After years of consultation, smaller sites have been given a reprieve as the government finalises new legislation to curb vapour emissions from petrol pumps. Final plans for implementing stage II vapour recovery - officially known as Petrol Vapour Recovery II - mean that service stations selling more than 3.5m litres of petrol a year will be required to fit expensive equipment by a deadline of 1 January 2010 - and the Petrol Retailer’s Association has warned that those unable to meet the installation and maintenance costs could close.
However, while the new rules will be yet another burden for those operators who are still affected, the higher threshold now set means those retailers with more modest volumes can breathe a huge sigh of relief.
The recently published final implementation paper on PVRII follows two consultations - in 2002 and November 2005 - and legislation is expected to come into force around September this year. A compliance threshold has also been set for new-build sites, with those expected to sell more than 500,000 litres of petrol a year also needing to fit recovery equipment.
However, since the government had been considering setting a lower threshold for existing sites, PRA director Ray Holloway says the industry has got the best deal it could: "I don’t think there’s a better offer on the table. A lower threshold option would have created a much bigger problem. For sites doing 3-3.5m litres of fuel in total it would have been dire, but because we’re only talking about high-volume sites I think the investment needed will be quite feasible. I don’t think this will be the end for most. The key thing is that the decision is made and we move on," he says.
The Department for Environment, Food and Rural Affairs (Defra) says it has considered the impact on smaller sites and set the limit to reflect this. A spokesman said: "The government has set the compliance threshold high enough to protect the more marginal service stations from closure, especially those located in rural areas. These service stations often provide additional services to rural communities such as groceries and Post Offices."
BORDERLINE
Holloway agrees, saying that only sites with a total annual fuel volume of more than 6m litres will be affected and adds that changes in the mix of fuels being sold over the next few years may mean that sites currently on the borderline will not have to worry.
He says: "You are only talking about sites that are doing 3.5m litres of spirit and that’s in any 12 month period after January of next year. If you look at today’s mix of diesel to spirit that will actually give you sites of above 6m litres per annum. Diesel is also a growing part of the sale and that percentage growth will continue. As that goes up, sales of petrol will decline. And, given that the compliance date is four years ahead, we are also going to see the emergence of new bio-grades of fuel. The 3.5m litres of pure petrol as we know it today will come down as people switch to diesel and other fuels. The benchmark is for pure petrol. Any site that is selling 4m-5m litres of fuel - given the amount of diesel they’ll be selling - won’t need to worry."
The PRA estimates that around 2,000 sites with an annual petrol throughput of between 3.5m and 5m - total sales of between 6m and 8.5m litres - will be affected by the legislation, with some being more ready than others: "I would say not too many in the traditional industry are prepared for this," says Holloway. "The oil companies’ larger sites will probably all be either compliant or prepared to comply. For independent sites it’s a worse picture because PVRII has and hasn’t been on everyone’s agendas over the past few years. Those that haven’t done any forecourt work recently, probably won’t have done anything yet."
Those who do need to start from scratch face a fairly hefty bill - costs could be anything from £60,000 to £100,000, depending on the size of the site, says Holloway. The government has stated that recovery measures installed need to have a minimum hydrocarbon capture efficiency of at least 85%. Current technology being favoured to achieve this usually requires major work to the forecourt - which needs to be dug up to install the necessary pipework. While equipment can be retro-fitted to most modern dispensers, manufacturers say this too can be a complex and relatively expensive process - and older pumps may not be upgradeable. On top of the outlay for bringing the site’s equipment up to standard there will also be added regulatory costs - in other words increased fees to cover the extra work of the local authorities overseeing the new legislation. There is also likely to be a certified compliance test to ensure the requirements are being met.
However, Holloway believes developments in the next few years are likely to reduce the level of site work needed and cut the costs. He says: "Starting from here, it will take all the time available and a probably a bit more to get all the sites done. But new forms of technology will develop in that time. It isn’t until you’ve got a need to have the equipment produced that more manufacturers move into it."
NEW TECHNOLOGY
"Once the requirement is in place and they realise there’s a market, there will be others looking at it with new ideas," says Holloway. "I think things will improve to the benefit of the retailer, to bring down the cost and to make sure everybody complies by the due date. Retailers don’t have to do this immediately, and the reality is that technology will probably make their investment cheaper when they need to get round to it."
Work to install new equipment could also be scheduled as part of a broader investment programme - a chance to put other things right. Holloway says: "We are talking about larger businesses here and these retailers will want to look at the solution that’s appropriate for them. They would be looking at other things to do while opening up the ground for these changes. It’s perfectly practical to roll these costs into something else as well.
"New or replacement storage or a re-balancing of storage to fit the grades being sold could be done at the same time to prepare for the next 15 to 20 years. You can put new plastic pipe in, which would address some of the requirements going forward as well. A few things will come together here that will focus the attention of the retailer on some cost-effective investment."
The Forecourt Equipment Federation (FEF) is currently working on a Code of Practice for implementation of PVRII, which will list the standards that manufacturers and installers need to meet to comply with the new regulation. This should also help retailers to understand the rules and implementation guidelines and is expected to be issued by the end of the summer when the legislation comes into force.
"Anything that’s a cost to this industry is worrying," concludes Holloway. "And there’s no way of remunerating it due to the competitive nature of the market. But we have to comply and make the best of it."
FAST FACTS
The government and devolved administrations’ decision for implementation of Petrol Vapour Recovery stage II (PVRII) means that controls would be required at:
- All existing service stations with an annual petrol throughput of greater than 3.5m litres, and;
- All new service stations with an annual petrol throughput greater than 500K litres.
- PVRII would be required to be installed at all stations within the above scope by 1 January 2010.
- Whatever vapour recovery system is used should be certified by the manufacturer to have a hydrocarbon capture efficiency of not less than 85%.
- Defra is now consulting on the legislation which will implement PVRII - an amendment to the Pollution Prevention and Control Regulations 2000. The devolved administrations for Scotland, Wales and Northern Ireland will implement PVRII within their own jurisdictions. Once the consultation closes - 14 July - and representations have been considered, it is expected that the legislation implementing PVRII will be laid before parliament. The legislation is likely to come into force around mid-August to mid-September 2006.
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