Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 280 - 293)



  280. On the question of the package of measures, one of the other forms of taxation on motoring which is currently being explored in the United Kingdom is the question of congestion charging. We do not have motorway tolls but we are about to introduce congestion charging in the near future. What are your observations on congestion charging and in particular on the technology of it. Do we now have the technology to introduce a very refined system whereby people can be charged per kilometre of the journeys they travel? Is this going to be an effective way of reducing overall congestion? So far we have talked about the impact on air quality, but we have not touched congestion.
  (Mr Carey) There is electronic technology which can do all of the things you mention, car tagging and monitoring. My personal view is that there are two issues here: one is congestion one is environment. You do not solve one by trying to solve the other. If we have congestion problems and congestion charges are the solution, then let us do that, but do not look at congestion charging as a way of reducing pollution. We can solve pollution through technology. We talked about fuel technology and engine technology. Congestion charging is something different. You commented the other week when the AA were here that driving across France costs the same as driving across the UK because they have road charges. You cannot introduce toll charges in some countries because the motorway networks will not work. Imagine trying to come off some parts of the M25 and queuing to pay and the congestion that would cause rather than solve.
  (Mr Frank) We have to make a distinction because the vehicle technology will be available in a very short time; it is really road technology. What we are missing so far is the management of the traffic. We have to ask the question: what do we want? Do we want to keep the people in the traffic jams so that the revenue increases and do that every morning and only some people have an alternative to do different things, or do we try to avoid the traffic jam? Then we need a traffic management system to inform the people in advance by planned management, so today they know what may happen tomorrow morning, due to the weather conditions, the holidays, whatever. That is one question. The second question is: what do we do with the money? Do we spend it again on the pension fund so that the Government is happy to have the money, or do we feed it back into the system and use the money to reduce the reason for the traffic jam by, let us say, increasing the intermodal changes between personal transportation, public transportation, enhanced cycling but also improve the road infrastructure? I should be much more in favour of this circle: improve the system so that at least there is a goal to reduce traffic jams and not give a signal to the customer which says, "Sorry, we misused the traffic jam to increase our revenue". This would not be a good signal to the road user because then he will not understand any other signals that he should behave properly in terms of the environment, because he feels being misused in order to increase revenue. That was a very frank statement as a road user.
  (Mr Mumford) We have been involved in some research in this area and there are several points I would make. The first is that when you look at the social cost of transport, in particular of road transport, congestion is the major element by a very, very large way. Congestion is a very legitimate environmental concern and is arguably the largest environmental concern that we have. Also, even if you look at the impact on things like carbon dioxide, a vehicle travelling at less than ten miles per hour is producing twice as much carbon dioxide per mile as a vehicle which is travelling at 20 miles per hour. There is actually a carbon dioxide benefit from having free flowing traffic. Where congestion charging has some benefits is firstly if you are applying the principle that the person who is causing that problem should pay for that problem; then congestion charging has some merit because it is actually applying a charge to where there is a problem and applying it to the people who are involved in that problem. Secondly, if your objective is actually environmental improvement, by targeting that charge very specifically on a behaviour, particularly if it is a behaviour which is modifiable, then you can actually alter behaviour. It comes back again to choice. If the objective is one of traffic management, getting people to stagger journeys, getting people to take different routes, then road user charging is quite an effective tool in that environment. A number of countries have used it in this way and it has been effective. There are several related issues like where the displaced traffic goes and how you actually ensure that the system is foolproof. The satellite tracking systems, which are the most effective ones for this, are good, but if a cloud goes over you could be viewed by the system as being in one road when actually you are on the road next to it. It is not perfect yet but it is an option to look at in the future.

Mr Grieve

  281. Can we look at the question of purchase tax on new cars? If you buy a new car which is less polluting than an old car, has there been any research on the environmental and social impact of getting older cars off the road in view of the fact that the newer car is likely to be leaner burn than the older one? How do you think that could be achieved?
  (Mr Carey) It goes without saying that new cars are better than old cars and every year in the UK we buy just over two million new cars and we scrap about 1.6 million old cars; the net increase is about 500,000 a year. The older cars' average age at scrapping is somewhere around 14 or 15 years, so the benefit of scrapping old cars, particularly now, because 15 years ago most cars did not have fuel injection systems, so they would not have catalysers, is 10 or 15 times less pollutive today in terms of air pollutants than 15 years ago. There is definitely a benefit in having more new cars on the road, but as a vehicle manufacturer it is very difficult to push that as a solution to the problem. However, I would say that perhaps one of the more significant things the Government did last year in persuading manufacturers to reduce the prices by 10 or 11 per cent did increase the market and we are seeing signs now that more are coming back in to buy new cars and that is probably a far more significant impact on the environment than any of the fuel taxes of any of the vehicle excise duty taxes, simply by the fact that you might have brought 100,000 to 200,000 new cars onto the road over a year.

