How the media loves a scare story. ’Nearly nine million cars could be incompatible with new fuel’ screamed one headline earlier this year, while ’E10 could add £80 to a family’s annual driving costs’ screamed another. If only Michael Winner was still with us to say ’Calm down dear’.
Instead we have Transport Minister Norman Baker indicating that he does not wish to see E10 introduced until next year which, according to UKPIA, essentially means introduction will be a commercial decision, down to individual fuel suppliers.
Shell, for example, has stated that it will only offer E10 in the UK when it is confident that motorists are ready, understand what it is, why it’s coming and that their cars are compatible.
First, a recap. UKPIA says the previous unleaded petrol 95 grade (BS EN228:2008), which is widely known as ’Premium Unleaded’ has allowed up to 5% volume ethanol in petrol (E5), along with other alcohols and oxygenates to be blended into the fuel against a 2.7% oxygen specification.
The EU has implemented a number of measures to help reduce carbon emissions from the road transport sector, starting with the Biofuels Directive (2003/30/EC), which in the UK has been implemented via the Renewable Transport Fuel Obligation (RTFO).
UKPIA communications director, Nick Vandervell, says: "With the advent of the EU Renewable Energy Directive (2009/28/EC), suppliers are required to increase the quantity of renewables in petrol and diesel to 10% by energy by 2020. Again, in the UK this requirement has been implemented by modification of the RTFO. There are a range of different renewable petrol-blending components available in the market of which ethanol is the largest used today, and typically in the UK averages around 4% volume in premium unleaded 95 petrol.
"The current CEN (European Committee on Standardisation) standard for unleaded gasoline was reviewed during 2012 and a new standard published at the end of that year to permit up to 10% volume biofuel content (E10). In the UK, this standard was incorporated into a revised BS EN 228:2012 for premium unleaded petrol published in March 2013.
"In order for the UK to meet the 2020 targets of biofuel content of 10% by energy set out in the Directive, suppliers will need to add more renewables to their fuels from 2014 onwards. However, the timing of such a move is a commercial decision for individual fuel suppliers."
Vandervell says that before such a change is made, clear advice and technical information will be made available to motorists and other users via the Low Carbon Vehicle Partnership and other industry websites well before the fuel is introduced.
Provisional estimates from the Society of Motor Manufacturers and Traders indicate that approximately 70% of the petrol vehicles on UK roads are capable of using E10. For those older vehicles unable to use E10, it is anticipated that the E5 protection grade will be the more expensive super unleaded.
But Andy Eastlake, managing director of the Low Carbon Vehicle Partnership (LowCVP), believes 90% of cars will run on E10. "The motor manufacturers, through their trade association, have been working very hard to build a comprehensive database of all the petrol vehicles on the road so they can tell at the click of a button whether a particular car is approved to use E10.
"Many people forget that the compatibility of cars to run on E10 was actually one of the ways the automotive industry supported the CO2 reduction targets for new cars, so now almost 90% of the petrol cars on the UK roads are fully approved to use this fuel."
The Petrol Retailers’ Association’s technical director, Phil Monger, says of the cars that won’t be able to use E10, many are classic vehicles and older cars used by drivers in rural areas. Fuel prices in rural areas tend to be dearer anyway, so any change that means drivers are forced to switch to premium grade fuels would not be popular
Eastlake believes that a large number of the vehicles that show up as not approved for E10 just haven’t been tested. But he adds: "A key part and challenge of our work is to identify solutions and advice for the minority of vehicles that are not fully approved. We are working at everything from continuing limited supply of E5, to whether there are additives; or even one idea was converting older vehicles to run on LPG, which is only 70p per litre. Ensuring that a continued supply of compatible fuel is available for every vehicle is a priority for everybody involved throughout the project. The detail of how that is achieved is where the real work lies."
Eastlake confirms that "when the time is right" there will be a centralised E10 educational campaign to help the public understand the new fuel and create the right market conditions.
So when is that time? "Introducing a new fuel specification has ramifications in so many areas that to be successful a large number of industries need to be prepared and voices aligned," he says. "A successful transition would actually be the one with almost no subsequent media coverage! To get to that point we must ensure that all the steps in the chain are both prepared for and indeed motivated to make the change."
The PRA’s Monger says he doesn’t think the time is right for independent dealers to make the switch yet. "Everybody needs to be prepared," he says. "At the moment producers are telling us the economics aren’t there. They say they can meet their RTFO obligations already, through the use of biodiesels, but when the annual targets are raised further, there will be a problem in meeting the obligation without the introduction of E10." He does believe that E10 may actually solve one problem: "In the EU standard for unleaded EN228, which sets a maximum of ethanol content, there is no minimum prescribed. Previously, it was just up to 5% and now 10%. Where the ethanol falls below 3% it can lead to phase separation occuring if water is present above the absorption capacity of the ethanol. When we get nearer to 10% ethanol, that risk significantly reduces’’.
