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As of 1 January 2017, the Queensland Government will commence enforcement of a Biofuels Mandate over motor spirit and diesel fuel sales across the state.

The Government’s objective with this Mandate is to increase the use of renewable fuel by substituting a proportion of motor spirit and diesel fuel sales with ethanol and biodiesel respectively.

We have issued this Industry Note to summarise key aspects of this Mandate and help fuel distributors and retailers, particularly in the motor spirit space, understand the implications of this Mandate at a high level, and what this will mean for those businesses in 2017 and beyond.

What is the Biofuels Mandate?

For motor spirit distributors and retailers, the Mandate will require that annual fuel sales of all applicable businesses include a minimum volume of ethanol equal to 3% of all unleaded petrol (base grade motor spirit) sales made through the business per year.  Based on the sale of E10 as the most popular ethanol-petrol blend, this means a minimum of 30% of all base grade motor spirit sales must be E10.

Note this ethanol target is currently set to increase from 3% to 4% of all base grade unleaded petrol for applicable businesses from 1 July 2018.

For diesel distributors and retailers, the Mandate will require that annual fuel sales of all applicable businesses include a minimum volume of biodiesel equal to 0.5% of all diesel sales made through the business per year.

Are there exemptions to the Mandate if my business is found to be applicable as per the criteria above?

Each business that falls within the ‘applicable’ category for the Mandate will need to either comply with the Mandate or, if they choose to, seek exemption with the Government.

Before exemption can be applied for however, the applicable business must first demonstrate to the Government that they have taken reasonable steps to comply with the Mandate, e.g. demonstrating efforts have been made to secure adequate supplies of biofuel blends or promoting the sale of biofuel blends through the business.

If seeking exemption, the Government has outlined a number of set exemption criteria against which the business will be assessed.  Some such key exemption criteria include:

  • Capital cost impact of compliance deemed too high for business to remain sustainable
  • Supply chain failure to provide biofuels (e.g. current supply agreement doesn’t include biofuels, biofuels supply physically not available to region, etc.)
  • Failure to obtain finance for the capital costs
  • Where a tenant has no ownership of the fuel storage/dispensing infrastructure (owned by separate fuel distributor)
  • Physical site constraints disallow installation of further on-site storage (if further capacity required to separately store biofuels)
  • Demand for biofuels blends in a particular region/market is non-existent (e.g. marinas)

Application can also be made for delayed compliance – i.e. unable to comply by 1 Jan 2017, however capital program will be put in place over a certain agreed timeframe to ensure compliance.

 

How can TFA assist your business during this transitional period?

As a leading consultant in the national downstream fuels market, we understand the requirements of the Mandate and what this will mean for all applicable businesses – from large distributors looking to modify and upgrade infrastructure to accommodate the Mandate, right through to small businesses that have found themselves in the ‘applicable’ category, but that may need assistance in determining the most appropriate low cost solution.

With our experience and capabilities we can assess your sites, identify where modifications will be required for compliance, and if applicable manage the process of implementing ethanol and biodiesel blends quickly and cost effectively.  This could include simply developing an upgrade plan and coordinating contractor quotes to understand the required capital investment for compliance.

Whether your business requires design, planning, project management or engineering services, or even just professional advice, TfA offers Australia’s most complete and specialised range of professional consulting services in this area, and would be more than happy to discuss any opportunities where we can assist you and your business during this transitional period.

For more information please find contact details below:

Sydney Office:
Craig Duffield
(02) 8814 5219

craig.duffield@tfa.com.au

Brisbane Office:
Jordan Gooch
(07) 3854 2900

jordan.gooch@tfa.com.au

Melbourne Office:
Ben Phillips
0409 877 467

ben.phillips@tfa.com.au

Copyright © 2016 TFA Group Pty Ltd, All rights reserved.

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