Appendix A: How the Review Was Undertaken
A.1 Terms of Reference
A.1.1 Introduction
The Ministry of Economic Development is responsible for policy relating to energy resources and energy markets. In undertaking these responsibilities, the Ministry administers the Petroleum Products Specifications Regulations 1998, established under the Ministry of Energy (Abolition) Act 1989.
Market conditions are constantly changing. Since 1988, when the petroleum market was deregulated, the market has become increasingly competitive with the entry of new players. In addition, there have been ongoing policy developments both domestically and internationally that impact on how the market operates.
Accordingly, the Ministry initiated the Review of the specifications to ensure that consumers have access to the petroleum products they demand, and that these are affordable, of a reliable quality, and meet recognised standards. URS New Zealand Limited was contracted by the Ministry of Economic Development in December 2000 to undertake this work.
A.1.2 The Review
- Undertake a Review of the Petroleum Products Specifications Regulations 1998, addressing the following issues:
- The purpose of the current specifications and whether this purpose is still appropriate
- Whether the specifications are meeting present needs or need to be revised
- Whether the specifications are relevant for the medium and long term
- Whether New Zealand needs a strategy for changing the specifications over time
- Present the Review in the form of a public consultation paper
- Include in the Review a discussion of:
- Environmental, health and safety issues and the most appropriate way of addressing them;
- The effect of the specifications on consumer access to petroleum fuel products;
- 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
- Changes in the wider legislative regime.
- Take into account in the Review:
- Government decisions relating to work undertaken by the Ministry of Transport and the Vehicle Fleet Emissions Control Strategy and by the Ministry for the Environment on ambient air quality; and
- The impact, if any, on the present of a competitive market for petroleum.
A.1.3 Underlying Principles
The revised Regulations should ensure that:
- Regulation is avoided if there is little or no benefit to the consumer, the environment or public health;
- A conservative approach should be taken if the risk is still unknown or there is significant certainty;
- Innovation and responsiveness to consumer demands are promoted;
- Compliance costs are minimised;
- Flexibility to respond to developments in the domestic and international environment is achieved;
- Consistency with any international obligations, for example in relation to trade and the environment, is achieved;
- A competitive environment is promoted and that unjustified barriers in the petroleum industry (both domestic and international) do not result; and
- Consistency, where appropriate, with similar international petroleum product regulations is attained.
The proposed changes outlined in Sections 7, 8 and 9 of the report have been tested against these principles.
A.1.4 Overview of Review Process
The Review is being undertaken 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 comprises the following steps:
- Information Gathering and Consultation Paper Preparation
This Resource Document, and the companion Discussion Document (Petrol and Diesel - Delivering Quality) comprise the suite of consultation documents. A more detailed description of the process of preparing these documents is given in the following sections. - Public Consultation
Public submissions on the proposed recommendations are sought, and should be forwarded to the Ministry of Economic Development by 15 October 2001. The Discussion Document contains a cut-out submission form and details on how to have your say. - Receipt and Analysis of submissions from the public
- Presentation to the Associate Minister of Energy and Cabinet Ministers of findings and public consultation
- Finalisation of policy and changes to the regulations
- Promulgation of amendments
A.2 Information Sought
A review of documentation, technical papers and other relevant material was undertaken to identify key issues within New Zealand, additional information sources and overseas trends.
The information initially sought in this search comprised:
- Background to and experience with the current specifications, and the significance of specified parameters;
- Issues driving change internationally and their relevance to New Zealand;
- International trends in policy, fuel specifications, engine and fuel technology, refining and processing capability;
- Options for regulation together with an analysis and evaluation of the attendant risks;
- Information on the likely impacts of changes (e.g. vehicle performance, economic, environmental, health);
- Information on vehicles and fuels as they exist in the New Zealand context;
- Environmental, health and regulatory information in respect of petrol and diesel use in New Zealand;
A.3 Interviews and Discussions
Information gathering to define the key issues was undertaken in a series of interviews, either in person or by telephone. Due to the potential for changes to the Regulations to have an impact on a wide range of interested parties, these initial informal discussions canvassed a relatively broad group of people and organisations covering the general categories below, though it was by no means intended to be exhaustive.