Consumers are, of course, one of the most important and perhaps challenging groups that need convincing about E10. Eastlake says that once a consumer has established that the fuel is right for their car they are likely ask ’Why should I use this fuel?’.
"Here the motivation needs to come from a number of routes including, of course, carbon reduction, but this alone will not change the majority of the public. I am certainly not going to attempt to give advice on how to market fuels to consumers, but the LowCVP role is to look at the messages from government in terms of supporting policies, taxation or incentives and to drive carbon reduction into these in as strong a way as we can.
"Personally I see a pool of around 18 million petrol vehicles on the road, which are fully capable of reducing their carbon impact by around 2-3% from current levels if we can get E10 successfully introduced. However, if the fuel is brought in without preparing the ground, we could create a market backlash such as happened in Germany, which would deliver no carbon saving at all! So the potential of this fuel is well worth our effort now to have a successful introduction at the right time. To do that we still have some more work in preparing the infrastructure and supply chain and establishing the motivation for consumers before we unfurl our advertising banners, but we should prepare quickly because this will happen!"
But biofuels, which include those with ethanol, have had some pretty mixed press recently and selling a new product in that environment could be quite challenging. Eastlake says that even now the European Commission is debating further legislative hurdles, but when it comes to biofuels, put simply, there are good ones and bad ones.
"The legislation already in place actually mandates certain land cannot be used and certain sources are not acceptable. And within the LowCVP we are absolutely focused on only supporting fuels and technologies that deliver real robust carbon savings, so we are very careful about the policies we encourage and mindful of the need for very robust science and evidence at all stages."
He continues: "I think there are very clear signals at government level that sustainable biofuels and renewable energy will play an increasing part in transport. But we are also pretty sure that running particular vehicles on liquid fuels is going to be a critical part of the market for many years.
"We are undertaking some work to map out the fuel and energy options we feel will give the lowest carbon pathway in the future, but I am also very aware that we have 34 million vehicles on the road now and at least half of them will still be on the road in 2020, so we cannot rely only on new vehicle technology."
Meanwhile, BP believes that most of the media coverage on the effects of biofuels has over-simplified the issues. A BP spokesman says: "There is a need for more sustainable transport fuels. It would be far more constructive to enter a discussion to seek an answer to the question: "How can biofuels be done well? At BP, we believe that biofuels can be done well. Furthermore, we believe that they are a crucial part of the transport energy mix and demand is likely to increase.
"For BP, ’biofuels done well’ involves higher yields, sensible land management (including the use of non-prime land, highly efficient use of waste and co-products), respect for available natural resources and eco-systems. In these conditions, we believe that the sustainable biomass potential is equivalent to at least 60% of current global road transport fuel demand."
BP says biofuels are done well in Brazil, where almost half of the fuel for cars is ethanol made from sugar cane. An integrated model between the agricultural operations and the factory ensures that every part of the cane is used. This allows the most efficient Brazilian producers to reach in excess of 70% reduction in greenhouse gases (GHGs) versus fossil fuel.
Closer to home, BP says the unveiling of three of its most advanced biofuels biobutanol, cellulosic ethanol and sugar-to-diesel (S2D) at a showcase called Fuelling the Future Live at London 2012 enabled it to tell its "lower carbon mobility story" to a wide range of opinion-formers and explain how it is working to bring advanced biofuels to the forecourt within the next few years.
As such, BP says the showcase was a great success.
Meanwhile, Greenergy’s chief executive officer of Greenergy, Andrew Owens, says the use of waste-based biofuels in the UK market has grown rapidly, reflecting concerns about the use of biofuel derived from food crops. "This has put pressure on raw material supply it’s increasingly difficult to source waste in sufficient volume and of the right quality for biodiesel production.
"To address this raw material shortage, we opened up a new biodiesel pre-processing facility in North Yorkshire this year. This operates as a sister-site to our existing biodiesel manufacturing plant at Immingham along the Humber estuary, and is a first of a kind and scale in Europe. We’re using novel technology to upgrade low-grade waste oils and fats, to make them suitable for biodiesel production. The new facility allows us to manufacture even more biodiesel from waste, by giving us access to a wider range of raw materials and also by making our biodiesel manufacturing plant work more efficiently. And, of course, the good news is that we can blend more of our sustainable biodiesel into the fuel we supply to UK forecourts."
Moving on to what’s happening today on the forecourt, and there’s no doubt that fuel sales are down. This is partly due to technology that’s improved engine efficiency but also due to the economy and drivers consciously making fewer journerys. Needless to say, most drivers are looking for value. Research has revealed that Shell has the biggest market share of cost-conscious drivers. For them, it offers FuelSave, described as its "most advanced regular-priced fuel". To communicate its advantages to drivers, Shell is running two campaigns.
