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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