Energy

8.2.1 Oilcode
8.2.2 Monitoring and enforcement
8.2.3 Fuel taxation
8.2.4 Environmental regulation

Australia's liquid fuel markets are regulated through a complex set of intersecting frameworks at the national and state and territory levels covering competition policy, taxation, environmental, and health and safety issues. The principal Australian Government regulations are outlined in this section.

8.2.1 Oilcode

The Competition and Consumer (Industry Codes—Oilcode) Regulation 2006—formerly known as the Trade Practices (Industry Codes—Oilcode) Regulations 2006—is a mandatory industry code under the Competition and Consumer Act 2010. It regulates the conduct of suppliers, distributors and retailers in the downstream petroleum retail industry and provides:

• standard terms and conditions for fuel reselling agreements for franchise and commission agency arrangements
• a consistent national approach to terminal gate pricing arrangements and improved transparency in wholesale pricing, which allows access by all customers (including small businesses) to petroleum products at the terminal gate price
• an independent dispute resolution scheme, including a dispute resolution adviser, to give the industry a cost-effective alternative to taking action in the courts.

8.2.2 Monitoring and enforcement

The ACCC formally monitors prices, costs and profits of unleaded petroleum products following a ministerial direction under the Competition and Consumer Act. It also informally monitors diesel and automotive LPG prices. The monitoring functions are overseen by a commissioner of the ACCC.

Part IV of the Competition and Consumer Act promotes competitive markets through prohibitions on anticompetitive practices, such as misuse of market power, price fixing and other collusive conduct. The ACCC has powers under Part IV of the Act to investigate and take enforcement action where necessary.

8.2.3 Fuel taxation

Petrol and diesel are subject to an excise and excise-equivalent customs duty rate of 38.143 cents per litre. The rate for gasoline and kerosene for aircraft fuels is 3.556 cents per litre (excluding carbon price impacts).

New taxation arrangements for alternative fuels came into effect on 1 December 2011 (Table 8.1), with a five-year transition of the gaseous fuels into the regime and a 10-year moratorium on current taxation and grant arrangements for ethanol, biodiesel, renewable diesel and methanol.

Under the Ethanol Production Grants Program, grants of 38.143 cents per litre are provided for domestic production of ethanol, making the domestically produced fuel effectively excise free. The Energy Grants (Cleaner Fuels) Scheme also provides 38.143 cents per litre grants for the domestic production and import of biodiesel and renewable diesel.

Table 8.1: Alternative fuels excise and excise-equivalent customs duty rates

CNG = compressed natural gas; LNG = liquefied natural gas; LPG = liquefied petroleum gas.
Source: Legislation Amendment Act 2011.

A broad review of the operation of the legislation and its impact on arrangements for gaseous fuels will take place after 1 July 2015. The taxation and grant arrangements that apply to biodiesel, ethanol, renewable diesel and methanol will be reviewed after 1 July 2021.

8.2.4 Environmental regulation

Fuel quality standards

Fuel quality at the national level is regulated under the Fuel Quality Standards Act 2000. The Act regulates fuel supplied in Australia in order to reduce the level of pollutants and emissions arising from the use of fuel that may cause environmental and health problems; facilitate the adoption of better engine technology and emissions control technology; allow the more effective operation of engines; and ensure that, where appropriate, information about fuel is provided at the point of supply.

Australian fuel quality standards have been made for petrol, automotive diesel, biodiesel, autogas and E85, a high-ethanol blend with petrol. A fuel quality standard is being considered for diesel-biodiesel blends containing at least 5% but not more than 20% biodiesel with diesel, known as B20.

Carbon pricing

The Australian refining sector has been subject to carbon pricing since 1 July 2012. Petroleum refiners are eligible for assistance in relation to carbon costs from direct emissions and electricity consumption under the Jobs and Competitiveness Program. The assistance provided covers emissions associated with the refining of petroleum products that may be used by end-customers as transport fuels.

Transport fuel used in the rail, domestic shipping and domestic aviation sectors is subject to an effective carbon price from 1 July 2012. International aviation and shipping fuel use are not subject to the carbon price.

Light commercial vehicles (4.5 tonnes or less gross vehicle mass) and households do not face a carbon price on the fuel they use for transport. In addition, the agriculture, forestry and fishery industries do not pay a carbon price on their fuel use. The government intends that on-road heavy vehicles will be subject to an effective carbon price from 1 July 2014, although gaseous fuels used in heavy on-road vehicles will be effectively exempt, as gaseous fuels excise rates are lower than the road user charge. Carbon pricing does not apply to the use of biofuels (ethanol, biodiesel and renewable diesel).

Since 1 July 2012, a carbon price has been included in the cost of the natural gas used to produce non-transport CNG. Furthermore, from 1 July 2013 non-transport usages of LPG and LNG will be covered by the carbon pricing mechanism. Before then, non-transport LPG and LNG suppliers will pay an equivalent carbon price through a reduction in the remission of excise for non-transport LPG and LNG. CNG, LPG and LNG users in the agriculture, forestry and fisheries sectors will not pay a carbon price or an effective carbon price.