Automated and Electric Vehicles Bill

Written evidence submitted by Vivergo Fuels Ltd (AEVB 12)

Automated and Electric Vehicles Bill

About Vivergo Fuels

Vivergo Fuels is the UK’s largest bioethanol producer, directly employing 150 people at its £350m plant and commercial offices in Humberside, and supporting over 3,000 jobs across the region. We are also proud to be an official partner of the Government’s Northern Powerhouse initiative.

Vivergo Fuels produces bioethanol – a low carbon renewable fuel which is blended with petrol to lower emissions – from feed wheat grown locally at about 900 farms within an average distance of 34 miles from the plant. As a co-product, we also produce protein rich animal feed which is used by over 800 livestock farms throughout the UK.

Bioethanol is currently blended with UK petrol at a rate of up to about 5%. A doubling of this bioethanol level to 10%, known as E10, is used successfully throughout the world and would be the emissions savings equivalent of removing 700,000 cars from UK roads.

The need to tackle transport emissions immediately

The Government is right to recognise air quality and climate change as health issues as well as environmental ones, and to seek ways to address both of these areas. Whilst many stakeholders consider environmental considerations to be more distant and harder to tackle without international consensus, health policy is seen as an immediate concern which gains significant domestic political capital. In the interests of tackling air quality problems, it is therefore prudent to approach these issues together.

It is concerning that environmental considerations are not taken more seriously, with many politicians viewing targets negatively without recognising that they are a means to an important end. There has been very little concern given regarding the UK’s binding commitment under the Renewable Energy Directive and Carbon Budgets to meet 10% of its transport energy through renewable sources by 2020. The decision to leave the European Union has made such targets appear even less relevant to many.

Whilst the recent focus on air quality from the media and politicians is welcome and should be applauded, too much focus is placed on distant or punitive measures whilst the Government is missing huge opportunities presented by other low-carbon renewable transport options. In terms of dealing with emissions reductions as quickly as possible, it is falling well short and has spent many years failing to take necessary decisions.

For example, the Government’s recent consultation on ‘Tackling nitrogen dioxide in our towns and cities’ states that "the link between improving air quality and reducing carbon emissions is particularly important" (pg1 pt5) and that it wants to "accelerate the move to cleaner transport options" (pg1 pt3). However, the document largely fails to recommend any private vehicle alternative other than electric vehicles, which it recognises require significant investment and infrastructure development to enable growth – making them a medium to long-term solution rather than a short to medium-term one. As such, they cannot reasonably be considered to address the issues set out "as quickly as possible" (as the Government repeatedly frames the issue), and the Government should be seeking a way to both improve air quality and lower carbon emissions from private vehicles in the meantime, particularly if it is seeking to deliver its legal obligations which include those mandated by the Renewable Energy Directive for 2020. The quickest, easiest and most cost-effective way to do this is through the introduction of E10 fuel in the UK (see below).

The danger of only focusing on electric vehicles

Whilst we do not oppose the promotion of electric vehicles as one of many important methods to decarbonise transport, it is important not to over-emphasise the degree to which they can resolve the problem of emissions, and in particular their ability to address the problem "as quickly as possible".

Recent figures from the Society of Motor Manufacturers and Traders show that purely electric vehicles still account for only 0.5% of new car sales [1] . This is a very small base for the Government to be placing such significant focus upon. The majority of ‘alternatively fuelled vehicles’ (less than 5% of market share this year) are actually petrol hybrids which would also benefit from the decarbonisation of liquid fuel and are compatible with E10. Indeed, hybrids are increasingly being favoured over full electric vehicles and are often seen as a stepping stone towards them. Sales figures show a migration from diesel towards petrol vehicles and a recent survey of 25,000 motorists by Fair Fuel UK [2] showed that of those drivers planning to change from a diesel car, 9.4% planned to purchase a petrol or petrol hybrid compared to 0.7% who would choose an electric car. Notably, of those who currently drive an electric car, 5% intended to revert to a petrol hybrid. These results illustrate that demand for petrol is likely to increase in the coming decades and that it would be remiss of Government not to lower petrol vehicle emissions further by displacing fossil oil with ethanol. 

It is also very important to remember that most electric vehicle batteries still require powering from the grid, which would tend to come from fossil fuel sources, thereby still contributing to emissions.

