Australia tightens fuel standards ahead of 2025 regulation changes

March 31, 2025

The Australian Government is making two key changes to fuel quality from 15 December 2025. These updates will enhance petrol quality, reduce emissions, and align Australia with international fuel standards. Additionally, the approval of a paraffinic diesel standard will support the transition to cleaner energy sources.

Fuel quality improvements from December 2025

On 5 November 2024, the Department of Infrastructure, Transport, Regional Development, Communications and the Arts announced significant fuel quality improvements set to take effect on 15 December 2025. These measures aim to support Euro 6d noxious emissions standards and reduce vehicle emissions.

The key changes include:

Lowering the maximum aromatic hydrocarbon content in 95 Research Octane Number (RON) petrol to 35%. Aromatics contribute to engine performance but can cause operability issues at high levels.
Reducing sulphur levels in all petrol grades (91 RON, 95 RON, and 98 RON), aligning Australia with international fuel standards.

The new fuel specifications will apply to:

All new light vehicle models introduced in Australia from December 2025.
New vehicles from existing production lines by 2028.

Why these changes matter

Australia’s fuel quality standards have historically lagged behind those of the European Union and the United States. The upcoming 2025 regulations mark a significant shift towards aligning with global best practices, reducing vehicle emissions, and improving air quality. High levels of aromatic hydrocarbons and sulphur in fuel contribute to air pollution and adverse health effects, particularly in urban areas.

By reducing these harmful components, the new regulations are expected to:

Improve air quality and public health by cutting down on pollutants like particulate matter (PM) and nitrogen oxides (NOx).
Reduce maintenance costs for vehicle owners by preventing engine deposits and corrosion.
Enhance the efficiency of new-generation petrol and diesel engines.

Australia’s new paraffinic diesel fuel standard

In December 2023, the Australian Government announced the Fuel Quality Standards (Paraffinic Diesel) Determination 2025, which establishes a national standard for paraffinic diesel, including renewable diesel. The standard was developed by the Department of Climate Change, Energy, the Environment and Water (DCCEEW) to provide a regulatory framework for alternative diesel fuels.

Key features of the paraffinic diesel standard include:

Regulated specifications for renewable diesel, enabling its wider adoption in Australia.
Support for emissions reductions, as paraffinic diesel burns more cleanly than conventional diesel.
Compatibility with existing diesel engines, reducing barriers to entry for fleet operators.

The announcement followed public consultation, concluding in early 2024, with input from stakeholders across the fuel, transport, and energy sectors. This standard is expected to encourage investment in low-carbon fuel production and accelerate the adoption of renewable diesel across the country.

Industry and economic impact

The transport and energy industries are expected to undergo major transformations due to these fuel regulation updates. The paraffinic diesel standard opens up new opportunities for investment in renewable fuels and infrastructure, while the fuel quality improvements will provide long-term cost savings for consumers and businesses.

Key anticipated benefits include:

Stronger demand for renewable diesel as a lower-carbon alternative to conventional fuels.
Increased investment in fuel refining and blending technologies.
Enhanced vehicle lifespan and performance, reducing repair and maintenance expenses for fleet operators.

However, industry stakeholders have also raised concerns about:

The cost of adapting fuel supply chains to meet the new standards.
Potential short-term price fluctuations as refiners adjust to lower sulphur and aromatic content.
The need for broader incentives to support the shift towards electric and hydrogen-powered vehicles.

The future of fuel standards in Australia

These fuel regulation changes mark a major step towards a cleaner energy future, but challenges remain. Industry stakeholders are calling for additional incentives to accelerate renewable diesel production and expand infrastructure for alternative fuels such as hydrogen and electricity.

While these updates focus on improving conventional fuel quality, they also pave the way for future policies that could further reduce Australia’s reliance on fossil fuels. Experts anticipate that by 2030, Australia will see greater adoption of zero-emission vehicles, with hydrogen fuel cell and battery-electric technologies playing a larger role in freight and transport industries.

With the growing global push for low-carbon transport solutions, Australia’s fuel policies will likely continue evolving, supporting the transition to sustainable mobility and lower-emission vehicles.