Part 3: Supporting documentation for exemption applications
Volume retailers need to declare certain facts to support their application for an exemption to the biofuel minimum requirements.
3.1 General documentation requirements
In order to avoid retailers being required to attach large quantities of documentation to exemption applications, volume fuel retailers will be asked to declare certain facts that support the application, but generally will not be asked to attach supporting documentation.
Retailers will, however, be required to sign an online declaration that they either hold or can readily obtain the relevant documentation to support the facts stated in their exemption application.
NSW EPA may carry out spot checks to check the claims made in exemption applications and may request production of supporting documentation in particular cases.
3.2 Specific requirements – grounds for exemption
Ground 1
Exemption from requirement to sell 6% ethanol where the retailer has taken all the steps set out below.
Step 1. Taking all reasonable action to upgrade the retailer’s infrastructure to enable it to distribute sufficient petrol-ethanol blend to ensure compliance
The retailer will need to declare that it has provided tanks and bowsers capable of holding and delivering petrol-ethanol blend. This may include replacement of a tank if necessary.
If the retailer has an exemption from the requirement to make petrol-ethanol blend as accessible as any other type of petrol, information about this exemption will need to be provided.
Step 2. Taking all reasonable action to ensure the availability of facilities for the sale of petrol-ethanol blend at the retailer’s service stations
The retailer will be asked to declare that it has provided tanks, bowsers and nozzles for delivering petrol-ethanol blend to retail customers and that it has complied with the requirement to make petrol-ethanol blend as accessible as any other type of petrol at the service station.
Data in FuelCheck showing that E10 and/or E85 is being offered can be checked, as well as information about the number of bowsers and nozzles in the retailer’s half-yearly return.
If the retailer has an exemption from the requirement to make petrol-ethanol blend as accessible as any other type of petrol, information about this exemption will need to be provided.
Step 3. Making all reasonable efforts (on a continuing basis) to secure sufficient supplies of ethanol or petrol-ethanol blend to comply
The retailer will be asked to declare that it is making these efforts on an ongoing basis.
This claim may be checked against data on FuelCheck, which shows petrol-ethanol blend being offered, and the half-yearly returns showing the amount of ethanol sold, along with the number of bowsers and nozzles.
If a petrol-ethanol blend is not being offered, and there is no exemption from the requirement to offer a petrol-ethanol blend, the retailer will need to have evidence that it has attempted and continues to attempt to obtain sufficient ethanol and an explanation of why a petrol-ethanol blend is not being offered.
The retailer is expected to be able to have evidence of supply contracts or supply quotes if requested but is not expected to breach the terms of existing supply contracts by seeking supply elsewhere.
Step 4. Taking all reasonable action (on a continuing basis) to market petrol-ethanol blend, including by ensuring that at each service station at which E10 is sold, the price of E10 is conspicuously displayed on a sign alongside the price of other fuels
The retailer will be asked to declare that the price of E10 is displayed on a price board so that it is readily seen by motorists approaching the service station as required by the Fair Trading Regulation 2019. The retailer will also be asked to declare that it is taking other reasonable steps to market petrol-ethanol blend and outline what these steps are.
Step 5. Taking all reasonable action (on a continuing basis) to ensure that all E10 sold by the retailer contains at least 9% ethanol
A retailer will be asked to declare that they have taken all reasonable action to satisfy themselves that the product they obtain and sell that purport to be E10 contains at least 9% ethanol and complies with one of the sustainability standards prescribed in the regulation.
Ground 2
Exemption from requirement to sell 2% biodiesel on the basis that the retailer has taken steps 1-4 above (mirroring biodiesel in place of E10).
A biodiesel blend that contains up to 5% biodiesel in Australia does not need to be labelled as biodiesel. It can be labelled and marketed simply as diesel. Accordingly, any retailer who sells diesel will not necessarily need to upgrade infrastructure to sell biodiesel but can sell a B5 blend.
The retailer will need to declare that it is making all reasonable efforts on an ongoing basis to secure sufficient supplies of biodiesel blend.
When there is a significant shortage of biodiesel, the Panel will take this into account.
Ground 3
Exemption from the requirement to sell 6% ethanol or 2% biodiesel or to offer a petrol-ethanol blend on the ground that the retailer has otherwise taken all reasonable steps to comply with the biofuels requirement.
The retailer will need to explain how it has otherwise taken all reasonable steps to comply.
Ground 4
Exemption from the requirement to sell 6% ethanol or offer a petrol-ethanol blend on the ground that it is not economically viable for the retailer to comply:
- because the wholesale price of ethanol exceeded the reasonable wholesale price determined by IPART
- because of the price at which the retailer was reasonably able to produce or obtain petrol-ethanol blend for retail sale.
The retailer will need to provide information about the price at which it can obtain petrol-ethanol blend and about its supply contracts.
A retailer is not expected to breach the terms of existing supply contracts by seeking supply elsewhere.
Ground 5
Exemption from the requirement to offer a petrol-ethanol blend on the grounds that it is not economically viable for the retailer to comply because:
- the retailer, despite their best efforts, has not been able to secure finance to install or upgrade infrastructure
- the capital costs of installing or upgrading infrastructure made it not economically viable to comply, considering the price that would have to be charged for the petrol-ethanol blend to recover those costs.
The requirement to make petrol-ethanol blend as accessible as any other type of petrol will be taken to mean that, nozzles of petrol-ethanol blend are conveniently located across the forecourt of the service station, and in comparable numbers to the other most available petrol product being offered for retail sale.
An exemption on the basis of inability to secure finance for infrastructure costs or excessive costs for infrastructure upgrades will only be considered in relation to the most cost-effective means of compliance with the biofuels requirements at that site. For example, flushing out an existing tank and using it to supply E10 would be a more cost-effective means of compliance, where this is possible, than installing a new tank. It will be up to the retailer’s discretion to decide which product to replace with E10, if the retailer chooses this means of compliance.
