1. Introduction
This Resource Document comprises a detailed discussion of the Petroleum Products Specifications Regulations 1998 and the context in which they exist. The regulations set out minimum standards affecting the performance of fuel, enabling consumers to purchase petrol and diesel to a quality standard appropriate for New Zealand's vehicle fleet and climatic conditions. They also include provisions limiting components that could be harmful to the environment or public health.
The regulations are being reviewed to ensure that consumers have access to petrol and diesel that comply with accepted and up to date quality, safety and environmental standards. The review has two main objectives:
- To clarify the purpose of the regulations; and
- To determine whether the specifications are meeting present needs and are relevant for the medium to long term, and whether we need a strategy to amend the specifications over time.
Petrol and diesel specifications were first regulated in 1988 at the time of deregulation of petrol and diesel retailing. The specifications have been amended since this time to prohibit the use of lead as an additive and to restrict the addition of aromatics in petrol. However, the present review is the first time the Regulations have been considered in total.
When issued in 1988, the fuel specifications were considered good by world standards.
Since then, there have been significant developments both domestically and internationally in fuel engine technologies, in fuel production processes and in our understanding of the health and environmental issues that surround petrol and diesel use. Other jurisdictions, notably Europe, the United States of America, Australia and Japan, have adopted in recent years more stringent specifications to achieve higher quality, safety, health and environmental outcomes.
1.1 Who Is Involved in the Review
The Petrol and Diesel - Delivering Quality review is being led by the Ministry of Economic Development, in association with the Ministry for the Environment, the Ministry of Transport, the Ministry of Health and the Ministry of Consumer Affairs.
The review complements the Vehicle Fleet Emissions Control Strategy work undertaken by the Ministry of Transport, the Ministry for the Environment's work on ambient air quality, climate change and the National Energy Efficiency Strategy and the Ministry of Health's work on benzene.
This Resource Document is complemented by the Discussion Document: Petrol and Diesel - Delivering Quality - A Review of the Petroleum Products Specifications Regulations.
Public submissions on the proposed recommendations, outlined in both documents, are sought, and should be forwarded to the Ministry of Economic Development by 15 October 2001. The Discussion Document contains a submission form and details on how to have your say.
1.2 Scope of the Review
Appendix A describes the terms of reference for the review and this Resource Document, the underlying principles that have informed the review, and the process by which the review has been conducted so far.
In brief the review and this Resource Document examine:
- What is the purpose of the current Regulations and are these still appropriate?
- Are the specifications meeting current needs and are they relevant for the medium to long term?
- Does New Zealand need a strategy for changing the regulations and/or specifications over time?
Particular emphasis has been placed on:
- Consumer, environmental, health and safety issues and the most appropriate way of addressing them;
- The effect of the Regulations on consumer access to petroleum fuel products and the impact, if any, on the presence of a competitive market for petroleum fuel;
- Whether the specifications create barriers to the development of new products and/or the adoption of new technology;
- Whether the specifications reflect international trends; and
- Related work programmes in other government departments.
The review does not cover:
- Alternative fuels such as LPG, CNG, bio-diesel. It does however consider the use of petrol/ethanol blends, which is discussed in Section 7.
- Life-cycle energy analysis. Changes to fuel specifications may require additional processing energy at a refinery, increasing emissions of CO2. A full life-cycle analysis of the effect of the proposed changes on CO2 emissions has not been conducted.
- Traffic congestion. The causes of traffic congestion and ways of managing congestion have not been discussed. References to work carried out by the Ministry of Transport that describe in detail the impacts of congestion on emissions are provided.
- Road and fuel pricing policy. The financial impacts of any recommendations are discussed in Section 10; however, this discussion does not extend to ways of financing any recommended changes in the specifications nor to road and fuel pricing policy and practice.
1.3 Resource Document Structure
This Resource Document is a more detailed companion to the Discussion Document.
Section 1 (this section) provides a brief background and outlines the scope of the review.
Section 2 describes the history and scope of the Regulations.
Section 3 describes the New Zealand fuel market and the New Zealand vehicle fleet.
Section 4 describes the policy and physical context for the three main areas that are the focus of the regulations: consumer protection, environmental impacts, and health and safety.
Section 5 describes what is happening internationally in relation to fuel and vehicle development and relates this to the situation in New Zealand.
Section 6 summarises the key issues taken into consideration in reviewing the current Regulations and specifications.
Section 7 contains a property by property analysis of the specifications for petrol (regular and premium grade) and recommendations for change.
Section 8 contains a property by property analysis of the specifications for diesel and recommendations for change.
Section 9 makes recommendations for possible amendments to the Regulations.
Section 10 discusses the market and cost implications of the proposed changes.
The last two sections contain a full list of references and a glossary.
Additional information is provided in the appendices to this document.
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