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Renewable Fuel Bill 2016

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2013-2014-2015-2016

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

RENEWABLE FUEL BILL 2016

 

EXPLANATORY MEMORANDUM

 

 

Circulated by the authority of Hon Bob Katter MP

 

 

 

 

 

 

 

 

 

RENEWABLE FUEL BILL 2016

OUTLINE

This Bill aims to provide for the regulation of renewable fuel content in petrol at the bowser and stipulates that the ethanol or other renewable fuels volume percentage be mandated at 5% minimum from 1 July 2019, and 10% minimum from 1 July 2022.

The Bill provides a regulatory regime for the inclusion of cellulosic biomass ethanol and other renewable fuels, in fuel supplied for use in motor vehicles in Australia.  It also establishes an office of Renewable Fuel Program Administrator and outlines the functions of the office.

The implementation of a renewable fuels mandate will:-

        I.             reduce motor vehicle emissions and associated costs to health;

      II.             diversify the grain, wheat and sugar industries whilst creating thousands of extra jobs in regional Australia;

    III.             increase Australia’s self-sufficiency in fuel and food; and

    IV.             ultimately deliver cheaper petrol and electricity.

Ethanol-blended unleaded petrol (ULP) is a cleaner and healthier fuel than ULP alone. The NSW Department of Health estimated that almost three times more people die (up to 1400 deaths) from exposure to vehicle exhaust-pollution than from road accidents. It is estimated that the cost to taxpayers, of health impacts associated with this pollution, is between $2billion-$3 billion annually in Sydney alone. Additionally, particulate emissions (along with other toxins) have been linked to health problems relating to air pollution.

Australia has grown increasingly reliant on oil imports, with a continued growth in domestic oil demand and a declining rate of domestic oil production. The Australia petroleum industry’s total fuel trade deficit has increased exponentially, from -$600 million in 2001 to  -$25 billion in 2015. Net oil imports have increased from 12,000 BPD (barrels per day) in 2000, to 633,000 BPD in 2015. This raises significant concerns over cost and energy security.

Our growing dependence on imported oil leaves Australia vulnerable to potential disruptions, in the case of political instability or conflict in major oil-producing regions globally (and Australia is reportedly the only member of the International Energy Agency that does not stockpile the equivalent of 90 days net imports of oil). Given the vast size of the Australian continent; our geographic isolation; our reliance on transport fuels; and the closure of oil refineries in Australia, the implementation of an ethanol mandate is critical for Australia’s fuel production and consumption security.

Australia is one of few countries on the globe - from Europe to Asia and the Americas - to not mandate a volume of biofuels. The United States of America mandate a 10% ethanol volume content; Brazil has a 25% ethanol mandate; the United Kingdom has a 5% biofuel mandate; Ethiopia  has a 10% ethanol mandate; France has a 7% ethanol mandate; China has a 10% ethanol mandate. Many African countries including also have a 10% mandate.

In Australia, New South Wales has mandated ethanol content in petrol at 6% and Queensland has recently mandated ethanol content in petrol at 3%, increasing to 4% from July 2018.

The conversion of sugar mills to ethanol producers will significantly enhance the sugar industry, an economic backbone for many regional and rural towns in Australia. This guarantees a long-term market price and income stream from electricity (via the mill conversions from being incinerators of sugar cane fibre to electricity producers). Ultimately, this will provide cheaper electricity and cheaper petrol for Australians.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL IMPACT STATEMENT

The Bill establishes a new office, the office of Renewable Fuel Program Administrator , to be paid out of normal budget supply.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT ON COMPATIBILITY WITH HUMAN RIGHTS

The Statement of Compatibility with Human Rights appears at the end of this Explanatory Memorandum.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES ON CLAUSES

 

Part 1 - Preliminary

Clause 1 - Short Title

This is a formal provision specifying the short title.

