Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 380 - 399)



  Q380  Mr Chaytor: —will not result in a 5% total reduction in emissions. What by 2010 do you estimate the transport sector as a whole to have achieved in total emission reductions?

  Mr Watson: If you take the forecast that UKPIA produces, we would expect by 2010 our emissions from the road transport sector alone to be lower than they are today.

  Q381  Mr Chaytor: Lower than they are today?

  Mr Watson: Yes.

  Q382  Mr Chaytor: But in terms of transport as a whole?

  Mr Watson: In terms of transport as a whole, it depends how you define aviation. The UK Government tends to define domestic aviation only and only include that in the numbers. What we are doing is selling something like 13 million tonnes of jet fuel in the UK every year. That is obviously being converted into carbon dioxide and that is growing significantly.

  Q383  Mr Chaytor: If we are talking purely now to 2010, all being well and all things being equal in road transport, we will see a 5% reduction in emissions as a result of the Renewable Transport Fuels Obligation but we will see a growth in aviation emissions so there will be no net reduction and possibly a net increase in the transport sector as a whole?

  Mr Watson: If you take the transport sector including just domestic aviation there will be a slight decline, in our view. If you include international aviation, which is the largest user of fuel, there will probably be a net increase.

  Q384  Mr Chaytor: Why do you expect a reduction in domestic aviation?

  Mr Watson: I am saying with the road transport effect domestic aviation is relatively small. If you look at the figures published by the Government, we are producing something like 32 to 33 million tonnes of carbon from road transport. We only increase that by a few million tonnes when we add in domestic aviation.

  Q385  Mr Chaytor: Okay. By 2020 the transport sector has targets to meet in terms of CO2 emissions which is between a 5 and 10% reduction?

  Mr Watson: Yes.

  Q386  Mr Chaytor: On the current projections, are you confident that those will be met?

  Mr Watson: We may achieve a 5% reduction by 2020. I would not anticipate a 10% reduction being achieved.

  Q387  Mr Chaytor: What will the biggest contributory factors be? Renewable fuels partly?

  Mr Watson: If you wish to reduce emissions from road transport, you have three choices: you make your vehicles more efficient; you change your fuel; or the consumer buys more fuel-efficient vehicles. The SMMT do a calculation where they divide the market up into nine categories—and you may have come across this. They have got minis up to luxury cars. If everybody bought the most fuel-efficient car in that sector, ie, the most fuel-efficient luxury car and the most fuel-efficient mini, you would reduce CO2 emissions from road transport by 30%. So you have got consumer choice as another variable which you have to take into account. If you look at the contributions we can make, vehicle efficiency currently in the UK is about 170 grams of carbon dioxide per kilometre. The EU have a target of 140 grams of carbon dioxide per kilometre which they would like to see achieved on average across the whole of the EU and movement towards 120 grams of carbon dioxide per kilometre as a long-term aspirational target. So there is a lot of stretch yet in vehicle technology. If you take the fuels contribution, if we put 5% biofuels into a car that is doing 140 grams of carbon dioxide per kilometre, the EU target for 2008, it will reduce carbon dioxide emissions to something like 136 grams of carbon dioxide per kilometre. It is a 3% effect. It is not a big effect. We are working with the European standards organisation, CEN to see if we can increase the percentage of biofuels we can put into our cars. We have got to do it through CEN to make sure that it is safe and that we do not invalidate people's warranties on cars. That work is ongoing and it will probably allow up to 10% biofuels in the future. I do not know exactly when because the work in CEN will be complete. So we can increase the contributions from biofuels but the key things in reducing emissions are more fuel-efficient vehicles and consumers choosing more fuel-efficient vehicles.

  Q388  Mr Chaytor: Finally, just returning to the bigger picture of transport as a whole, do you anticipate that transport will still be 98% dependent on oil as we move through the earlier decades of the century?

  Mr Watson: It will still be a high percentage.

  Q389  Mr Chaytor: Would you expect that 98% figure to come down by 2030?

  Mr Watson: Yes, I expect it to come down because I expect biofuels—

  Q390  Mr Chaytor: By what order?

  Mr Watson: A few per cent, I am afraid. Alternative fuels are starting from a very low base and although the growth rate will be high it will take a long time to reach the volumes supplied by fossil fuels today.