- Government agencies (local and national)
To identify other research related to this work and to identify key issues. - Fuel suppliers (oil companies)
Significantly affected by any changes to the specifications, due to their role as producers and suppliers of petroleum products. It was considered that they may also be able to provide information on marketing and pricing issues arising out of possible future "greener" specifications for existing fuels. - The New Zealand Refining Company Limited.
Operators of the Marsden Point Refinery, the only refinery operating in New Zealand. - Consumer Groups
These groups provide a "watch dog" role in respect of consumers or specific user groups. - Vehicle manufacturers and associated motor industry organisations
- Other Interested Parties
Organisations or individuals who expressed a wish to contribute at this stage or who were referred to URS as having a specific interest.
Stakeholders contacted at this stage include the following:
Anchor Ethanol Limited
Auckland Regional Council
Australian Institute of Petroleum
Automobile Association (AA)
BP Oil New Zealand Limited
Bus and Coach Association
Caltex New Zealand Limited
Challenge Petroleum
Consumers? Institute of New Zealand
Energy Efficiency and Conservation Authority (EECA)
Environmental Risk Management Authority (ERMA)
Environment Canterbury
Environment Waikato
Energy Efficiency and Conservation Authority (EECA)
Ford Motor Company
Gull Petroleum New Zealand Limited
Industrial Research Limited
Land Transport Safety Authority (LTSA)
Maritime Safety Authority
Ministry for the Environment
Ministry of Consumer Affairs
Ministry of Health
Ministry of Transport
Mobil Oil New Zealand Limited
Motor Industry Association
Motor Trade Association
Occupational Safety & Health Service (part of Department of Labour)
New Zealand Refining Company Limited (NZRC)
Road Transport Forum
Shell New Zealand Limited
A.4 Technical Questions
A list of technical questions was then prepared and formal responses from NZRC and the six fuel supply companies sought. These questions addressed possible changes to specified properties of petrol and diesel and the technical and logistical feasibility of implementing those changes.
A.5 Preparation of Draft Paper
The information gathering process lead to the preparation of a draft paper (similar to the structure and content of this document) containing an initial set of proposed changes to the Regulations and specifications.
A.6 Peer Review
The draft paper was reviewed by an external expert panel comprising people with expertise in vehicle technology, air quality and environmental and consumer issues.
The peer review group comprised:
| Professor Ray Meyer (Chair) | formerly Dean of Engineering, University of Auckland and energy and engineering specialist. |
| Wallace Simmers | Simmers and Associates, Wellington, formerly Chairperson of Consumers' Institute, member of Standards NZ council. |
| Peter Waring | formerly Principal Engineer, Compliance, Land Transport Safety Authority (LTSA) and motor vehicle and fuels specialist |
| Dr. Gerda Kuschel | Regional Manager, National Institute of Water and Atmospheric Research Ltd. (NIWA) |
The draft paper was also independently reviewed by the Review Interdepartmental Advisory Committee and the Ministry of Economic Development.
A.7 Stakeholders Meeting
Following the peer review, the proposed changes were revised and summarised, and distributed to a wider range of stakeholders. A stakeholders meeting was convened in late June, at which a presentation on the proposals was made. This provided an opportunity for further stakeholder input ahead of the release of the public consultation documents.
A.8 Public Discussion Document and Resource Document
This Resource Document, and the companion Discussion Document (Petrol and Diesel - Delivering Quality) comprise the suite of consultation documents for public review. Public submissions on the proposed recommendations are sought, and should be forwarded to the Ministry for Economic Development by 15 October 2001. The Discussion Document contains a cut-out submission form and details on how to have your say.
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