Select Committee on Environmental Audit Written Evidence


Memorandum submitted by Lyondell

INTRODUCTION

  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.

OVERVIEW OF BIO-ETBE

  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.

Table 1

COMPARISON OF ENERGY EFFICIENCY AND CARBON EMISSIONS DATA


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
[MJ
fossil/MJethanol]
Greenhouse Gas Emissions

[gram CO2 eq/MJ
ethanol]

As ethanol, directly
0.65
46.6 (46% reduction)
As bio-ETBE
0.39
42.0 (51% reduction)
gasoline (for reference)
1.14 [MJfossil/MJgasoline]
85.9

  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.

Table 2

AIR QUALITY IMPROVEMENT FROM BIO-ETBE


Mechanism
Magnitude

Direct effect
Oxygen content/more complete combustion
—  Carbon Monoxide (CO):
1% CO emission reduction for every 1% of bio-ETBE in gasoline

—  Hydrocarbon components(HC):
1% total HC emission reduction (from incomplete combustion) for every 1 to 2% of bio-ETBE in gasoline


Indirect effect
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.

BENEFITS OF CONVERTING BIO-ETHANOL TO BIO-ETBE

  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 distribution.

  10.  Bio-ETBE delivers bio-ethanol enhancement in the following ways:

  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 specifications.

  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.

AVAILABILITY

  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.

POLICY RECOMMENDATIONS

  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 bio-ETBE benefits.

  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 Directive.

  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.

SUMMARY

  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 successfully.

  17.  Lyondell would be pleased to elaborate any of the points raised here in oral evidence to the Committee if so required.

February 2006





 
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