NO.083

ULTRA LOW SULPHUR DIESEL

As part of the Measures for a Better Environment package agreed between the

Government and the Australian Democrats in 1999 it was announced that differential

excise of low and high sulphur diesel would be introduced to provide an incentive

to encourage the early uptake of ultra low sulphur diesel (ULSD) before the

introduction of the mandatory fuel standard in 2006. The differential was to

commence with an increase in diesel excise of 1 cent per litre from 1 January

2003.

The Government has implemented the majority of initiatives under Measures

for a Better Environment and continues its commitment to the package, including

providing incentives for the early introduction of ULSD to the Australian market.

However diesel excise will not be increased by 1 cent per litre from 1 January

2003. The Government is concerned at the possibility of raising costs to diesel

users at a time when the farming sector is facing serious drought conditions.

Accordingly, the Government has decided to defer for six months the implementation

of the incentive for the early introduction of ULSD, with the issue being included

in consideration of alternative fuels within the Energy Task Force.

CANBERRA

24 December 2002

Contact: David Alexander

0418 210 601