"The Government is currently conducting vehicle testing to clarify these impacts, prior to the development of a soundly based national fuel standard," Mr Kemp said. "My obligation as minister is to ensure it is based on good science and not merely opinion."
The Minister did concede consumers have a right to know the contents of their petrol however, the power of labelling rested with the states.
In response to the government's handball to the states, Opposition Treasury spokeman Bob McMullan said the government was "putting mates before motorists" - referring to the close relationship between the government and dominant ethanol producer, Dick Honan's Manildra Group.
Peak motoring group, the NRMA said the government was "blinded" to the mounting evidence that ethanol levels above 10% could be seriously damaging to motor vehicles.