Incentive to ● ● ● ● Discussions with stakeholders participate/ identified that the major fuel free-ride Compliance and Compliance and Major fuel industry Major fuel industry companies industry companies have an enforcement enforcement companies have indicated have indicated that they would incentive to participate. arrangements create an arrangements create an that they would participate. participate. However, it is incentive for incentive for uncertain whether all of the Small organisations may have a Co-regulatory arrangements participation. participation. industry would participate, or would also provide an reduced incentive to participate whether they would seek to incentive to participate. as there is there may be exploit financial arbitrage opportunities to make financial opportunities. returns. Objectives ● ● ● ● Where fuel quality is concerned and key points are: arrangement Government regulation Government regulation Co-regulation can support Gaining industry-wide coverage Products are not can deal with can deal with the management of will be very challenging, homogenous. heterogeneity, heterogeneity, heterogeneity, assurance particularly given product assurance and assurance and and representation. heterogeneity. Assurance is challenging representation. Noting representation. Noting However, the national Reliance on industry to provide because there are many that all of these issues that all of these issues organisation will need to assurance arrangements will be retail outlets and linking fuel can increase regulatory can increase regulatory navigate these issues and difficult, because assurance costs cost. cost. quality issues with a specific that could be challenging. reduce financial margins. retail outlet is difficult. Achieving balanced representation across all Balanced representation stakeholder groups will be would be hard to achieve. challenging to achieve.
Incentive to participate/ free-ride Discussions with stakeholders identified that the major fuel industry companies have an incentive to participate. Small organisations may have a reduced incentive to participate as there is there may be opportunities to make financial returns. ● Compliance and enforcement arrangements create an incentive for participation. ● Compliance and enforcement arrangements create an incentive for participation. ● Major fuel industry companies have indicated that they would participate. Co-regulatory arrangements would also provide an incentive to participate. ● Major fuel industry companies have indicated that they would participate. However, it is uncertain whether all of the industry would participate, or whether they would seek to exploit financial arbitrage opportunities. Objectives and arrangement Where fuel quality is concerned key points are: Products are not homogenous. Assurance is challenging because there are many retail outlets and linking fuel quality issues with a specific retail outlet is difficult. Balanced representation would be hard to achieve. ● Government regulation can deal with heterogeneity, assurance and representation. Noting that all of these issues can increase regulatory cost. ● Government regulation can deal with heterogeneity, assurance and representation. Noting that all of these issues can increase regulatory cost. ● Co-regulation can support the management of heterogeneity, assurance and representation. However, the national organisation will need to navigate these issues and that could be challenging. ● Gaining industry-wide coverage will be very challenging, particularly given product heterogeneity. Reliance on industry to provide assurance arrangements will be difficult, because assurance costs reduce financial margins. Achieving balanced representation across all stakeholder groups will be challenging to achieve.
act-review-final-report.docx