Fuel Mandates Have a History of Success and a Lesson for Bio Fuels Implementation

Australian policymakers and politicians concerned with the implementation of ethanol and bio diesel (bio fuels) into mainstream use should examine the introduction of unleaded fuel as a historical analogy. The similarities are profound in terms of issue identification and opposition – but the policy responses to unleaded fuel compared to bio fuels show a difference in the political approach to policy making. Despite contemporary claims that policy making is now more evidence based than ideological, there are strong signs that it is ideology that is inhibiting the implementation of bio fuels. In comparison, the implementation of unleaded fuel appears more pragmatic.

Both the introduction of unleaded fuel and bio fuels into Australia was a response to environmental concerns.  In 1981, Australian state and federal transport ministers met to address pollution problems.  Driving the shift towards unleaded petrol were vast environmental and health concerns.  From the late 1990s, the rationale for the adoption of bio fuels followed similar concerns, as it was seen as an effective step toward reducing CO2 emissions.

While both unleaded fuel and bio fuels were seen as improving air quality and the environment, each received similar opposition. During the 1980s, automobile associations were critical of the introduction of unleaded fuel. The RACV opposed the implementation believing it was too costly. The oil industry was cynical, too, arguing the introduction of unleaded fuel did not follow from a technological breakthrough but rather a decision by ministers. Criticism from automobile associations also has emerged regarding bio fuels. Concerns emerged regarding ethanol blends and the possibility of engine damage, while oil companies initially complained the costs involved in making the transition would outweigh any benefits. Without doubt, the position taken by oil companies, automobile associations and other stakeholders regarding unleaded fuel changed over time.  Furthermore, there is strong evidence that those groups also are changing their position on bio fuels.

The environmental concerns leading to the introduction of unleaded and bio fuels along with the opposition each generated are where the historical analogy ends and lessons from the past begin. Despite opposition to unleaded fuel, the Transportation Council adopted a program to mandate unleaded petrol by 1985. The implementation policy for unleaded fuel was undertaken in stages.  Initially, regulations were made calling for all new motor vehicles made after January 1986 (manufactured within Australia or imported) to meet the new fuel requirements.   The policy then called for a complete phase out of unleaded fuel by 2002. Prior to the national mandate, states had led the way on unleaded fuel. NSW, which took the lead on mandating for unleaded fuel, similarly has now done the same for ethanol. The decision to mandate was essential for implementing unleaded fuel.  It forced car manufacturers, oil producers and consumers to make the transition.  It has only been recently, however, that states have begun to move toward mandating ethanol blended fuel.  To date, the Federal Government still resists the choice to set a national mandate on ethanol and bio diesel blends.

It is the issue of national mandates that brings into question contemporary policy making and its emphasis on ideology. Use of ethanol blends has lagged behind international trends because Australian policymakers have rejected mandates in favour of allowing the uptake of ethanol blends to be market driven. For the period 2005 to 2009, both Liberal and Labor federal governments believed consumers should decide if they used ethanol blend or not.  For strictly market based ideological reasons, the mantra around Cabinet and Shadow Cabinet tables was that consumers should have choice.  But had the architects of unleaded fuel implementation relied upon the market, it is unlikely the consumers would have made the change at the pump on environmental grounds.

Today, state governments appreciate that market driven reform is unable to bring about decisive action. Car manufactures and oil companies have enforced mandates of their own.  Caltex, for example, is phasing out its regular unleaded petrol and replacing it with E10 (ethanol blended fuel) and Holden is now introducing its “flexi fuel” sedan which can operate on ethanol blends of up to 85 per cent.

If the Federal Government examined the historical analogy of unleaded fuel and bio fuels it would see that a national mandate is more apposite than the free market driven approach of consumer choice and market demand. The Federal Government also would recognise that opposition to unleaded fuel and bio fuels is short lived. Here, perhaps the greatest lesson from recent history is that a failure to enact decisive action places the Federal Government behind the states who, through their mandates, give certainty to local bio fuel industries and a clear direction for vehicle manufacturers, oil producers and consumers.

Citation: Troy Whitford, Fuel Mandates have a History of Success and a Lesson for Bio Fuels Implementation. Australian Policy and History. April 2010.