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Brands want better Aussie fuel before emissions regs

Hit for 6: Cars with Euro 6-compatible engines are incompatible with local fuel standards, according to several Australian automotive industry executives.

Low-sulphur fuel must be enforced before CO2 standards, says car-makers

12 May 2016

SEVERAL manufacturers have called on the federal government to improve national fuel standards in formal responses to the Vehicle Emissions Discussion Paper released in February.

The paper led to talks relating to the implementation of fuel emissions regulations during stakeholder engagement sessions initiated by the offices of federal minister for major projects, territories and local government Paul Fletcher and federal environment minister Greg Hunt.

Representatives from Mazda, Hyundai, Toyota and Mercedes-Benz have told GoAuto that Australia’s sulphur content in unleaded fuel must first be lowered in order to achieve emissions targets comparable with the European and United States markets.

The move would eliminate regular unleaded (91RON) petrol, which is currently rated at 150 parts per million of sulphur, while premium unleaded (95RON) currently at 50ppm sulphur would require a reduction to 10ppm in line with the EU, Japan, South Korea and, from next year, the US.

Mazda Australia managing director Martin Benders and Hyundai Australia public relations general manager Bill Thomas said that engines meeting stringent Euro 6 emissions regulations were already available globally, however they are incompatible with local fuel standards.

“Current low fuel quality (91 RON) in Australia does require our engines to be developed with lower compression ratios than that of Europe,” Mr Benders said.

“In addition the high sulphur content of Australian fuel restricts Euro 6 adoption across the Mazda range.”

Mr Thomas further explained why that was the case.

“Without fuel of equal quality to other developed markets, the advanced Euro 6-compliant vehicles we import won’t physically emit the quantity of emissions they are designed to emit with higher-grade fuels which are standard in other countries,” Mr Thomas said, adding that fuel standards is “one of the main concerns” in the discussions around local CO2 emissions regulations.

In an outline of its formal submissions, Toyota Australia responded: “Any mandated emissions regimes, including CO2 and other vehicle pollutants such as NOx, must be accompanied with associated changes to fuel quality standards.”

Mercedes-Benz Australia/Pacific senior manager public relations, product and corporate communications David McCarthy said that CO2 emissions regulations should “not be developed in isolation and that fuel quality and low reduction incentives (such as luxury car tax thresholds and EV incentives) have a vital role to play in sensible regulation”.

“The fact that the government is talking to the industry is a great initiative … but issues around central factors such as fuel quality have to be integral to the discussion and currently they need more prominence,” he added.

It has been suggested in at least one manufacturer's submissions that low-emissions vehicles should pay a reduced luxury car tax rate, which currently stands at 33 per cent for any vehicle over $63,184 that uses more than 7.0 litres per 100 kilometres or $75,375 for vehicles consuming less than that figure.

Two manufacturers participating in the government forums, Ford Australia and Mitsubishi Motors Australia Limited, said they conform to the view of the Federal Chamber of Automotive Industries (FCAI), which has been campaigning for the introduction of higher fuel standards since last year.

The reduction in sulphur content of fuel is claimed in several global studies to allow engine management systems to run a less fuel-rich mixture and for catalysts to more finely meter oxides of nitrogen (NOx) and carbon dioxide (CO2) emissions. The reduction requires fuel to be more refined and this could cause increased costs for oil companies that could be passed on to consumers.

Of the overall discussions with the federal government, Mazda Australia’s Mr Benders commented that, “The progress so far has been collaborative … this is a complex subject, with a wide variety of industries and factors that impact outcomes.”“Without a holistic view of all the variables that impact CO2 emissions we risk setting unrealistic targets,” he opined as another key concern around the discussions. He added that Mazda hopes to seek “clarity around future Australia CO2 targets, enabling our organisation to develop clear plans for the future.”

Hyundai Australia’s Mr Thomas admitted, “as ever with discussions of this nature there are a few stumbling blocks, but overall the government has been very receptive to the Australian automotive industry’s position on emissions targets and is listening.”“This is encouraging,” he added.

Mr Thomas further listed “an acceptance and understanding of the unique nature of the Australian automotive landscape” as a primary consideration when setting CO2 targets given the local market’s increasing preference for traditionally higher-emitting SUV models compared with Europe.

“It’s not just a matter of adopting European or North American protocols,” he said.

“Australia is a unique place and any light-vehicle emissions targets need to be constructed with full understanding of that fact. As a company we actively support CO2 emissions regulations for Australia, as long as they are manageable, achievable, and also structured around a workable timeframe and strategic direction in line with the unique needs of the country.”

Toyota likewise commented in its summary of its formal response that, “any regulatory system must … take into consideration the unique conditions of the Australian market – we can’t simply apply the same parameters adopted in overseas markets.”

Mercedes-Benz’s Mr McCarthy commented that “regulations that in effect piggy back on say the EU regulations are the sensible way to go,” however he too added that “the regulations need to reflect the market mix Down Under.”“We want an emissions regulation outcome that recognises the market make-up in Oz,” he continued.

“There are many more larger vehicles (mostly SUV) than in the EU for example.

It’s not sensible to ignore that fact. You can’t just chase a figure, it has to be achievable and reflect the reality of the market.”

Incentives for low-emissions vehicles were a third issue for Mercedes-Benz and also Hyundai.

“There are no government incentives for low-CO2 vehicles in Australia,” Mr Thomas said.

“For example, there are no tax breaks, no registration fee discounts, nor even any concessions like the ability to use bus lanes or be exempt from tolls.

“Government incentive is an important part of the equation for early uptake of green vehicles, but so far, there has been very little at federal or state level. Government needs to actively adopt a green agenda and proudly announce such initiatives – we are confident that this attitude is changing and we fully support that change.”

BMW Australia has also been vocal about what is required to introduce emissions legislation in Australia, with the company’s corporate communications general manager Lenore Fletcher having previously told GoAuto: “We obviously support the implementation of a CO2 standard in Australia but it has got to be relevant to market conditions and it has to be achievable.”“Even just a stated goal of low-emission vehicles by a stated date, and a discussion about that to promote awareness, there are many things that could be done that don’t have to be cost-negative for the government,” she added.

Other participants in the government-led discussions, Holden and Volkswagen, were approached for comment.

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