Examination of Witnesses (Questions 380
- 399)
WEDNESDAY 10 MAY 2006
MR NICK
VANDERVELL AND
MR MALCOLM
WATSON
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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