Clause 2 - Commencement

This is a formal provision which sets out the commencement dates of the Bill.  The Bill’s provisions section 1 to 3 are to commence the day after the Bill receives Royal Assent.  Schedule 1 is to commence on a date fixed by Proclamation.

Clause 3 - Schedule(s)

This Bill provides that each Act, and each set of regulations, that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has the effect according to its terms.

Schedule 1 - Amendments

Fuel Quality Standards Act 2000

Item 1

This item adds a new section after Part 2 of the Fuel Quality Standards Act 2000.

Part 2A - Renewable Fuel

Division 1 - Preliminary

This item adds a new section 36A, which provides an overview of this Part. It provides that this section sets out a regulatory regime in relation to the inclusion of cellulosic biomass ethanol and other renewable fuel in fuel supplied for use in motor vehicles in Australia. It also specifies that Division 2 establishes an office of Renewable Fuel Program Administrator and outlines the functions of the office. Division 3 deals with the requirements for the inclusion of cellulosic biomass ethanol or other renewable fuel and additionally, Division 4 deals with reporting requirements.

Section 36B sets out the definitions in the Bill.

Division 2 - Renewable Fuel Program Administrator

Item 36C appoints a Renewable Fuel Program Administrator, which the Minister must appoint within 6 months of the commencement of the Bill. The Renewable Fuel Program Administrator, must be appointed for a period of 5 years, and may be re-appointed.

Item 36D provides for the functions of the Renewable Fuel Program Administrator. This includes:

·          Overseeing the operation of the requirements of this Part including enforcement of the Renewable Fuel Program;

·          Approval of prices to be paid to each to the producers and processors in the cellulosic biomass ethanol  production and marketing chain;

·          Approval, by legislation of the composition and source of blends of renewable and fossil fuel; and

·          Issuing and approving the sale, transfer of use of renewable fuel credits under section 36H.

 

Division 3 - Renewable Fuel Program

Section 36E provides for the supply of motor vehicle fuel.  It outlines that a person commits an offence if;

·          The person supplies motor vehicle fuel in Australia that is subject to regulations made under section 36F or 36J; and

·          The person is a constitutional corporation or a Commonwealth entity or the person supplies the fuel in the course of constitutional trade or commerce; and

·          The motor vehicle fuel does not comply with the regulations; and

·          The supply is not in order to comply with discretion or order under an emergency law.

The penalty for the offence is 100 penalty points. This does not apply if a person believes that on reasonable grounds that the motor vehicle fuel that is supplied will be further processed for the purpose of bringing fuel into compliance with regulations.

Section 36F provides for the requirements for renewable fuel. The volume percentage of cellulosic biomass ethanol or other renewable fuel which is to be included in motor vehicle fuel supplied for use in Australia is prescribed by the regulations and is to commence within one year from the date of commencement of this Part. The regulations must include provision for the required volume percentage to be at least 5% from 1 July 2019, at least 10% from 1 July 2022.

Additionally incentives will be included in the regulations, if percentage targets above and beyond the minimum targets are reached. Further details of how the percentage required is to be measured and applied by any person involved in the production or dispensing of motor vehicle fuel is to be prescribed in the regulations.

Section 36G outlines that before the Governor General makes a regulation under section 36F, the Minister must take into consideration;

·          the available supply of cellulosic biomass ethanol and other renewable fuels; and

·          any potential unfair effect on existing refineries; and

·          any seasonal variations in the use of renewable fuels; and

·          the report, including any recommendations, of the Administrator prepared under section 36L or any other recommendations of the Administrator.

The Minister must also be satisfied that the Reid Vapour Pressure of the motor vehicle fuel will be at an acceptable level and, if appropriate, alternative blending, storage or other arrangements may be included in the regulations.

Section 36H outlines renewable fuel credits. It provides that refineries, blenders or importers of motor vehicle fuel may be given credits for the production or sale of motor vehicle fuel that contains a quantity of renewable fuel greater than the quantity required by the regulations in effect at the time of production, importation or sale. Credits received in a financial year may be counted in assessing compliance with section 36F or 36J of the Bill applying in the following financial year or other period prescribed in the regulations. Credits may also be sold or transferred to another person. It also provides that regulations may provide that the receipt or purchase of credits can be used to offset a failure to comply with a requirement which occurred in a previous year.

