Denaturant
46. To be excise duty free, ethanol must be denatured in accordance with a formula approved by the Chief Executive of Customs. The addition of 1% by volume petrol is amongst the approved denaturants. Denatured ethanol is approved under the Hazardous Substances and New Organisms Act 1996 (HSNO) by way of the Denatured Ethanol Group Standard, which likewise includes up to 1% by volume petrol as an allowed denaturant.
47. The discussion document proposed that the ethanol specifications be for denatured ethanol and that only the addition of between 1% and 1.5% petrol be permitted for denaturing. Petrol is widely available and the use of petrol as the denaturant avoids the possibility of another denaturant not already used in vehicles having adverse impacts on fuel stability, fuel systems or engine operability.
48. Most submissions supported the specifications being for denatured ethanol and recognised the advantages of allowing only petrol as a denaturant. Some submissions however suggested that when imported ethanol is denatured overseas it will not be practical to use New Zealand specification petrol as the denaturant. To enable denaturing to occur overseas, it is proposed that the petrol used to denature must meet certain key parameters (unleaded, low sulphur etc) to ensure appropriate quality, but does not need to meet the full New Zealand petrol specification. Two oil companies also suggested that other petrol components should be able to be used as denaturants, however, as these are not consistent with Customs requirements or approved under the HSNO Denatured Ethanol Group Standard, it is not proposed that this be permitted.
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