourced crude oil to the coast for processing and then transporting it back for use.
b) The protection of occupational and public health and safety
High levels of sulfur in diesel increase emissions of particulates into the atmosphere. A number of studies have indicated that diesel particles are mutagenic and carriers of compounds which are suspected of contributing to the rise in cancer cases in city areas with a large proportion of diesel fuelled vehicles. Furthermore, in June 2012, the International Agency for Cancer Research classified Diesel Particulate Matter as a known human carcinogen (Group 1).
As the proposed coverage area for the supply of the fuel is restricted to 300 km from the Eromanga Refinery or from the outlet at Innamincka, South Australia, it is not expected that there will be any adverse impacts on occupational and public health and safety from the approval.
c) The interests of consumers
The introduction of a 10 mg/kg sulfur limit for automotive diesel in January 2009 enabled introduction of ADR80/03 (Euro 5) emission standards for heavy vehicles. The use of diesel containing greater than 10 mg/kg sulfur in vehicles certified to ADR80/03 may affect vehicle warranties and is not recommended. To mitigate impacts on consumers, conditions include limiting sale of the product to contracted commercial purchasers and providing consumer information.
d) The impact on economic and regional development
IOR provides employment opportunities for the local community in regional areas of Queensland, Northern Territory, South Australia and New South Wales. The Eromanga refinery currently directly creates employment for between 68 to 75 people.
Commercial industries also benefiting from IOR include long haul freight operators, local shire councils, regional mining and pastoral companies, and downstream solvent manufacturers.
James Hetherington
A/g Assistant Secretary, Energy Security Branch
8 December 2017
Overview
The Fuel Quality Standards Act 2000, enacted by the Australian Parliament, was introduced to regulate fuel quality standards to protect the environment, occupational and public health and safety, and to promote economic and regional development. This Act allows for the setting and enforcement of fuel standards, and provides mechanisms for approving variations to these standards under specific circumstances. The Assistant Secretary, Energy Security Branch, Department of the Environment and Energy, has exercised their authority under this Act to approve a variation in the fuel standard for automotive diesel, recognising the environmental benefits and regional economic impacts. The approval granted to IOR Energy Pty Ltd to supply diesel with specific parameters until 31 December 2019 was made in consideration of the environmental quality of the fuel, its low sulfur content, and its regional production and distribution, which collectively contribute to reducing emissions and protecting public health. The decision also took into account the interests of consumers and the broader economic benefits of the approval, including employment and regional development.
Scope and Application
The Fuel Quality Standards Act 2000 governs the quality standards for fuels supplied in Australia, and it applies to entities involved in the production, distribution, and supply of automotive fuels, including diesel. The Act is a Commonwealth legislation, thereby extending its jurisdiction across all states and territories within Australia. The notice under Section 17A of the Act pertains to an approval granted to IOR Energy Pty Ltd for varying the Fuel Standard (Automotive Diesel) Determination 2001, effective from 1 January 2018 to 31 December 2019. This approval allows for the supply of automotive diesel with specific parameters, namely a minimum density of 800 kg/m3 and a maximum sulfur content of 50 mg/kg, to commercial road users within a defined region. This decision was made following consultations with the Fuel Standards Consultative Committee and is subject to the conditions outlined in the Act and the approval itself. The approval is designed to balance environmental protection, public health and safety, consumer interests, and economic development, with specific conditions imposed to mitigate any potential adverse effects on these areas.
Key Provisions
The primary sections of the notice (section 13, 15, 17, 24A) establish the framework for granting an approval to vary a fuel standard under the Fuel Quality Standards Act 2000. Section 13 provides the authority for the approval, while section 15 outlines the process for consultation and decision-making, including mandatory consultation with the Fuel Standards Consultative Committee (section 24A). Section 17 specifies the conditions that must be attached to any such approval. The approval itself modifies the Fuel Standard (Automotive Diesel) Determination 2001 to allow for the supply of diesel with a minimum density of 800 kg/m3 and a maximum sulfur content of 50 mg/kg to commercial road users until 31 December 2019, under certain conditions.
The obligations imposed on the parties governed by this Act include strict adherence to the conditions outlined in the approval. IOR Energy Pty Ltd, as the approval holder, must ensure that the specified diesel is supplied only to the regulated persons listed in Annexure 1 and only under the terms of the contract. The regulated persons, in turn, are obligated to comply with the conditions set forth in the approval, which likely include ensuring that the diesel is used only by commercial road users within the approved geographical limits and in accordance with the specified parameters. Both parties must also provide information and data as required by the Act, ensuring transparency and compliance with environmental and safety standards.
Failure to comply with the terms and conditions of the approval can result in various consequences. Under section 18 of the Fuel Quality Standards Act 2000, the Minister may cancel the approval if it is found that the conditions have not been met, or if the approval is no longer in the public interest. Additionally, breaches of the approval conditions may result in civil or criminal penalties. The Act provides for fines up to $126,000 for corporations and $25,200 for individuals for offences related to non-compliance with fuel quality standards. These penalties reflect the seriousness of ensuring environmental and public health protections are upheld. Furthermore, ongoing non-compliance could lead to further regulatory actions, including potential legal proceedings and further sanctions.