Section 36J outlines that regulations may specify a different volume percentage of renewable fuel to apply in respect of supplies of motor vehicle fuel in specified areas of Australia. However, they must not give preference to one State or part of a State and must not have an effect equivalent to a value of more than 2% of the annual motor vehicle fuel sales in Australia. Before the Governor General makes a regulation under subsection (1), the Minister must consult with the Renewable Fuel Program Administrator and be satisfied that the variation is necessary as a remedy for hardship or similar special circumstances.

Section 36K provides that supplies of motor vehicle fuel is to be accompanied by documentation if;

·          a person (the supplier) supplies motor vehicle fuel in Australia to another person and the fuel is subject to regulations under section 36F or 36J; and

·          the supplier is a constitutional corporation or a Commonwealth entity or the supplier supplies the motor vehicle fuel in the course of constitutional trade or commerce; and

·          the other person is not the end user of the motor vehicle fuel;

the supplier must, within the period prescribed by the regulations, provide the other person with a document or documents containing a statement as to whether or not the motor vehicle fuel complies with the regulations and any other information relevant information relating to the motor vehicle fuel.

The supplier commits an offence if the supplier fails to comply with this section. The penalty is 60 penalty units.

 

Division 4 - Record keeping and reports

Section 36L provides that within 6 months of the commencement of this Part, the Renewable Fuel Program Administrator must provide a report on the motor vehicle fuel market in Australia including any likely adverse impact on consumers and an evaluation of the renewable fuel supplies, prices, blendstock supplies, supply and distribution capabilities. It also provides that the Minister must have regard for the report, including any recommendations made by the Renewable Fuel Program Administrator.

Section 36M provides that the Renewable Fuel Program Administrator must, as soon as practicable after the end of each financial year (commencing after 30 June 2016) provide the Minister with a report setting out for each State and Territory the market share of fuel containing ethanol, containing renewable fuel and any other matters. The Minister must provide a copy of the report to the Parliament, within 15 sitting days of receiving the report.

Section 36N outlines record keeping. A person must keep and maintain records in relation to the supply if;

·          A person supplies motor vehicle fuel in Australia that is subject of regulations under section 36F and 36J; and

·          The person is a constitutional corporation or a Commonwealth entity or the person supplies the fuel in the course of constitutional trade or commerce.

A person commits an offence if the person fails to comply with this section. The penalty is 60 penalty units.

Section 36P provides for annual statements. Producers must supply an annual statement for the year, if a person produces and supplies motor vehicle fuel in Australia and the fuel is subject to regulations under section 36F or 36J and the person is a constitutional corporation or a Commonwealth entity or the person supplies the fuel in the course of constitutional trade or commerce. Importers must supply an annual statement for the year, if the person imports motor vehicle fuel into Australia and supplies the fuel in Australia and the fuel is subject to regulations under section 36F or 36J. The annual statements must be provided on or before 14 February in the following year or a date set by the Renewable Fuel Program Administrator. The content of the statement must be in a form (electronic included) and contain any information required by the Renewable Fuel Program Administrator. A person commits an offence if the person fails to comply with these requirements. The penalty is 60 penalty units.

 

Item 2

This item inserts a new subsection (1A) after section 72 (1) of the Fuel Quality Standards Act 2000, that a review conducted before the second anniversary of Part 2A of this Bill does not need to include the operation of Part 2A. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

RENEWABLE FUEL BILL 2016

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Bill

This Bill aims to provide for the regulation of renewable fuel content in petrol at the bowser and includes that the ethanol volume percentage be mandated at 5% minimum from 1 July 2019, and 10% minimum from 1 July 2022.

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.

 

Hon Bob Katter MP