The Morrison government will provide a boost to Australia’s oil storage capacity while relaxing fuel standards to allow surplus jet fuel to be converted into diesel, in yet another move to support the fossil fuel sector in the midst of Covid-19.
Energy and emissions reduction minister Angus Taylor said on Monday that the federal government would look to underpin investments in expanding Australia’s oil storage capacity, as it tried to strengthen Australia’s strategic fuel reserves.
At the same time, the Morrison government would look to free up surplus supplies of jet fuels, by relaxing the diesel fuel standard to allow refineries to convert excess aviation fuels into diesel fuels sold into the local vehicle fuel market.
“Temporary changes to diesel standard will be allowed to enable all Australian refineries to utilise excess jet fuel supplies. This will ease the storage pressures currently being felt by refineries from the drop in demand for fuel products as a result of Covid-19,” Taylor said in a statement.
“High-quality diesel will continue to be supplied to the retail market and the change will not affect the operation of vehicles, the environment, or health and safety.”
“The temporary change to the diesel flashpoint was supported by state and territory agencies, fuel refiners, car and truck manufacturers, and clean air experts.”
The main difference between petrol and diesel engines is that the former are ignited by a spark plug, while diesel engines are ignited via compression, also known as flashpoint. These have had to be changed to cater for the differences in jet fuel.
Australian suppliers of jet fuels have found themselves with a glut of supply, due to a dramatic drop in travel triggered by Covid-19 travel restrictions.
An indicative estimate provided by the Department of Industry, Science, Energy and Resources found that domestic aviation fuel use in April had fallen 79 per cent compared to the same month in 2019.
Rather than capitalising on the emissions reduction that has been achieved through the changes in travel arrangements triggered by Covid-19, the Morrison government will instead relax fuel standards to allow this glut of aviation fuels to be redeployed into the vehicle fuel market.
As was flagged by the government in April, a weakening of vehicle fuel standards is necessary to allow for aviation fuels to be reprocessed into diesel fuels and mirrors a move from the Trump administration to roll back vehicle efficiency standards in the United States.
In addition to the relaxation of fuel standards, Angus Taylor announced that the Morrison government had opened a ‘request for information’ for proposals to expand Australia’s fuel storage capabilities.
Australia was singled out for criticism from the International Energy Agency for allowing its fuel stocks to fall well below the 90-day minimum standard for IEA members. Australia has held just a few weeks of reserve stocks, leaving the country vulnerable to shortages if international supplies were disrupted.
Earlier in the year, the Morrison government struck a $100 million deal to purchase access rights to oil reserves stored in the United States. The deal was intended to boost Australia’s strategic fuel reserves but attracted criticism due to questions over Australia’s realistic ability to access reserves stored in the United States during a crisis.
“RFIs are being sought from industry players on potential storage projects, which will allow the Government to examine different volume, location and fuel storage specifications. This will inform the next steps for exploring storage opportunities, to be announced later in 2020,” Taylor added.
“This RFI process forms part of the government’s comprehensive fuel security package and follows on from Australia and the United States finalising a deal to store Australian government-owned oil in the US Strategic Petroleum Reserve earlier in June.”
The move to expand local fuel storage capacity will address the legitimate need to boost Australia’s onshore oil reserves; it is also a concession that the agreement struck with the United States to hold oil reserves offshore will do little to improve Australia’s ability to access fuels in an emergency.
Australia has lacklustre electric vehicle policies, and numerous analyses, including a recently released research prepared by ClimateWorks Australia, have shown that stronger national coordination of electric vehicle strategies would tackle both challenges of fuel security, by reducing demand for liquid fuels, while also playing a crucial role in reducing Australia’s emissions.
The Australia Institute’s climate and energy director Richie Merzian said that there were better ways to improve Australia’s fuel security, and called on the Morrison government to finally deliver the National Electric Vehicle strategy announced more than a year ago.
“There are simple and cleaner ways to improve Australia’s liquid fuel security that are being ignored – like improving our dismal fuel security standards and electrifying vehicles,” Merzian said.
“The Electric Vehicle strategy was supposed to be delivered mid-2020 and we haven’t even seen a discussion paper yet.”
“The only reason the transport sector has reduced its emissions last year is because consumers are actively picking more fuel efficient, smaller cars. If only the federal government would get on board imaging the progress we could make.”
Opposition spokesperson for climate change and energy Mark Butler said that the moves would not be enough to address Australia’s fuel stock shortfalls.
“The Coalition government has sat idly by while Australia’s refining capacity has decreased by 40 per cent over the last eight years and Australia has failed to comply with International Energy Agency fuel security requirements,” Butler said. “Instead of taking real action, the Morrison government has been silent on Australia’s refining capacity, while taking half-hearted measures to create a strategic oil reserve to be held in the USA.”
“Angus Taylor needs to stop misleading the Australian people and covering up his failures in delivering fuel security.”
The dual announcements mark another stage of the Morrison government’s efforts to strengthen the fossil fuel industry in the midst of a Covid-19 triggered economic crisis, while there has been virtually no support for the emerging clean energy sector, nor for the uptake of zero-emissions electric vehicles.
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