State of knowledge report
Environment Australia, 2001
ISBN 0 6425 4739 4
As part of the ‘A New Tax System’, introduced in 2000, the Commonwealth Government introduced a number of initiatives for the improved management of transport emissions and greenhouse gases. The initiatives are described as the Measures for a Better Environment.
The Commonwealth Government has an ongoing program to review vehicle emission standards and introduce new ones. It aims to harmonise Australia's standards with international standards by 2006, as stated by the Prime Minister in his 1997 statement ‘Safeguarding the Future – Australia's Response to Climate Change’. Section 2 of the Diesel and Alternative Fuels Grants Scheme Act 1999 outlines the timetable for the introduction of new vehicle emission standards established under the Measures for a Better Environment. The new emission standards will be determined under section 7 of the Motor Vehicle Standards Act 1989 and gazetted as Australian Design Rules.
New vehicle standards
Euro2 (ECE Reg 83/04) emission standards will be introduced from 2003 for new petrol vehicles and from 2004 for continuing models. The introduction dates will allow domestic vehicle manufacturers sufficient lead time to source new engine technology, thus minimising disruption to the industry. US 96 will be the standard for heavy-duty petrol engines.
Euro3 (EC Directive 98/69/EEC) emission standards will be introduced from 2005 for new petrol vehicles and from 2006 for continuing models. Euro3 standards will offer further gains, particularly for inservice performance, because of their requirements for onboard diagnostics. They do, however, demand significantly lower sulfur and higher-octane levels for petrol. The octane requirement will facilitate the introduction of direct injection engines, which are important in meeting fuel efficiency and greenhouse targets. US 98 will be the standard for heavy-duty petrol engines.
The Measures for a Better Environment did not include an adoption date for Euro4 petrol vehicles, as the standards were not considered to be sufficiently defined. The Government will seek advice from the Motor Vehicle Environment Committee in determining when to introduce the Euro4 standards).1
Euro2 (ECE Reg 83/04) emission standards will be introduced from 2002 for all new light-duty diesel vehicles and from 2003 for continuing models. Euro3 emission standards will be introduced from 2002 for new medium and heavy diesel vehicles and from 2003 for continuing models. The draft of this standard is currently before the European Parliament. US 98 heavy-duty diesel standards will be accepted as an alternative.
Euro4 emission standards will be introduced from 2006 for all new diesel vehicles and from 2007 for continuing models. The draft of this standard is currently before the European Parliament. The one-year lag, from planned European adoption in 2005, reflects the practicality of introducing appropriate vehicle support and maintenance infrastructure in Australia. US 2004 heavy-duty diesel standards will be accepted as an alternative.
Inservice vehicle standards
The stock of existing diesel vehicles (the inservice fleet) is responsible for a significant proportion of the particle air pollution in urban areas. New vehicle standards only progressively improve performance as the stock is turned over, so minimising emissions from existing vehicles is also important. The Measures for a Better Environment initiative therefore includes a commitment by the Commonwealth Government to provide resources to develop and introduce a NEPM, specifically addressing emissions from the inservice diesel fleet, as soon as possible. The NEPM is intended to establish:
- inservice emission tests/inspection protocols and programs for diesel vehicles;
- a minimum performance standard for all inservice diesel vehicles which were not certified to an agreed international standard at the time they entered the market; and
- inservice emission standards, based on compliance with original certification standards, for all diesel vehicles certified to international standards (Euro2, 3 etc).
The importation of second-hand diesel engines that fail to meet current Australian emission standards will also be prohibited.
Alternative fuel vehicles
The Measures for a Better Environment initiative provides for an ongoing assistance program for the conversion of buses and other commercial vehicles to compressed natural gas (CNG) and liquified petroleum gas (LPG). The program will provide funding, initially over four years, for up to 50% rebate for conversions to CNG and LPG for buses and other commercial vehicles. The program will complement the existing federally funded CNG infrastructure program administered by the Australian Greenhouse Office. It is intended that over the first four years the program will encourage the conversion of 800 buses and up to 4000 commercial vehicles a year.
Earlier recommendations for the introduction of new vehicle emission standards had been constrained by the challenge of ensuring that fuel of suitable quality was widely available. The relatively high sulfur content of Australian fuels (both petrol and diesel) had been identified as a problem for the efficient functioning of new vehicle technologies that are necessary to ensure compliance with advanced international standards. Preliminary work had commenced on addressing this issue through the Australian Fuel Quality Review (see Clean Air 33(1) February 1999).