  282. The one tool which is around at the moment is the MOT emission test. I wondered what your view was on that. Is it of any value?
  (Mr Carey) The MOT emission test has great value. The SMMT campaigned for several years to bring more roadside testing and more emission testing into that sort of thing. We had a programme running for two years which we have now abandoned because the emissions test has been brought more fully into the MOT. It very much depends on how the penalty is applied. If you are told you cannot drive your car, if you strictly apply the MOT test, because it does not fulfil the emissions legislation, then that will work. It is a good thing.

Mr Gerrard

  283. Hydrogen has been mentioned on quite a number of occasions as the direction in which we should be going. I think Mr Mumford made a comment earlier that a variety of options should be kept open. How far is there a consensus that hydrogen is the way forward? Is it likely to be suitable for all types of vehicle as well? Would you see it as the sort of fuel which would be used by buses, lorries as well as cars?
  (Mr Mumford) There is a consensus at the moment that it is likely to be the fuel of the future. My comment should not be taken as saying that I am not fully supportive of hydrogen. I am fully supportive of hydrogen. BP, in common with some other companies, is actually putting a lot of money and a lot of people into creating the ability to market hydrogen. There is a consensus that hydrogen is a good way forward and there is also quite a competition between fuel suppliers now emerging in the hydrogen arena. There was a comment earlier about the fact that here was nobody to talk to about hydrogen. At least two major oil companies are very publicly doing things in hydrogen and I am sure others. A nascent hydrogen industry is emerging already.

  284. We had some evidence last week from Transport 2000 and it is mentioned as well in the IEEP paper that there are different mechanisms for delivering hydrogen to a fuel cell, the sort of mechanism which BMW were talking about earlier of liquified hydrogen, but also the possibility of methanol and petrol reformulated on board the vehicle. How do those different mechanisms impact on the total lifecycle? What are the differences in terms of emissions for instance?
  (Mr Beckwith) We have published some work in this area. Our view is that a compressed hydrogen fuel cell vehicle could give a lifecycle CO2 benefit of something like 40 per cent compared to current technology. That depends very much on your source of hydrogen. The thing which is very attractive about hydrogen long term is that if the hydrogen can be produced from renewable sources, then you have the prospect of a sustainable system. Currently the renewable resources for the production of hydrogen are nowhere near economic and an awful lot of work needs to be done to make them economic. When producing hydrogen from natural gas, which at the moment is the most economic way of making hydrogen and is probably the lowest CO2 option for making hydrogen, we see a lifecycle benefit of about 40 per cent for hydrogen powered fuel cell vehicles. If you have a fuel cell vehicle which generates its hydrogen on board, either through methanol or through gasoline, the lifecycle benefit is lower and our figures would indicate that the lifecycle benefit is more like 30 per cent as opposed to 40 per cent.

  285. May I ask Mr Fergusson to comment on that because in his paper he was suggesting that maybe using methanol, using petrol was not the way we should be going, that we would not get any great benefit out of it? However, you obviously felt there were some concerns that some industrial interest might want to go down that road.
  (Mr Fergusson) I put that study in, only one study of many, and they will differ, because it does make the point which is broadly supportive of your point, that it makes a great deal of difference where you get your hydrogen from, where you reformulate it and so on. That is the sort of question it is very important we do look at early on rather than commit to a particular technological route, which does not produce big benefits. For example, even if you are talking about something like a 20 per cent benefit in CO2 terms, we are supposed to be having conventional engines which are 20 per cent better in ten years time, so why develop a whole new technology for that? You have to look at the real big long-term benefits or there is really no point in doing it. That is a point which should not be missed in this. Yes, if I were a betting person I would say that hydrogen with fuel cells does look like the winner now; it does look like it might actually happen in our lifetime which has not been something you could have said about any alternative fuel until relatively recently. It does look like that will be the way we go. Whether we go the route of hydrogen with internal combustion or whether we go a different intermediate route with fuel cells and methanol or whatever, that is just the sort of debate we need to be having. It is not being had at the moment and therefore it will be pursued by particular sectoral interests in other ways.


  286. Do you mean it is not being had in the UK but it is more in continental Europe?
  (Mr Fergusson) Yes, that is right. It sounds to an extent at least it is being had in Germany certainly. They obviously are rather ahead of us in terms of having made their own choices about that. I would add that we should make some choices along the way. Yes, we cannot have hydrogen fuel cells tomorrow and maybe it would be wrong to put all our eggs in one basket. But distributing all our eggs between all the possible baskets would be a mistake. Do we want CNG buses and LPG cars and biofuels for something else while we wait for hydrogen to come along? I would say the answer must be no. We cannot really afford to fund all these options simultaneously, especially as we are coming rather late into it. If we had done this 20 years ago, perhaps, but at this stage some choices should be made.

