Memorandum submitted by Lyondell
1. Lyondell is one of the world's largest
chemical companies with 2005 revenues in excess of 18 billion
US dollars and manufacturing assets in all three principal regions
of the world. Employees number around 10,000. Lyondell is also
a major producer of fuel ethers for use as clean motor gasoline
(petrol) components, including bio-ETBE (ethyl tertiary butyl
ether) produced from bio-ethanol feedstock. Lyondell's assets
include a manufacturing facility at Stallingborough, Lincolnshire
and a management office in Maidenhead, Berkshire.
2. As a recognised leader in the field of
clean transport fuels, Lyondell has extensively advised on the
use of fuel ethers in gasoline to minimise harmful emissions,
while extending tight supplies of finished gasoline. Since the
Company's initial production of fuel ethers in the 1970s, Lyondell
technologists have provided support and consultation to governmental
authorities on transport fuel emission reductions and, more recently,
on biofuels policy and regulation.
3. The strategic issue on which Lyondell
wishes to focus is the Committee's question on what specific steps
the Department for Transport should now take to reduce road transport
carbon emissions and congestion over the next decade. We wish
to comment on the pathways to the reduction of carbon emissions
from road transport with particular emphasis on accelerating the
adoption of biofuels. We hope it may be useful to the Committee's
deliberations to rehearse the arguments relating to the contribution
that biofuels can and should be encouraged to make.
4. Bio-ETBE is a gasoline component produced
from bio-ethanol and isobutylene. Bio-ethanol constitutes 47%
by volume of bio-ETBE, and is typically derived from fermentation
and distillation of sugar or cereal crops. The other (isobutylene)
portion of the molecule is commonly derived from butane sourced
from UK and other North Sea gas fields. Bio-ETBE can accelerate
the penetration of biofuels within the EU, and is acknowledged
by the European Commission and a number of Member States for its
potentially significant contribution to carbon emissions reduction,
lowering of crude oil dependence, and support for CAP reform.
5. Bio-ETBE delivers substantial reduction
in emission of carbon dioxide (CO2) when blended into
conventional hydrocarbon gasoline. Concawe data presented in Table
1 (below) show that Bio-ETBE delivers substantial energy efficiency
and CO2 reduction to gasoline, both in absolute terms,
and relative to those achieved from the direct blending of bio-ethanol.
COMPARISON OF ENERGY EFFICIENCY AND CARBON
|Use of bio-ethanol (of the 1st generation; 2nd generation is expected to bring further improvement)
||Fossil energy consumption per unit
of bio-energy contributed to the gasoline pool
|Greenhouse Gas Emissions |
[gram CO2 eq/MJethanol]
|As ethanol, directly||0.65
||46.6 (46% reduction)
||42.0 (51% reduction)
|gasoline (for reference)||1.14 [MJfossil/MJgasoline]
Source: Concawe/Eucar/JRC, 2005.
6. In practice, the magnitude of benefits outlined in
Table 1 considerably understates the differential benefits of
bio-ETBE which arise from its properties of higher octane (anti-knock)
performance and lower volatility when blended into conventional
gasoline. These properties enable avoidance of high intensity
refinery processing, and allow greater incorporation of materials
exhibiting a more favourable CO2 emissions profile.
7. Bio-ETBE also delivers substantial improvement in
air quality compared to conventional gasoline. The EU CAFE (Clean
Air For Europe) programme specifically recognizes unburnt hydrocarbons
as volatile organic components (VOC's). VOC's are precursors to
low level ozone which, according to recent research is particularly
damaging to the health of children.
8. Air quality improvements derived from bio-ETBE arise
principally from more complete combustion imparted to gasoline
by the oxygen content of the bio-ETBE molecule. Table 2 summarises
the direct and indirect benefits of bio-ETBE with respect to emissions
reduction, which are additional to the lowering of carbon dioxide
presented in Table 1.
AIR QUALITY IMPROVEMENT FROM BIO-ETBE
|Direct effect||Oxygen content/more complete combustion
|| Carbon Monoxide (CO):
1% CO emission reduction for every 1% of bio-ETBE in gasoline
1% total HC emission reduction (from incomplete combustion) for every 1 to 2% of bio-ETBE in gasoline
|Optimisation of gasoline composition by addition of bio-ETBE
|| Bio-ETBE reduces direct Volatile Organic Components' (VOCs) Ozone Forming Potential (OFP) compared to other gasoline components: Reductions between 50% and 90% achievable.|
Source: EFOA, 2006.
9. In spite of prominent advocacy and recent media coverage
of bio-ethanol as a component for direct blending into gasoline,
Lyondell believes that, in practice, its most valuable contribution
is as a feedstock for conversion to bio-ETBE, whose physical properties
provide considerably superior performance and fuel systems compatibility.
During 2005, more than 75% of EU bio-ethanol destined for gasoline
use entered the market as bio-ETBE, with much of the remaining
bio-ethanol being delivered in field trials conducted in controlled
distribution systems unrepresentative of bulk gasoline supply
10. Bio-ETBE delivers bio-ethanol enhancement in the
10.1 Gasolines blended with bio-ETBE are commercially
distributed within bulk fuel distribution systems without the
requirement for additional investment or non-standard operating
procedures. This unconstrained access to bulk distribution systems
avoids significant cost, emissions and traffic congestion otherwise
required to transport liquid bio-fuels by road.