  Q391  Chairman: On the point you have just made about the fuel-efficiency of vehicles being capable of delivering quite a big cut in carbon emissions, would you support much stronger fiscal incentives so that consumers could be encouraged to choose much more fuel-efficient vehicles? The Government moved only in a very, very small way in relation to the Budget, a very small step, but given the potential that people are likely to go on driving their cars as much as they do today and simply cutting emissions by more fuel-efficient vehicles, would you be in favour of seeing much bigger tax incentives?

  Mr Watson: As an Association, I am sorry to say this, we do not lobby on tax. Our members do not wish us to lobby on tax so can I decline to answer that question.

  Q392  Ms Barlow: What do you think would be the impact on energy returns for energy invested if, for example, we have a shift to more unconventional oil sources such as tar sands or oil shales, and how would that affect climate change?

  Mr Watson: It would have a net increase in the amount of energy that we use. If we take the example you have just given of converting gas to liquids, I believe of the order of something like 10% more energy will be required to deliver the fuel. That is a rough guess because it depends very much on the location and various other specific factors but directionally it would increase it. If you take tar sands, again we have to put more energy in because we are beginning with heavier molecules and to convert them into lighter transport molecules we require energy and again there would be an increase in energy, so directionally in both cases we would be using more energy to produce our transport fuels, with obviously more CO2 emissions.

  Q393  Ms Barlow: What about the emissions from the fuel?

  Mr Watson: Emissions from the fuel could be lower in the case of gas to liquids. What you are producing is mainly a diesel fuel. However it is a diesel fuel unlike the one you buy today in that it has a very high Cetane number. This is a measure of the quality of the fuel. Today you buy a diesel of just over 51 Cetane. If you use a gas-to-liquids derived diesel it will be over 70 and give you more miles per gallon when you have vehicle engines designed to exploit that, which is not true of today's engines, but you could design better engines to run on that fuel in the future.

  Q394  Ms Barlow: There is also research going on into making synthetic oil from coal. What would be the effect on carbon emissions of that?

  Mr Watson: Coal is converted in South Africa into transport fuels by a company called Sasol today. It is something they started doing when they had embargos on oil coming in during the apartheid era. That technology is the same one I talked about a few moments ago for converting natural gas into liquids. It is the same type of technology. Once again it requires a lot of energy because you have to break the molecules down to gas and then rebuild them.

  Q395  Ms Barlow: If you look at the net gains of all the processes and the net losses in terms of energy use, am I right in saying that you feel we would be using more energy, in effect? It would have a negative effect on carbon emissions?

  Mr Watson: We would be increasing our carbon emissions per kilometre travelled, if I can put it that way.

  Q396  Colin Challen: The Chief Economist at the IEA has said quite recently that it would be very surprising if oil prices were to drop significantly in the future from the current levels. Do you agree with that statement?

  Mr Watson: Again can I say we do not predict oil prices. I would have to ask one of my members and perhaps Lord Brown gave an answer to that a few days ago when he said oil prices around $40 a barrel were more justified, but I do not have the information to answer your question, I am sorry.

  Q397  Colin Challen: When he said it would be more justified at $40 a barrel when currently it is $70, what do you think is sustaining the high price of oil at the present time?

  Mr Watson: Once again Lord Browne talked about speculators, but this is not an area of our expertise.

  Q398  Colin Challen: Would you be able to comment on the impact of the current level of prices on transport usage, for example? Do you notice any drift away or reduction in usage?

  Mr Watson: In the past what we have seen in transport is that the price is fairly inelastic in the short term. In the longer term it starts influencing people's choices. So someone may move from a petrol car to a diesel car because that is more fuel efficient. It is that sort of choice rather than the fact he needs a car to get to work and it almost does not matter what the price is, he would still use his car to get to work.

  Q399  Colin Challen: Bearing in mind what you have said in response to my previous question about your unwillingness to predict prices, would you nevertheless be able to comment on way that the Government projects oil prices? They have a current projection, I think, which is their high price scenario which is $50 a barrel. Are you aware of their methodology and would you be able to comment on that?

  Mr Watson: I believe that Government forecasts should cover the range of crude oil prices, gas prices, et cetera, that we are likely to encounter, so I would have thought they should have used a larger range than the current range.

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