The introduction of E10 fuel into the UK came a step closer this week as the finishing touches were applied to a public awareness campaign about it. No oil company has yet committed to introducing E10 into the UK, but when one does the campaign will swing into operation to smooth the way.
But while the oil companies are preparing to try and allay any consumer fears about the new fuel, many retailers are deeply concerned about the risks and costs that introduction could impose on them, and the PRA is pressing for the introduction to be delayed at least until the end of 2014.
The reason that consumer fears need to be allayed, and that so many retailers are in a quandary, is that E10 is incompatible with a significant proportion of cars in the UK. According to many people opposed to E10, up to 8.6 million cars in the UK are incompatible with E10, although the Department for Transport told Forecourt Trader that latest industry estimates were that two million were known to be incompatible and it was not known whether a further one million were compatible.
It is believed that the compatibility problem was one of the reasons that German consumers shunned E10 when it was introduced in Germany. However supporters of E10 point to the experience in France where consumers have generally embraced it after the industry and government co-operated in an awareness campaign, and this is why preparations for a similar campaign are being finalised in the UK.
Stakeholders in the industry have come together in the Low Carbon Vehicle Partnership, and they have prepared guidance for consumers and carried out research into vehicle compatibility. The result of their work is a comprehensive Q&A for the benefit of the general public, and a website which will enable searchers to enter the registration number of their vehicle to discover its compatibility. Both of these will be backed up by publicity, but this will only be activated when a company announces it is going ahead with E10.
However, while this enabling work has been completed any oil company considering taking the first step will face considerable opposition, not least from the Government. Having left the market to decide when E10 is introduced, the Government now has no way of stopping it, but transport minister Norman Baker has written to the oil companies strongly urging them to delay the introduction.
He explained: "I have made it clear to fuel suppliers that we would like them to delay supplying E10 until the number of incompatible vehicles has reduced and the market is ready. I am particularly conscious that it is often poorer people with older cars who may be particularly affected. Although it is ultimately a commercial decision, we believe this is the right approach to minimise the impact on hard-pressed families."
In other words, if drivers’ cars are incompatible with E10 then the alternative is premium unleaded, so many drivers who can least afford it will be forced to use a more expensive alternative.
An additional reason could be that the ethanol in E10 is more expensive than unleaded petrol, and provides fewer miles to the gallon, meaning it costs more than the fuel it is replacing and raising the politically toxic issue of more expensive petrol.
A spokeswoman for Baker’s department adds that ministers want the oil firms involved to give the government at least three months’ notice of any move to sell the fuel. This would allow for the public awareness campaign to kick in before E10 began arriving on forecourts.
For the PRA, chairman Brian Madderson warns that many smaller forecourts only have two grades on their forecourts - unleaded and diesel. If E10 is introduced they will have to weigh up the risks of moving over to the new fuel and losing the business of customers with incompatible vehicles, or the high cost of investing in new tanks and equipment to handle E10 in addition to their existing offer.
He has been regularly briefing MPs on the E10 issue and says introduction must be delayed until the number of vehicles incompatible with E10 is much lower. While all the major oil companies told Forecourt Trader they had no immediate plans to introduce E10, and some cited the number of incompatible vehicles as a barrier, some traders and blenders are likely to be weighing up their options. Several have ready access to ethanol and must be considering the commercial case for making the first move.
But while retailers worry about the consequences of these changes, which were instigated by the EU, the same European body may provide an unlikely remedy. When the EU Renewable Energy Directive was passed biofuel such as ethanol was perceived as a sustainable alternative to fossil fuels. But as demand rocketed, agricultural land previously devoted to food crops was turned over to producing biofuels.
This has led to a re-evaluation of the merits of ethanol, and proposals that the directive should be changed. However, as the EU operates at such a slow pace, it could be a long time after all the pain has been inflicted before a decision is reached.
The EU has been promoting the use of renewable fuels in transport and set targets for the amount that should be included, with 5% by the end of 2012 and 10% by 2020. This has resulted in 5% of most unleaded petrol in the UK being ethanol by the end of 2012 (E5) and preparations for a move to 10% (E10) being planned. The timing of the introduction of E10 has been left to the oil companies.