10.2 EU gasoline specifications permit the inclusion
of bio-ETBE in gasoline at levels up to 15% volume, equivalent
to 7% volume of bio-ethanol, and sufficient to meet the EU Directive
target of 5.75% energy substitution by 2010. Direct blending of
bio-ethanol is restricted to a level of 5% volume under the same
10.3 Bio-ETBE delivers low volatility to gasoline, thus
allowing the accommodation of materials which impart favourable
reduction of carbon monoxide exhaust emissions.
11. The conversion of bio-ethanol to bio-ETBE occurs
through an efficient, low cost process, the nature and purpose
of which can be usefully compared with the widely practised upgrade
of rape seed oil to its ester derivative to produce high quality
biodiesel. In advocating bio-ETBE as a preferred pathway towards
accelerated penetration of biofuels, Lyondell acknowledges the
contribution that bio-ethanol can make to the fuelling of flexi-fuel
fleets from controlled distribution systems, and the proportional
benefits that second generation lignocellulose technology can
provide to the economics and availability of bio-ETBE in the future.
12. European fuel ethers production capacity currently
comprises 5.8 million tonnes per year distributed between more
than 50 production units in 22 European countries (see Figure
1 below), with substantial potential for further expansion. Bio-ETBE
production, which uses well proven, efficient and reliable process
technology, increased rapidly to around 1.1 million tonnes in
2005 (19% of total available capacity), and full conversion of
EU fuel ether units to bio-ethers can generally be achieved at
modest cost and short lead times.
Figure 1: Fuel Ethers Production Capacity in Europe
(numbers are in 1,000 tonnes/year)
Source: EFOA, Lyondell.
13. Lyondell operates worldscale fuel ethers units at
Botlek, in Rotterdam and at Fos-sur-Mer, near Marseille with a
total ethers capacity of 600,000 tonnes and 750,000 tonnes respectively.
The Company's Fos facility first introduced commercial quantities
of bio-ETBE in 1998, and has increased volumes to meet the growing
demand in Europe.
Lyondell's Fos-sur-Mer and Rotterdam units have the combined
capacity to consume ultimately as much as 8 million hectolitres
of bio-ethanol per year, when converted to full bio-ETBE operations.
14. Lyondell supports the UK Government's leadership
in developing a flexible obligation mechanism (RTFO) which targets
an aggressive renewable substitution of transport fuels, while
incorporating critical elements of carbon assurance and sustainability.
15. Nevertheless, Lyondell believes that the successful
implementation of such a scheme requires:
15.1 Equitable treatment of competing biofuel options
with regard to tax treatment, and the application of robust and
sophisticated methodology for the calculation of carbon emissions
and assurance. All direct and indirect contributions to carbon
reduction must be taken into account. In this respect, it is worth
noting that a number of published papers from leading institutions
have failed to deliver complete and accurate representation of
15.2 EU harmonisation of biomass administration and certification
in order to allow free product flow and common bases for biomass
credits. Lack of biofuel market penetration in some Member States
can in part be attributed to deficiencies in this respect.
15.3 The adoption of existing international standards
and methodology for sustainability assurance and certification,
where they exist. Notwithstanding WTO provisions which forbid
such schemes which discriminate against imports from developing
nations, it is nevertheless important to ensure that EU manufacturing
businesses are not subject to disadvantage from rules which are
not equitably applied on the international stage.
15.4 A 5% volume RTFO target aligned with a system which
tracks energy substitution, as directed by the 2003 EU Biofuels
15.5 The maintenance of existing gasoline specifications
which have been carefully formulated to safeguard vehicle performance
while minimizing the emission of harmful air pollutants. This
is especially important with respect to gasoline volatility.
15.6 Adequate assessment and relative ranking of biofuels
in contributing to the reduction of VOC precursors, and specifically
to the achievement of CAFE targets. Lyondell believes that UK
policy and regulation needs to encourage solutions to harmful
low level atmospheric pollution, in addition to that of climate
change and carbon reduction.
16. This memorandum addresses the specific steps which
the Department for Transport should now take to reduce road transport
carbon emissions and congestion. Lyondell is a major producer
of fuel ethers including bio-ETBE. Bio-ETBE provides significant
performance and environmental benefits to conventional hydrocarbon
gasolines and has the additional advantage of being produced from
renewable ethanol derived from agricultural crops, such as sugar
and cereals. The Bio-ETBE capacity available for production in
Europe provides an opportunity to accelerate the adoption of biofuels,
thereby helping control and reduce greenhouse gas emissions, and
harmful atmospheric pollutants over the next decade. Lyondell
supports the RTFO initiative as a way of achieving this in the
UK but additional policy changes are required if it is to be implemented
17. Lyondell would be pleased to elaborate any of the
points raised here in oral evidence to the Committee if so required.