Whilst the Government often rightly seeks to focus on value for money to the taxpayer, it is worth noting that electric vehicles are not only very expensive to buy but also gain significant support via taxpayer-funded grants and subsidies provided to incentivise consumers and corporate car schemes. Indeed, it could reasonably be argued that hybrid vehicles are less effective as ‘company cars’ due to the higher speeds and mileage that they would tend to be used for in that capacity, yet many companies gain significant financial support for having them within their car fleet. There is also some uncertainty over the implications of the ‘end of life’ of these vehicles. This is not to mention the significant lack of infrastructure such as charging points, which even with the Government’s proposed investment in this area will still leave such motorists struggling to make longer journeys in non-urban areas.

All of the above points to the requirement not just for a long term solution but also for an immediate one which tackles liquid fuel emissions head-on. The only immediately available solution which can be delivered at scale with minimal disruption is E10.

E10 – An immediate solution

An obvious immediate solution to transport emissions is to increase the Renewable Transport Fuels Obligation (RTFO) to 9.75% by 2020 and mandate the introduction of E10 renewable fuel (10% ethanol blended with petrol). Although the Department for Transport has recently published proposals to do the former it has consistently delayed decisions on this, thereby serving to increase emissions. Regarding the latter, although it spoke favourably of E10 in its RTFO publications, it appears to prefer a market-led solution which leaves this important issue largely in the hands of fuel providers who may have other priorities than cutting emissions.

Using bioethanol to displace oil in vehicle petrol tanks has a wide range of positive benefits upon the emissions of both carbon dioxide and other pollutants which lower air quality and risk health:

· A recent European Commission report [3] found that increased ethanol blends in petrol would result in reduced emissions of pollutants such as hydrocarbons (HC), carbon monoxide (CO) and particulate matter (PM). For example, ethanol blends reduce emissions of HC/CO/PM by 5 to 20% compared to petrol with no ethanol.

· Bioethanol is only blended with petrol, not with diesel, so supporting its use further encourages people to move away from diesel vehicles and can thereby decrease Nox emissions

· Ethanol is not carcinogenic, whilst several chemicals contained within oil-based fuels are, so a higher bioethanol blended fuel like E10 helps to displace fossil oil and reduce the carcinogens produced by transport

· The oxygen contained within ethanol helps the fuel to burn better and increases the efficiency of the engine, lowering the hydrocarbons that are released

· Benzene and Butadiene emissions, both of which are highly carcinogenic, decrease with higher levels of ethanol blending in fuel

· Bioethanol is produced from renewable sources such as wheat or sugar so can be constantly regrown whilst also absorbing CO2. In the case of Vivergo Fuels it is made from animal feed-grade wheat grown by about 900 farms mostly in the North East and East of England. This is also beneficial for farmers growing these crops locally who gain significantly compared to otherwise having to export, thereby supporting goals within the Industrial Strategy and enhancing the UK’s position in a post-Brexit environment, without impacting on the food chain

· Bioethanol offers around 60% greenhouse gas emissions savings compared to standard petrol production

· The introduction of E10 fuel (10% bioethanol blended with petrol) would be the carbon emissions savings equivalent of taking 700,000 cars off the road

Introducing E10 is one of the quickest, easiest and most cost-effective ways of the UK meeting its 2020 renewables obligations which are important for not only carbon emissions reductions but also for improving air quality. This was recognised as such in the cost-benefit analysis which accompanied the DfT’s recent RTFO consultation and within the Minister’s foreword which introduced the subsequent proposals, where he commented that E10 would make ‘achieving our targets easier and potentially more cost effective, as well as providing an economic boost to domestic producers’.

Experiences elsewhere

The UK is already significantly behind Europe, North and South America and Australasia in this regard. Most countries in Europe have adopted E10 fuel – some as early as 2011 – and a ‘crop cap’ of 7% which gives fuel providers and farmers flexibility in the market. Meanwhile, in the UK there is still debate around the introduction of E10 and the ‘crop cap’ has been proposed at an initial level of 4% declining to 2% by 2032 which is damaging for business and investment as well as sending a negative signal about our support for renewables. Belgium introduced E10 in January 2017 and have a similar fuel supply model to the UK so is a comparable example.

Fiscal considerations

It could be reasonably argued that there are too many fiscal and policy incentives directed towards too narrow an option regarding electric vehicles. Instead, the Government should seek to spread their options wider and encourage a range of alternatives rather than putting all their eggs in one basket.

With regard to the potential introduction of E10 fuel, it is worth noting that ethanol is the highest taxed fuel by energy composition. This is due to the fact that most liquid fuels are taxed on the basis of volume rather than energy. It would be wise for the UK to tax ethanol on the basis of energy, in line with some other similar fuels such as biomethane and Liquid Natural Gas. In many other countries where E10 has been introduced, the taxation level has been amended to encourage take-up of the new fuel in order to encourage consumer confidence and environmentally friendly practice.

November 2017