LPG Proving a Tough Sell in Australia

Australian businesses specializing in repairing and servicing vehicles powered by liquefied petroleum gas are frustrated with government and public disinterest in the fuel.

Despite the country’s vast reserves of LPG, consumer demand for LPG-powered vehicles is low and interest in LPG as a green alternative to gasoline is diminishing.

Figures from the Victoria Automotive Chamber of Commerce (VACC) show 96,401 private vehicles in Australia were converted to run on LPG in 2008. By last year, conversions had fallen to 27,976.

In the same period, sales of new LPG vehicles fell from 13,378 to just 244 in 2011.

An excise tax of 2.5 Australian cents a liter ($0.094) on LPG introduced last December by the Labor government will rise 2.5 cents a year until it reaches 12.5 cents a liter ($0.469 U.S. cents a gallon) in mid-2015.

LPG Australia CEO Michael Carmody says the tax means 700,000 motorists are paying more for the greener LPG fuel and hundreds more may be deterred from converting their vehicles to LPG.

“How do we explain to working families that, at a time when the government wants to impose a carbon tax to encourage them to take up more environmentally friendly energy options, we are imposing a tax on a green transition fuel – one that they were encouraged by successive governments to convert to?” the head of the industry organization says.

The numbers also won’t be helped when the federal government’s LPG installation incentive grant program ends in 2014. The grant now is worth A$1,250 ($1,236), down from the original A$1,500 ($1,483), and will be cut to A$1,000 ($988) in June.

A rebate of A$2,000 ($1,976) is available to buyers of new LPG cars.

The fuel is available at 4,000 stations around Australia. The NRMA motoring organization says in Sydney this week, LPG was averaging A$0.70 cents a liter ($2.61 a gallon), while E10 ethanol/gasoline was an average A$1.44 a liter ($5.41 a gallon).

GM Holden recently added an LPG version to its locally built Commodore sedan range.

VACC Executive Director David Purchase says LPG has a lot going for it as an alternative fuel, yet governments, motorists and business owners are not as interested in it as they could be.

“Motorists have shunned LPG, and it seems the only demand for it is from the taxi industry,” Purchase says in a statement. “Unless a way of promoting LPG can be found, there are not going to be enough LPG vehicles for repair and service automotive businesses.

“It has not helped that motorists have received a double whammy with the LPG conversion rebate being phased out and excise on LPG introduced. We urge the federal government to review these factors and to reconsider its assistance packages for the promotion of LPG as an alternative fuel for vehicles.”