Target One Million is designed to help one million drivers across the world learn how to save fuel. Via a series of online games at www.shell.com/targetonemillion, drivers can discover simple tips to help them save fuel.
Earlier this year, former international rugby player, Matt Dawson participated in the Shell FuelSave Driving Challenge to highlight how using the right fuel and making a few simple changes to driving habits can help save fuel and, in doing so, reduce fuel costs. Dawson drove from Preston to London using as little Shell FuelSave fuel as possible and managed to improve on the published manufacturer’s fuel consumption figures. His journey took him through Manchester, Stoke-on-Trent, Birmingham and Oxford. He visited consumers at selected Shell forecourts along the way to talk about the importance of saving fuel.
But Shell also offers a premium range (V-Power Nitro+) which Shell general retail manager, David Moss, says has been well received despite its premium price. The Shell V-Power Nitro+ fuels are designed to act instantly in the engine on deposits that can reduce the performance of your car.
A spokesperson for the oil giant says: "If you imagine your car being cleaned on the outside, this does it from the inside to help give you a cleaner engine and better performance."
Shell’s V-Power Nitro+ fuels are the result of over "60 years of innovation and shared passion for performance with Ferrari in the motorsports arena".
The spokesperson adds: "We have approximately 120 fuels scientists spending 21,000 hours on research and development. This helps us to give Ferrari the competitive edge in Formula One. When you think that 99% of Shell V-Power Nitro+ unleaded is the same component as in the F1 Ferrari, we don’t do that just to advertise, we do that to prove it." He says Shell V-Power Nitro+ is doing very well with positive sales and feedback from customers.
"We know that all fuels are not the same which is why we are committed to making better fuels for our customers and their cars. Many of our customers come to us because of our premium fuel it is our differentiator."
Over at BP the premium offer is Ultimate, which this year celebrates its 10th anniversary.
"BP Ultimate fuels are specially formulated to take care of your engine, keeping it fitter and healthier than ever before; to slow down its ageing process and even help restore its health if it’s been running previously on inferior quality fuels, says a spokesperson."
He adds that the fuel has been designed to provide benefits for all cars, and is fully compatible with all engines: "Whatever you are driving old or new, sports car, family car or van you can enjoy using BP Ultimate fuels."
Finally, Esso changed the formulation of its petrol and diesel last year with an enhanced additive package, which is designed to help provide improved engine responsiveness and clean vital engine parts (when compared to standard fuels). In addition, the company offers premium fuel called Supreme, which has double the detergent additives of its standard fuel for a deeper clean and better engine performance.
Thames Oil port update
According to UKPIA, there are seven major crude oil refineries operating in the UK which supply the bulk over 88% in 2011 of the inland market demand for petrol. They are: Petroineos Grangemouth; Total Lindsey; Phillips66 Humber; ExxonMobil Fawley; Valero Pembroke; Murco Milford Haven; and Essar Stanlow. The Petroplus Coryton refinery closed last year but the terminal assets were then acquired by a consortium comprising Shell, Vopak and Greenergy; this will provide another source of fuel supply for London and the South East. Redevelopment of the site is now under way, to convert the infrastructure of the former refinery and create the UK’s first deep water import terminal for road fuel, called Thames Oil Port. Five jetties, a deep draught and an initial storage capacity of around 500,000 cubic metres from a competitive, worldwide market.
The redevelopment work has been significant. Tanks have been cleaned, emptied, inspected and fitted with safety devices. The infrastructure on the site is being turned around with new pipework, new valves and pumps. Systems are being automated for safety.
Andrew Owens, chief executive officer of Greenergy, says: "We expect the terminal to be ready to begin throughput by the end of this year, but construction will not stop there. For at least two years after product starts to flow, we will be continuing work with Vopak and Shell to create a state-of-the-art terminal with up to one million cubic metres capacity."
In 2012, diesel sales grew by more than 2.5% while petrol dropped by 5%. Total road fuel sales were 44 billion litres.
Sales of petrol have been falling since their peak of 33 billion litres in 1990 (equivalent to 73% of the market). Today sales are around 18 billion litres a year.
Diesel accounted for more than 59% of road fuel sales last year, according to UKPIA’s Statistical Review, with diesel vehicles accounting for 48% of new registrations.
The removal of the grant scheme and the gradual reduction in duty differential between LPG and standard fuels means that LPG sales have fallen to 185 million litres from a peak of almost 250 million litres in 2006.
The 2012 Budget estimated that fuel duty receipts for 2012/13 stood at £26.6bn. In addition, around £10.2bn was collected from VAT on road fuels.
Source: UKPIA Statistical Review 2013