The retailer will need to explain whether the use of existing tanks to offer a petrol-ethanol blend is possible and which aspects of the infrastructure at the service station will need to be upgraded to comply with the biofuels requirements.
The retailer will also be asked about the terms of any franchise or commission agent agreement they are a party to, in particular how the cost of infrastructure upgrades due to regulatory changes would be apportioned. If the costs are to be borne by someone other than the volume fuel retailer, then the retailer will be unlikely to receive an exemption on the grounds of finance for or costs of infrastructure upgrades.
In the case of an exemption for inability to obtain finance, the retailer may be asked to obtain 2 quotes for finance and provide a declaration that either the finance applications were rejected, or finance was offered on unaffordable terms.
For an exemption on the grounds that the costs of installing or upgrading infrastructure make compliance economically unviable, the retailer will be asked to provide a declaration containing information about the retailer’s net average annual profit for the last 2-year period. The retailer will also be asked to obtain 2 quotes for the necessary infrastructure changes and provide a declaration about these quotes.
If the cost of upgrades is more than 25% of average net annual profit over the last 2 year period, the Panel will closely consider providing an exemption, especially if the retailer is a small business. The retailer will also be asked to provide any further information which may assist the Panel to determine whether an exemption is appropriate. This could include information about the retailer’s long and short term assets and liabilities.
Ground 6
Exemption from the requirement to offer a petrol-ethanol blend on the ground that it is not economically viable for the retailer to comply because the service station is in a remote and regional area, and the recurrent costs of transporting petrol-ethanol blend to the service station make it not economically viable to comply, considering the price that would have to be charged for the petrol-ethanol blend to recover those costs.
For an exemption from the requirement to offer a petrol-ethanol blend on this ground, the retailer will be asked to provide a declaration about the costs of transporting ethanol or petrol-ethanol blend to the service station from the closest available source.
The retailer may be asked to obtain a quote from 2 transport providers if this is feasible.
Ground 7
Exemption from the requirement to offer a petrol-ethanol blend on the ground that it is not economically viable for the retailer to comply because the combination of the costs of infrastructure upgrade and recurrent transport costs (for stations in a remote or regional area) made it not economically viable to comply, considering the price that would have to be charged for the petrol-ethanol blend to recover those costs.
Refer to the relevant information contained in Grounds 5 & 6 above.
Ground 8
Exemption from the requirement to sell 6% ethanol or offer a petrol-ethanol blend on the grounds that it is not economically viable for the retailer to comply on any other grounds.
Grounds that may justify an exemption in this category include:
- other significant regulatory compliance costs have been incurred in the last 2 years and further substantial costs for infrastructure upgrades will be necessary to comply with the requirement to offer a petrol-ethanol blend
- infrastructure upgrades will require closure of a service station for 28 or more days, or
- any other grounds that mean it is not economically viable to comply.
The retailer will need to explain why it is not economically viable to comply and make a declaration about the financial basis of this claim. The retailer may be asked for documentary evidence to support this declaration.
Ground 9
Exemption from the requirement to sell 2% biodiesel on the ground that it is not economically viable for the retailer to comply because of the price at which the retailer is able to produce or obtain biodiesel blend for retail sale.
The retailer will be asked to provide information about the price at which it can obtain biodiesel or biodiesel blend and about its supply contracts.
A retailer is not expected to breach the terms of existing supply contracts by seeking supply elsewhere.
Ground 10
Exemption from the requirement to sell 2% biodiesel on the ground that it is not economically viable for the retailer to comply on any other grounds.
The retailer will be asked to provide a declaration about these grounds and why they mean it is not economically viable to comply, and to hold evidence to support this declaration.
Ground 11
Exemption from any of the biofuels requirements on the ground that an exemption is reasonable to allow the retailer a period within which to take the steps required to establish a defence for failure to comply.
An exemption on this ground may be appropriate when a service station becomes subject to the biofuels requirements for the first time and needs time within which to take all reasonable steps that will be necessary to comply or to establish grounds for an exemption.
The retailer will need to provide an explanation of why it is reasonable to provide time within which to take these steps.
Ground 12
Exemption from any of the biofuels requirements on the basis that compliance may result in a risk to public health and safety.
An exemption on these grounds may be justified, for example, in situations where disturbance of an underground fuel tank is unsafe, or in any other situation where compliance may result in a risk to public health and safety.
The retailer will be asked to provide a declaration as to the grounds on which the exemption is sought and should hold evidence to support that declaration.
Ground 13
Exemption from any of the biofuels requirements on the grounds that there are other extraordinary circumstances justifying the grant of an exemption.
Examples of circumstances that may justify the grant of an exemption on this ground could include:
- that the retailer requires development approval to comply, and that approval has been refused, or the retailer is awaiting that approval
- infrastructure upgrades are necessary to comply, but cannot commence for a specified time period because, despite their best efforts, the retailer has been unable to engage a contractor at this time to undertake the upgrades
- the retailer or their site has recently been subject to a natural disaster or other catastrophic event, and this has affected their ability to comply
- closure of the service station for the period necessary to carry out upgrades will cause hardship to the local community, for example, because the retailer is the sole fuel supplier in a remote or regional location
- the retailer cannot obtain appropriate insurance to cover upgrade works
- the retailer leases a service station site, and the lease will expire in the near future
- the constraints of a service station site make infrastructure upgrades impractical
- where tank replacement is necessary, the remaining useful life of the tank, as estimated by an appropriately qualified expert, would likely exceed four years, or
- the retailer is a specialist supplier, for example of marine fuel.