UK Petroleum Industry Association

  9th October 2007

Pre-Budget Report and King Review of low carbon cars

The Government's Pre-Budget Report today announced that the the draft Renewable Transport Fuel Obligation (RTFO) Order had been laid before Parliament and also the publication of part 1 of the King Review.   The PBR announced that:

• The RTFO Order paves the way for the introduction of the RTFO in April 2008.(2.5% biofuel content in 2008/9, rising to 3.75% in 2009/10 and 5% 2010/11)
• There will be an extension of the current duty incentive for biofuels(20p per litre until 2009/10) to biobutanol on a pilot basis, with the aim of assessing its environmental benefits and performance as a transport fuel.
• The Government has confirmed its decision to focus on ensuring that the RTFO encourages the production of the cleanest and most sustainable biofuels through carbon reporting and sustainability standards from 2010.
• The Government is reducing by 20% its estimate of the amount of carbon savings likely to arise from the RTFO. Total net carbon savings were initially estimated to be in the region of 3.6MtCO₂ per year by 2010 but increased understanding of the marginal CO₂ impacts has resulted in a downward revision in the Government's estimates to 2.6-3MtCO₂ per year by 2010.
• The Government intends to make greater use of auctioning rather than allowances under Phase III of the EU Emissions Trading Scheme

The Government has also published part 1 of the King Review on de-carbonising road transport. The Review, which was issued alongside the Pre-Budget Report, says that vehicle technology exists that can deliver CO₂ reductions of 30% compared with current equivalent models and that these could be standard within 5-10 years.

The King Review sets out the environmental challenge for road transport and looks at the scope for emissions savings from more efficient vehicle technologies, cleaner fuels and smarter consumer choices. 

Its initial findings are that: 

• Urgent progress is needed from road transport to help meet emission cuts for the developed world of 60-80 per cent by 2050 outlined in the Stern Review. 
• At low cost and by 2030, per-kilometre emissions could be reduced by 50 per cent - equivalent to a 30 per cent reduction in the absolute level of emissions (taking into account traffic growth). These significant reductions in CO₂ from road transport are achievable in the short term through progress on fuels, bringing new technologies to market and smart consumer choices such as buying a low-carbon vehicle.
• Almost complete de-carbonisation of road transport is a realistic long-term objective, through electric or hydrogen-powered vehicles. This will require major technological breakthroughs as well as substantial progress towards decarbonising the power sector. 
•  Fuels must be considered on the basis of their life-cycle CO₂ emissions. Biofuels can occupy a segment of the UK fuel market but care must be taken not to expand demand too quickly, before crop breakthroughs and robust environmental safeguards are in place.

Part 2 of the King Review in early 2008 will put forward suggestions for policy options. 

Ends

Enquires: UKPIA Nick Vandervell,  0207 632 9880            

Notes to editors:

1.  UKPIA represents nine oil refining and marketing companies operating in the UK, which also own approximately 2,200 of the UK's 9,382 service stations, and own and operate the nine major crude oil processing refineries in the UK.