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Diesel delay: The Volkswagen Passat TDI is among several postponed new diesel models bound for Australia. DIGITAL IMAGE: Chris Harris.

FCAI slams Caltex’s failure to meet new diesel laws as importers revise schedule

1 Feb 2006

VEHICLE importers are outraged over a decision by the Federal Government to grant a three-month waiver for oil company Caltex over its introduction of low-sulphur diesel into Australia.

The oil company, which supplies diesel fuel to other big-name petroleum brands, has now notified the government that it may be unable to comply with a new standard for diesel fuel after March 31 and is seeking an extension to the waiver, which in turn has forced several vehicle importers to either reconsider or to postpone the introduction of diesel models.

Caltex claims delays at upgrading its Kurnell and Lytton refineries in Sydney and Brisbane respectively have reduced its ability to introduce low-sulphur diesel into some parts of Australia.

A Department of Environment and Heritage spokesperson said earlier this week the issue was currently under review.

If Caltex is successful in gaining an extension to its original waiver, several importers could face delays at launching new diesel models with particulate filters designed to run on 50 parts per million diesel fuel, the new diesel standard.

Since January 1 the harmful sulphur content in diesel has been lowered to 50ppm from levels up to 500ppm as part of the Fuel Quality Standards Act 2000.

GoAuto understands the 50ppm diesel supplied by Caltex will be in limited supply until the end of March and possibly longer in southeast Queensland and parts of NSW and the ACT.

Caltex is one of the major suppliers of diesel fuel in Australia.

Although reluctant to go on the record, a number of importers claim the three-month postponement has put launch plans for some newer diesel models into disarray.

One, who did not wish to be named, said any extension to the waiver goes against the Federal Government’s “green” credentials related to lowering vehicle emissions.

In a document leaked to GoAuto, the Federal Chamber of Automotive Industries (FCAI) asked Caltex to agree to a national media campaign to inform buyers of the fuel problem and also, where appropriate, “to compensate affected parties from any or all losses associated as a result of selling non-compliance fuel” if the government grants an extension to its initial waiver.

The FCAI document also pointed out that “no manufacturer has ever been given dispensation for failing to meet the introduction dates of a new ADR under the federal Motor Vehicle Standards Act”.

FCAI chief executive Peter Sturrock told GoAuto this week that the oil company had known for more than two years of the new diesel standard.

He said the FCAI had been in “frequent dialogue” with the Department of Environment and Heritage since December on the issue.

Caltex had received an extension to March “and now they’re seeking a further extension to maybe May or June”, Mr Sturrock said.

“Quite frankly, the fuel standards has been in place for a couple of years and the industry has been working towards this,” he said.

3 center imageSome brands had diesel products in the pipeline that had been scheduled for production for a couple of years and would now be affected by any changes, he said. “We have made that point to the Department that we find it unacceptable.” Mr Sturrock said the Department was now trying to work out a plan that would assist those who may be buying vehicles where they may not be able to get low-sulphur fuel.

Caltex is also understood to be planning to offer fuel vouchers worth thousands of dollars in lieu of the inconvenience.

Mr Sturrock said that although these reactions were useful “it by no means solves the problem”.

“They say they’re working hard to complete the infrastructure at the refineries in a reasonable time ... but as we sit here now it is not likely to be able to produce the lower sulphur fuel until probably May,” he said.

Mr Sturrock said “hundreds of vehicles, maybe up to a couple of thousand” could be affected.

“We’ve made our position felt to the Department and Caltex. In this day and age it is unacceptable.” Volkswagen Australia confirmed this week that it has been forced to reconsider the timing of its Passat TDI, due to be launched late next month, as a direct result of the situation with Caltex.

DaimlerChrysler is in a similar situation with some forthcoming models and Audi Australia stated this week that any delays longer than “only for a few months” could impact the company.

Jaguar said the delay was a serious concern but that it intends to launch its S-Type diesel late in April as planned, offering specific advice to each and very vehicle owner on which local service stations to frequent – in the short- term, at least.

Peugeot claims it is unaffected by the sulphur issue as their newer EuroIV-compliant diesels have particulate filters that can cope with higher-sulphur fuel. Others have argued that the opposite is true.

BMW does not believe its customers will be adversely affected.

The US Environment Protection Agency has declared diesel exhaust particulates as a likely human carcinogen and countries have been slowly reducing their sulphur content and increasing emissions technology related to the fuel.

The United States moves to 15ppm in June and Europe already offers diesel fuel with 15ppm sulphur content.

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