Australia risks being “a dumping ground” for high-polluting cars

Australia will become a “third-world dumping ground” for older, high-polluting cars unless action is taken to improve fuel quality.

In a scathing assessment of fuel policy in Australia, Volkswagen Group Australia managing director Michael Bartsch also said Australians would soon be paying more for new vehicles because consumers will be limited for choice.

While the rest of the world pushes for improved fuel standards that enable more efficient and environmentally-friendly vehicles, Australia lags at the back of the pack, according to the industry.

Australia is currently ranked 70th globally in terms of fuel standards because of the high percentage of sulphur permitted here.

Speaking with media in Sydney this week, Bartsch demanded action from the federal government and from oil companies. Without change, he said the alternative appeared bleak.

“We’re working with our dealers to talk to local politicians about getting some momentum into this discussion, because it will cost Australian consumers down the track,” Bartsch said.

“We have already lost engines in Australia because of the high sulphur content. We’ve had to go back and beg to be able to have those engines maintained because they represented a significant volume for us here.”

The issue has become a major talking point for the industry, not just for Volkswagen.

Under current requirements, Australian 91-octane unleaded has a sulphur limit of 150 parts per million (150ppm), while 95 and 98-octane premium fuels have a cap of 50ppm. Among developed nations in the OECD, only Mexico has worse petrol quality.

Furthermore, Australia's slow uptake comes at a time when Europe is pushing for a 10ppm sulphur cap.

In his inaugural speech as Federal Chamber of Automotive Industries president last month, Mercedes-Benz Australia boss Horst von Sanden said the impetus was on the government and the oil sector to take action.

“We cannot achieve lower emission outcomes purely on engine management technology, we need fuel of first-world fuel quality to get a first-world emissions outcome,” he said.

Bartsch said the issue was critical for air health, likening the eradication of sulphur-rich fuel to the scrapping of leaded petrol in the 1990s.

“We’ll become a dumping ground,” he warned, pointing out that incoming petrol vehicles fitted with a particulate vehicles will not be feasible with Australian standards.

“When you look at the countries that are placed behind Australia, it’s Bolivia, Tanzania, Egypt, Uganda. That’s not great company.”

The oil companies that run Australia’s four remaining refineries argue the cost to upgrade their facilities would be uneconomic and would impose more costs to consumers.

Calls to simply import all of Australia’s fuel, like what is done in New Zealand, have been met with opposition amid fears over security and job cuts.

“You have to get on board -- either you’re with it or you’re not,” retorted Bartsch.

“Like all fuel companies, the Australian industry has a lot of lobbying power and they have a lot of vested interest.

“We don’t need to scrap the refineries in Australia, we just simply need to learn the lesson in history that putting your head in the sand and putting things off ultimately becomes more expensive than moving with the times,” Bartsch added.

The federal government released a draft regulatory impact statement on the issue earlier this year looking at a range of options and timelines for improving our fuel standards – ranging from 2022 and 2027.

Bartsch said delaying change until then would be hugely detrimental to consumers, manufacturers and the environment.

“What [the future] will look like is we’ll see a lot of options in terms of powertrains we can’t get,” Bartsch explained.

“What you’ll start seeing is we’ll start getting lower common denominator products. And contrary to what the AAA will tell you and what the fuel companies will tell you, we’ll start paying more for the cars. Because they’ll start doing special testing and special engine runs and keeping old model lines alive and putting old engines down the production line to keep a few markets going.”

The push for better fuel coincides with the European Union overhauling its emissions testing regime. The EU is enforcing a new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) which uses real-life testing in place of the outgoing NEDC laboratory testing procedure.

Mercedes-Benz Australia corporate communications manager David McCarthy echoed the industry’s sentiments, calling for real change.

“The chamber’s already raised it. It is a real issue and unless we reach agreement and resolve this, there will be bigger factors to contend with,” he said.

“The car industry works on much longer lead times than the government, and with the WLTP being enforced, we want to see change occurring.”

In addition to VW’s supply woes, it is understood that high sulphur levels have played a part in the pared-back 2018 Mercedes-Benz C-Class range that arrives in Australian showrooms later this year.

The same issue has already imposed restrictions on Jaguar and BMW allocations in Australia.