Mr Gerrard

  287. I think it was Mr Frank who made the implication about the infrastructures which were needed. I think Mr Mumford said we cannot support a variety of infrastructures. We have to make some decisions about the direction we are going and develop the infrastructure which will then take us there. I was a little bit puzzled, in the light of that sort of comment, at what BMW said which was that obtaining hydrogen from petrol, methanol or using natural gas in compressed or liquid form could be a stepping stone to the setting up of a full hydrogen supply infrastructure. If the technologies are different, if it is reformulation from methanol, that is a different technology from a tank which has liquified hydrogen in it. How can the infrastructure support both?
  (Mr Mumford) The way I would answer that from a fuel supplier's point of view is that we can hold a variety of fuels. However, each fuel takes up space, it adds to the cost. If you are dealing with a number of alternative fuels which can use the same storage and delivery system, then it is quite easy to bring them in as substitutes or to bring them in in parallel. A route like taking a form of gasoline or chemical naphtha onto a vehicle where it is reformed to create hydrogen is something which is very easy to do with the existing infrastructure. If you then go to something like methanol, you are dealing with something which is highly toxic, it is a poison, it is something where you would need a different level of safety and probably different technology in the delivery system. You would not want to bring that in unless you were sure that was actually a long-term option. You would not want to bring that in if it only had a life of five or ten years.

  288. And liquified hydrogen is completely different.
  (Mr Mumford) Yes. We have experience of dealing with LPG and with compressed natural gas on forecourts. We are trialling hydrogen but hydrogen will have some big issues with it. We know from our experience of bringing in LPG in this country that the opposition we received from local councils to the siting of LPG facilities was quite extreme in some areas. It is not as easy as just saying it is a great fuel, let us go and deliver it. People do not always like these fuels in tanks next to their housing estates.

  289. Why do you think there was that opposition? Was that mistaken, was that people having mistaken concerns about safety or the environment?
  (Mr Mumford) It was a little bit of fear of the unknown. In some instances it was misunderstanding. We are now in a position where virtually 100 per cent of our applications for LPG are being passed by councils. In the early days it was not like that at all; we had a lot of education to do. There are still questions as to how much distance you need from the petrol station to the nearest housing with some of these fuels. There are also issues about the soil underneath the petrol station. If you are dealing with something which is dangerous, you would not want to be holding it somewhere where there was a risk. There are technological issues there which have to be solved. Particularly if you are dealing with liquid hydrogen, it does have technical problems, it is a potential environmental hazard in its own right. We have to get the technology right before we roll it out.

  290. May I ask BMW to comment on that? I understand that there has been some collaboration between a number of companies in Germany and the Government to start developing an infrastructure for hydrogen.
  (Mr Frank) Yes.

  291. Is that something which has come from the companies or has there been a political push from the Government to do that?
  (Mr Frank) Frankly speaking the first push came from our side as well as from our competitors looking for the fuel of the future. We think it is hydrogen. Thinking of the opportunity to take intermediate steps and not expand to the ten or so choices we theoretically have, we said if we could not achieve a liquid hydrogen infrastructure as the first step, then the intermediate step would be natural gas. We can step from compressed natural gas to liquified natural gas if necessary and use the same engine technology. Then we can go from liquified natural gas to liquified hydrogen using the same tank and fuelling facilities. So we do not have to get rid of all the infrastructure and vehicle technology and this could be a stepping stone to the final goal. That is the main idea. For the choice of the fuel, this German collaborative group set some prerequisites for that final choice. They said that the fuel we want to have has to fulfil three prerequisites. One is that it should at least be available for 30 per cent or more of the market. It must be available for 50 years or longer. Finally, it must be producible from renewable energy. These are the three basic prerequisites. Therefore they boiled it down then to hydrogen; maybe as an intermediate step liquified natural gas. That is the position so far. There is some suggestion that methanol may be a step and methanol only could be used in fuel cells, but it makes no sense for the internal combustion engine. If you produce methanol from natural gas, then it is better to use this natural gas in the internal combustion engine instead of loosing 30 per cent of the efficiency when you convert the methanol in the car in the reformer into hydrogen. That is an inefficient way. That is a little complicated because it mixes chemistry and mechanical problems.

  292. I believe you have a hydrogen filling station at Munich airport. How has that been operating? Have there been any problems with it?
  (Mr Frank) Yes, I am sorry, the second part of your question was: how did we come together? It was under pressure from the vehicle manufacturers to take care of the long term perspective but it has been taken up by the politicians and we included the mineral oil industry, natural gas industry and energy providers for electricity. They formed this coalition two and a half years ago. That is the political background.

  293. How has the filling station at Munich airport been operating?
  (Mr Frank) The filling station is being built up by a company who normally builds service stations and handles supercooled liquids, Linde for example, and Aral is the filling station operator. It runs quite well. It has to run automatically. Because it is so cold you cannot put a nozzle into any driver's hand. So far we have had no problems. We also have some mobile filling stations because, for example, in Hanover where we ran a service in the Expo 2000 World Fair, we had a mobile filling station and we are now starting a world tour with our fleet and in some places where they do not have a filling station we are taking this mobile filling station with us. In general it is not a problem because for purposes other than mobile applications Linde and other partners, are used to handling liquified natural gas or liquified hydrogen because it is being used already, for example to improve the fuel quality by using hydrogen. It is unusual as a transport fuel but it is not unusual in the chemical industry.

  Chairman: Thank you all very much indeed, that was an extremely useful session. We are indebted to all five of you for your contribution. Thank you.

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