Experts clash after LPG is branded 'a stepping stone'

FLEET experts have clashed over future demand for liquefied petroleum gas (LPG) as a long-term alternative to petrol and diesel amid the fast-paced development of fuel cell vehicles.

The Fleet News Hit for Six conference heard from CAP national research manager Martin Ward that LPG was a 'temporary blip' that was only a stepping stone before more viable alternative fuels, such as fuel cells, took its place.

'Getting the fuel is easy but LPG is a temporary blip, and then there will be other more advanced fuel sources,' he said.

But his comments prompted an angry reaction from a number of speakers, including Lloyds TSB autolease green fleet development manager Malcolm Noyle, a long time campaigner on the benefits of LPG.

In a session sponsored by the Energy Saving Trust, Noyle said: 'If fleet operators believe clean fuels are a 'temporary blip', then they should think again. It is an important part of the clean fuel strategy for the future and is currently the most viable of clean fuel choices.

'Fuel cells will not be commercially viable until at least 2020, which is up to five fleet lifecycles away. LPG is available now. I believe that in three years time, a number of issues will mean there will be high demand for used models but low supply, and that can only mean healthy residual values for fleets.'

A key reason for the expected higher demand is congestion charging, Noyle said. London has already revealed that the cleanest alternative fuel vehicles will enjoy a 100% discount from the £5 a day charge when it is introduced in February.

He added that the growing crisis in the Middle East was pushing up petrol prices, but most of the current stock of LPG was sourced through the North Sea, which helps secure demand and keeps prices down.

Noyle's view was backed up by Chris Coombes, deputy chief fire officer for Leicestershire Fire Service, who has been running an LPG powered fleet of 62 vehicles since 1998.

Coombes asked fleet managers to look at the bigger picture, such as the 50-year supply of natural gas under the North Sea, and issued a challenge to manufacturers to ensure dual fuel cars remain a viable option that is not simply ignored in the rush to develop fuel cell technology.

'Green team' tackles fears over LPG fuel quality

THREE major industry players have joined forces to launch a new LPG 'green team' amid fears over the quality of some liquefied petroleum gas conversions and growing demands for information on converting to the green fuel.

Launched at last week's conference in Birmingham, the Clean Fleet Alliance includes leasing giant Lloyds TSB Autolease, LPG supplier Calor Autogas and converter MSD SVE. It aims to provide fleet operators with an easy route to the 'green' market, from funding and conversion through to vehicle delivery.

Announcing the venture, Lloyds TSB autolease green fleet development manager Malcolm Noyle said: 'There are lots of questions out there, and until now there was no one place to go to find the answers.

'The industry has felt increasingly frustrated at the lack of clear information on clean fleets. The CFA aims to put this in the past. Each member is an expert in their respective field, and the CFA has the advantage of a single point of contact.'

He said the alliance will push standards up in the conversion industry, adding that 'under the arches operations should not be allowed to flourish'.

The alliance will only recommend and endorse solutions that receive the approval of the TransportEnergy Powershift programme, which is one of a number of agencies giving its backing to the scheme. Others include clean fleet consultancy Motorvate and manufacturers Toyota GB, Volvo and Vauxhall.

The announcement marks the start of an important six months for the LPG industry, Noyle said.

There is growing awareness of the fuel among private buyers, which will push up demand as the Government drives for its target of annual clean fuel vehicle sales of 250,000 in the next decade. Noyle revealed that for an 'average' fleet car, obtaining 32mpg running on LPG and 38 mpg running on petrol, the savings of using a clean fuel over 75,000 miles were £2,848 in fuel alone.

He also estimated that a driver or fleet could save £780 a year on congestion charging fees set at £5 a day, if the vehicle went into the fee-paying zone just once a week over a three-year period.

Noyle added: 'Clean fuel vehicles are a viable, cost effective, safe and reliable solution for today's fleets. Stop sitting on the fence and take advantage of the financial and environmental benefits now.'

LPG switch a success, says fire chief

LEICESTERSHIRE Fire and Rescue Service (LFRS) began looking at air quality issues in 1998 but it was not an easy process. The brigade's deputy chief, Chris Coombes, said LFRS went through a period of discussions before rejecting electric and compressed natural gas because of limited mileage scope.

He said: 'We wanted a fuel that we could use right across the fleet. For LPG, we wanted a single manufacturer with a range of vehicles and we did not want to have to do conversions. They had to be ready fitted.

'Vauxhall was the chosen company to supply vehicles. They said we would get reasonable delivery times, but there were problems with supply and demand at the start that have since been rectified.'

The fire service runs its own workshops, 24 hours a day, because emergency services also have to run 24 hours a day. When the project first started, forecourt refuelling was not really available, so Coombes opted for bunkered fuel from Flogas.

Coombes added: 'We now have 62 vehicles in use, with high reliability for such a pioneering project. We had four vehicles with recurrent reliability problems in the early days, but it's not a bad performance.'

The teething problems with those vehicles have been rectified and the fleet now runs smoothly.

Coombes also reported a high level of acceptance from drivers towards the LPG vehicles. He felt that a principal reason for this was that drivers could buy the cheap bunkered gas for private fuel. Drivers keep the cars for private use because of extended working hours, when they could be at home but still be on call, ready to rush to an emergency.

He said: 'Private bunkered fuel has proved very popular and has been one of the differences between success and failure. Only four of our drivers are still sceptical, and remain so, but every company will have people like that.'

Coombes himself has run two clean fuel cars during the period the fleet has switched fuels. He said the first, a 2.0-litre Vectra, achieved 32 mpg on petrol, equivalent to 10.1 pence per mile. However, when switched over to LPG, despite returning a lowly 26mpg, it cost just 5.4ppm on fuel.

The story is similar with his latest vehicle, a 3.2-litre Frontera. It returns 21mpg and 15.4ppm on petrol, and 17.5mpg and 9.9ppm on LPG.

Despite the savings, Coombes is not entirely satisfied with the results. In particular, he has found fluctuations in the standard of fuel across forecourts.

He said: 'Fuel quality is an issue. Sometimes, the quality can change, depending on the supplier. I believe there are variations in the quality and I believe it's something the industry has to tackle.'

However, Coombes has been able to quantify the project in financial terms. He said: 'It has been a success because we have an £18,000 fuel bill a year for 62 vehicles. We are now one step ahead of the game.'

The fleet's contribution to air quality is harder to measure, but Coombes is keen that manufacturers continue to support the work such fleets have done to help the environment and to safeguard the investment in alternative fuels.

He added: 'Vehicle manufacturers need to maintain their commitment to alternatively fuelled vehicles. