🧭 Regulatory Landscape
The fifth Independent Review of the Product Stewardship (Oil) Act 2000 was completed in February 2025 and tabled in Parliament in late October 2025. The levy currently sits at 14.2 cents per litre. Public submissions suggest potential movement to 18 to 22 cents per litre within the next one to two years. No firm implementation date has been announced, creating planning uncertainty for the industry.

💰 Where the Levy Goes
The PSO levy operates as a direct payment system to recyclers, not an infrastructure fund. Category 1 re-refined base oil receives 50 cents per litre, reflecting the highest environmental value. Category 5 industrial burner oils receive only 5 cents per litre. This tenfold difference creates strong economic incentives driving recyclers towards re-refining. The scheme does not fund collection infrastructure or facility construction. Market dynamics occur indirectly through elevated used oil values.

♻️ Re-Refining Objectives
Australia’s ultimate objective is closing the resource loop. Currently, 40 per cent of collected used oil undergoes re-refining to premium base oils, while 60 per cent is burned as industrial fuel. Three major operations anchor domestic capacity. Southern Oil operates facilities at Wagga Wagga and Yarwun. Cleanaway operates two Category 1 hydrogenation facilities producing API Group II base oils. Wren Oil provides Western Australia’s only complete re-refining service. If all collected oil were re-refined rather than burned, Australia could reduce its greenhouse footprint by 600,000 tonnes annually.

🌏 Australian Context
A single litre of improperly disposed used oil can contaminate up to one million litres of water. Since 2001, the scheme has facilitated collection of over 4,300 megalitres, preventing catastrophic environmental contamination. Collection rates have improved from 40 per cent to 60 per cent of all oil sold. Remote regions present higher collection costs. Australia imports 90 per cent of its virgin base stocks, making the approximately 320 megalitres recycled annually strategically significant. Re-refining uses 60 per cent less energy than producing base oil from virgin crude.

💡 Takeaway
The PSO levy operates as a direct recycler payment system, with rates structured to favour re-refining over industrial burning. The potential increase to 18 to 22 cents per litre awaits Government announcement on timing. Australian blenders contribute to a scheme that has diverted over 4,300 megalitres from environmental contamination since 2001, with the long-term objective of closing the base oil resource loop domestically.