The Measures for a Better Environment initiative specifically addresses the sulfur content of diesel; it recognises that in mandating new petrol vehicle standards, the higher octane and lower sulfur requirements will require changes to petrol specifications.
Sulfur levels in diesel are currently 1300 ppm on average. For light diesel vehicles, new vehicle technology requires sulfur levels to be reduced to 500 ppm for Euro2 standards; to 350 ppm for Euro3 standards; and to 50 ppm – typically known as ultra low-sulfur diesel – for Euro4 standards. Air quality gains in terms of reduced particle emissions can also be obtained from the use of low-sulfur diesel in vehicles already in the Australian fleet.
Incentives to switch to lower sulfur levels
The Measures for a Better Environment initiative includes the following Commonwealth Government commitments:
- negotiation with oil companies for the early voluntary introduction of diesel with a sulfur content of no more than 500 ppm in urban areas in 2000, on a best endeavours basis;
- establishment of a diesel standard for road transport fuel with a sulfur content of no more than 500 ppm by the end of 2002; and
- an increase in the diesel excise for high-sulfur fuel (ie fuel with a sulfur level greater than 50 ppm) so that the relevant effective diesel excise payable increases by 1 cent per litre from 1 January 2003 and 2 cents per litre from 1 January 2004.
This increase in the excise payable on ‘high-sulfur’ diesel will form part of the Energy Grants (Credit) Scheme, which will replace the Diesel Fuel Rebate Scheme on or before 1 July 2002 (see below).
Mandated sulfur levels
The Measures for a Better Environment initiative includes commitments to establish a diesel standard for road transport fuel with a sulfur content of no more than 500 ppm by the end of 2002 and to establish a mandatory diesel standard with a sulfur content of no more than 50 ppm sulfur by 2006.
Petrol specifications and other diesel fuel parameters
The Measures for a Better Environment initiative does not include any explicit requirements with respect to petrol composition.
Over the next few months the Commonwealth Government will commence, through the Motor Vehicle Environment Committee, the process of seeking stakeholder views on the identification of which diesel and petrol fuel parameters (other than sulfur in diesel) should be managed on a national basis, and which are best managed on an airshed or jurisdictional basis. Discussions will also take place on the identification of the most effective and appropriate legislative mechanism for implementation of national fuel standards. This information, coupled with the results of the national Fuel Quality Review, will be used to inform government policy in this area.
It was recognised that the economics of alternative fuel use would be affected by the ‘A New Tax System’ (ANTS) in that the payback periods for conversions would be increased and price incentives reduced. The Measures for a Better Environment initiative therefore includes ‘alternative fuel grants’ for alternative transport fuels, in order to maintain the current price relativities between diesel and these fuels. The Australian Greenhouse Office will administer the program.
Alternative transport fuels for which grants will be available (under the Diesel and Alternative Fuel Grants Scheme Act 1999) include CNG, LPG, recycled waste oil, ethanol, canola oil and any other fuels which are subsequently specified in the regulations under the Act. Vehicles using these alternative fuels will, however, be required to meet relevant emission standards.
Energy Grants Scheme
The Measures for a Better Environment initiative foreshadows the introduction of an Energy Grants Scheme to be developed jointly by the Commonwealth Government and the Australian Democrats. This is given effect in the Diesel and Alternative Fuels Grants Scheme Act 1999 (DAFGS Act), which notes that the Commonwealth Government intends to replace the grants made under the DAFGS Act and the Diesel Fuel Rebate Scheme (under the Customs Act 1901 and the Excise Act 1901) with an Energy Grants (Credits) Scheme to start on 1 July 2002 or earlier.
The purpose of the new Energy Grants Scheme will be to provide active encouragement for the move to the use of cleaner fuels. The scheme will, however, maintain entitlements that are equivalent to those that are established under DAFGS Act and the Diesel Fuel Rebate Scheme.
The Diesel Fuel Rebate Scheme provides a rebate for part of the excise paid on diesel for off-road uses, including in mining, primary production, certain residential power generation, hospitals and nursing homes, and aged persons homes. It does not provide a rebate of the excise for diesel used in road transport. The DAFGS Act provides grants for the on-road use of diesel and for certain alternative fuels.
Diesel fuel entitlements available under the new Energy Grants Scheme after 2006 will be restricted to ultra low-sulfur diesel (ie 50 ppm sulfur).
Questions on specific elements of the Measures for a Better Environment package should be directed to the Air Quality Section of Environment Australia at firstname.lastname@example.org.
The Diesel and Alternative Fuels Grants Scheme Bill (No. 88 of 1999) can be viewed on the internet.2
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