Notice of Decision to Grant an Approval under the Fuel Quality Standards Act 2000 to IOR Energy Pty Ltd

Administered by Department of Climate Change, Energy, the Environment and Water

Legislation au C2013G01976 In force Gazette

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ASSISTANT SECRETARY, ENVIRONMENT PROTECTION BRANCH,

DEPARTMENT OF THE ENVIRONMENT

NOTICE UNDER SECTION 17A OF THE FUEL QUALITY STANDARDS ACT 2000 CONCERNING A DECISION UNDER SECTION 13 OF THAT ACT FOR AN APPROVAL FOR A VARIATION OF THE FUEL STANDARD (AUTOMOTIVE DIESEL) DETERMINATION 2001

I, Andrew McNee, Assistant Secretary, Environment Protection Branch, delegate of the Minister for the Environment, provide the following information concerning my decision to grant an approval under section 13 of the Fuel Quality Standards Act 2000 (the Act).

Name of approval holder

IOR Energy Pty Ltd (IOR)

Period of operation

The periods of operation of the two components of the approval are from the date of the approval until 31 December 2014 and from the date of the approval until 31 December 2016.

Details of the approval

The approval varies the fuel standard for automotive diesel set out in the Fuel Standard (Automotive Diesel) Determination 2001 (Diesel Determination) so that:

a)  automotive diesel containing a minimum density of 790 kg/m3 and a maximum sulfur content of 125 mg/kg which will be taken to comply with the density parameter specified in the Diesel Determination in respect of the supply of automotive diesel under contract to commercial users for use in underground mining applications for a period of three years, that is, until 31 December 2016.

b) 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 density and sulfur parameters specified in the Diesel Determination in respect of the supply of automotive diesel under contract to commercial users to its commercial road customers for a period of one year, that is, until 31 December 2014.

The approval applies to automotive diesel supplied by IOR and the regulated persons specified in Annexure 1 to the approval instrument.

The approval is subject to conditions set out in Annexure 2 to the approval instrument and in section 17 of the Act.

Summary of reasons for the approval

I grant the approval as provided for in section 15 of the Act for the following reasons: 

(a) The protection of the environment

The use of IOR’s Eromanga Underground Mining Fuel will be geographically limited to underground mining applications in New South Wales and Queensland. Emissions in underground mines are closely regulated by State governments and mining operators. Under these circumstances it is unlikely that there will be any significant impact on the environment from the use of this fuel.

The diesel supplied by IOR to its commercial road users appears to be of a high environmental quality with low aromatics and high cetane. It seems to be a relatively clean fuel that would contribute to reducing some toxic emissions and the protection of the environment.

(b) The protection of occupational and public health and safety

Monitoring of emissions in underground mines is undertaken to ensure the health of all workers in confined mine environments is protected. Equipment and vehicles using IOR’s Eromanga Underground Mining Fuel in underground mining applications must meet state emission standards.

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 of the supply of fuel to commercial road customers is remote areas of Queensland, South Australia and New South Wales, 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

It is in the interests of consumers to have a choice of products available for use. Eromanga Underground Mining Fuel provides an alternative to fuels supplied by other companies and is apparently preferred by some mine operators.

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. Conditions that could be applied to an approval to mitigate impact on the interests of consumers include limiting sale of the product to contracted commercial purchasers and providing consumer information.

(d) The impact on economic and regional development

IOR refineries and plants provide employment opportunities for the local community in regional areas of Queensland, South Australia and New South Wales. Commercial industries also benefiting from IOR include cattle transporters, long haul freight operators, local Shire Councils, regional mining and pastoral companies.

Andrew McNee
Assistant Secretary
November 2013

Overview

The Fuel Quality Standards Act 2000 was enacted to establish a framework for regulating the quality of fuel sold in Australia, aiming to protect the environment, ensure occupational and public health and safety, and support economic and regional development. This legislation was introduced to address issues related to fuel quality and its impact on air quality, public health, and the economy. The Act is overseen by the Parliament of Australia and aims to ensure that fuel sold in Australia meets certain quality standards. The policy objective of the Act is to balance environmental protection and public health with the economic interests of fuel producers and consumers. The Act provides mechanisms for approving variations to fuel quality standards under certain conditions, as demonstrated by the approval granted to IOR Energy Pty Ltd for supplying automotive diesel with specific parameters for underground mining and commercial road use. This decision was made to support the interests of regional economic development, while ensuring minimal environmental and health impacts through stringent geographic and operational limitations. The approval also aimed to protect the interests of consumers by offering a choice of fuel products and ensuring compliance with relevant health and safety standards.

Scope and Application

The Fuel Quality Standards Act 2000 applies to the regulation of fuel quality in Australia, including the approval process for variations to fuel standards. In this case, the Act applies to IOR Energy Pty Ltd, which has been granted an approval for a variation of the fuel standard for automotive diesel. This approval allows IOR to supply diesel to commercial users for specific purposes, including underground mining in New South Wales and Queensland, and to its commercial road customers in Queensland, South Australia, and New South Wales, until specified dates. The approval is subject to conditions designed to protect the environment, occupational and public health and safety, and the interests of consumers, as well as to promote economic and regional development. The Act extends its application through subordinate instruments, including determinations and approvals, which set out specific fuel quality standards and variations. The approval granted to IOR is subject to the conditions outlined in the approval instrument and in section 17 of the Act.

Key Provisions

The Fuel Quality Standards Act 2000 (the Act) governs the approval of variations to fuel standards, and section 17A of the Act mandates that the Assistant Secretary, Environment Protection Branch, Department of the Environment, provide notice of such decisions. In this case, section 13 of the Act is invoked to approve a variation to the existing fuel standard for automotive diesel, as outlined in the Fuel Standard (Automotive Diesel) Determination 2001 (the Diesel Determination). The approval is held by IOR Energy Pty Ltd (IOR) and spans two periods, the first until 31 December 2014 and the second until 31 December 2016. The approval allows for the supply of automotive diesel with specific density and sulfur content parameters, tailored for underground mining applications in New South Wales and Queensland, as well as to commercial road customers in remote areas of Queensland, South Australia, and New South Wales. The approval imposes several obligations on IOR and the regulated persons specified in Annexure 1 to the approval instrument. These obligations include adherence to the specified density and sulfur content parameters for the designated supply periods and ensuring that the automotive diesel supplied under contract meets the conditions set out in Annexure 2 to the approval instrument and section 17 of the Act. Additionally, the approval requires IOR to limit the supply of the fuel to the contracted commercial purchasers and provide necessary consumer information as stipulated in the conditions of the approval. Failure to comply with the conditions of the approval may result in various consequences under the Act. The Act provides for both civil and criminal penalties for breaches, although the specific maximum penalties are not detailed in the notice. Civil penalties could include fines and other monetary penalties, while criminal penalties might involve imprisonment or fines, depending on the severity and intent of the breach. The Act also allows for the revocation of the approval if it is found that the conditions have been breached, which could lead to significant operational disruptions for IOR and the regulated persons. Additionally, non-compliance could result in legal actions being taken against IOR and the regulated persons, potentially leading to further penalties and enforcement measures.

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