Select Committee on Environmental Audit Written Evidence


APPENDIX 15

Memorandum from Greenergy

CONSUMER ENGAGEMENT WITH BIOFUELS

  1.  Using biofuels provides consumers with an easy first step on the "low carbon journey" which can provide the lever for other low carbon actions. This is because filling up your car with a low carbon fuel does not require them to do anything particularly differently. From this base engaging with the consumer on other opportunities for low carbon actions, for example, energy efficiency or "green" electricity purchasing, becomes significantly easier. This does highlight that the key mechanism is to ensure effective market penetration of biofuels.

BIOFUELS FOR TRANSPORT: MARKET PENETRATION OF BIODIESEL

  2.  The existing 20 pence per litre duty incentive on biodiesel is insufficient to support UK production of biodiesel from primary agricultural crops—yet this is the only route to creating a biodiesel market of a sufficient scale which can deliver significant greenhouse gas emissions benefits through market penetration. Therefore, an incentive beyond 20 pence per litre is required for the introduction of biodiesel from primary agricultural crops such as oilseed rape, which will in turn encourage the market penetration of biodiesel.

  3.  The 20 pence per litre duty incentive does support biodiesel production from used cooking oils, which also has waste management benefits. The limited availability of this feedstock will also restrict diesel market penetration by biodiesel.

BIOFUELS FOR TRANSPORT: IMPORTANCE OF BIODIESEL BLENDS

  4.  Biodiesel blends have a multiplicative effect on emissions reduction, compared with that of pure biodiesel. Therefore if the Government considers a 20 pence per litre incentive to be worthwhile for pure biodiesel, then a larger incentive for blends is entirely justifiable and appropriate on the basis of cost-benefit and environmental effectiveness. In fact, if the Government's objective is best value, it is quite clear that the duty incentive should be restricted to blends. The multiplicative effect is illustrated in the attached Millbrook test results. In addition to this effect, there is also a reported benefit in fuel consumption. (However the fuel consumption benefits are not yet quantified in wide-ranging tests, though the benefits have been widely reported by drivers.)

  5.  Both increasing the duty incentive and restricting it to blends will encourage participation by the major oil companies in this fledgling market, thereby increasing the potential for the market penetration of biofuels. The benefit of this is that it utilises the existing and established infrastructure for delivering fuel to the retail and commercial market, also ensuring that the Government's taxation revenues are protected. It also reduces the opportunity for duty evasion by "back-street" producers as they are unable to produce blends. But perhaps, most importantly, participation by the major oil companies provides a signal to the consumer that this is not a niche market product, and that biodiesel blends have the same quality they have come to expect of standard fuel products. Gaining and maintaining consumer confidence is key to driving this market forward.

BIOFUELS FOR TRANSPORT: MARKET PENETRATION OF BIOETHANOL

  6.  Greenergy also supports the introduction of the proposed 20 pence per litre bioethanol incentive, subject to EU agreement. However Greenergy is of the view that the case for conventional bioethanol production from high-sugar or high-starch crops is as yet unproven. This is due to the lack of an authoritative UK assessment of all bioethanol production technologies which considers the socio-economic and environmental benefits, in particular additionality, and the implications for the UK fuels market.

  7.  It appears to Greenergy that bioethanol produced from waste materials is both a more credible and justifiable way forward as it not only has greenhouse gas emissions benefits, but also supports sustainable development, waste management strategy objectives and energy supply security. Our view is that if bioethanol production was restricted to production from waste (whether this be domestic, industrial or agricultural, and where waste management is a more important driver than CO2 abatement), it may deserve a higher duty incentive.

LPG AND WHOLE-OF-LIFE EMISSIONS

  8.  We would question the Government's commitment to supporting the increased use of LPG (Liquefied Petroleum Gas) as part of its strategy to reduce emissions through lower-carbon fuels. Whilst LPG is good for reducing local and tailpipe emissions, emissions will actually increase during the whole-of-life cycle of the production of LPG. Biofuels, on the other hand, do not just reduce local emissions—they also reduce whole-of-life cycle carbon emissions.

PLANNING FOR THE LOW-CARBON ECONOMY

  9.  Greenergy agrees that the low-carbon economy needs to be planned for. One important way is for the Government to engage with the major oil companies and their concerns on biofuels as, in reality, the existing (highly efficient) distribution network is the only volume route to market for biofuels. This is essential in establishing the market penetration of biofuels.

  10.  Greenergy agrees that the expansion of the biofuels market will provide economic opportunities for farmers and for those in the rural economy. With the poor economic environment that UK farmers exist in today, stimulated rapeseed cultivation for biofuels, for example, would enable them to diversify their product base. Break crops such as oilseed rape could be lucrative for farmers with the existence of a strong and stable UK biofuels market.

  11.  Greenergy also agrees that an expanded biofuels market would offer improved fuel security. The demand for diesel fuel is set to rise in the coming years both in absolute terms and as a proportion of the "barrel" relative to petrol. This will create significant supply imbalances within the refining industry and will increase dependency on imported diesel products from potentially volatile parts of the world.

ABOUT GREENERGY

  12.  Greenergy was founded in 1992 by Andrew Owens, who was awarded an MBE in 2000 for services to the environment. In 1995 Greenergy CityDiesel became the first ultra low sulphur diesel (ULSD) available in the UK, initially through Sainsbury's supermarket forecourts. Greenergy has worked closely with UK Governments throughout the 1990s and up to the present day on maximising the environmental and commercial benefits of ultra low sulphur fuels. In 2002 Greenergy launched GlobalDiesel, a low carbon biodiesel fuel containing processed rapeseed oil, which is now sold through forecourts, including Tesco and Sainsbury's, and used by public and private sector organisations. Greenergy is now Europe's largest independent low emission fuel company.

March 2003


 
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