21st June 2004

Alternative low carbon fuels and changes in consumer behaviour will be required to meet the UK Government’s 2050 CO2  targets

The UK Petroleum Industry Association, representing the main oil refining and marketing companies in the UK, launched its landmark “Future Road Fuels” report today which examines the options for low carbon road fuels and technology in the 21st century.

Launching the report at a panel discussion in London, Ken Rivers, UKPIA’s President, commented “ The UK oil industry recognises the need to reduce CO2 emissions from road transport – indeed cleaner fuels have the potential to help more efficient conventionally fuelled vehicles meet all of the CO2 reductions expected from UK road transport by 2020. However, looking towards 2050, there are many routes to achieving the Government’s targets for lower carbon emissions and there is a danger in prematurely picking winners from amongst new fuels or technologies.”

He continued “ The near-term options include improved vehicle efficiency, traffic reduction measures, conventional biofuels and, in the future, advanced biofuels and hydrogen used in fuel cell vehicles. Consumer behaviour is also likely to be a significant factor, both in choice of vehicle and fuel. To date consumers have tended not to take up new cleaner fuels if they cost more than existing ones.”

Looking at the wider perspective for crude oil supplies, the report highlights that oil, although a finite resource, is not running out and the worldwide reserves of conventional crude oil and non-conventional sources, such as tar sands, are sufficient to meet transport energy needs for at least the next fifty years.
Esso UK’s Senior Economist, John Constable, speaking at the launch event, outlined some of the wider issues for the coming decades:

“Oil, driven by the growth in demand for transportation fuels, will remain the major component of the world's energy mix. Most of the demand growth will come from the developing world. Road fuel demand in the UK, however, is likely to decline modestly. Meeting the world’s desire for mobility while recognising its environmental impact will be a major challenge"

Nick Owen, Senior Manager of Technology at Ricardo, the leading automotive engineering consultants and a co-author of the recently published "Carbon to Hydrogen" study, comments:

"Advanced developments of what is considered conventional automotive technology can still offer significant reductions in real-world energy use and greenhouse gas emission.

Examples are advanced, clean Diesel engines, some new efficient petrol engine concepts, and various forms of Hybrid vehicle.  In the medium term, these technologies are a good choice for the consumer, industry and the environment because they will evolve out of today's vehicles, which reduces risk.  These new technologies can then continue to evolve towards a longer term goal of more sustainable transport."

Notes to editors
UKPIA represents the main oil refining and marketing companies operating in the UK, which also own approximately 3,000 of the UK’s 10,500 service stations.

The UK Government’s CO2 reduction targets are for the UK to be on the path for a 60% reduction by 2050, with real progress by 2020. The reductions are based on 1990 levels of emissions. Under the global Kyoto Protocol the Government is committed to a 12.5% reduction in greenhouse gases by 2008/12 and a national goal of CO2 reduction of 20% by 2010.

The main conclusions of the report are:
Government policy should continue to be based on maintaining a reliable UK energy system which meets the major pillars of sustainability; environmental, economic and social.  It should also use sound science to ensure that its goals are met in the most cost-effective way for the UK.

Continuously improving the efficiency of conventionally fuelled vehicles could contribute all of the CO2 reductions expected from the road transport sector to 2020.
50% CO2 reductions are potentially available from conventional fuelled vehicles, but ultimately the 2050 CO2 target combined with projected traffic growth will require the use of at least some alternative low carbon fuels and/or changes in behaviour (vehicle choice and use) and improved traffic management.

Oil is not running out and its diverse supply base combined with a strong, internationally competitive, refining industry in the UK offers security of supply and reliability.  The need for the UK oil refining industry to retain international competitiveness is vital.

Hydrogen, generated from renewable sources, from natural gas with carbon sequestration or from nuclear power, and road fuels derived from biomass can offer very low carbon options.  However not all sources of hydrogen and biofuels will deliver these benefits.

There are obstacles associated with the large-scale use of biofuels and hydrogen, such as production, infrastructure, changes to the car parc and environmental impacts. New technology could provide potential routes past these hurdles.  Most alternative fuels also require investment in vehicles as well as extra or new infrastructure.

The costs of low carbon fuels are higher than conventional fuels.  The incentives required to make them attractive to the consumer are greater than the pre-tax cost of petrol and diesel.  Hybrids are the lowest cost option in the transport sector for reducing emissions of greenhouse gases followed by some biomass based options.

Biomass and renewable energy provide greater CO2 savings when they are used to displace inefficient heat and power generation.

The ultimate choice of which fuel to use rests with the UK consumer, who has a track record of not taking up cleaner fuels that cost more.

The oil industry is fully involved in the move to a lower carbon economy with a number of initiatives already complete or in hand.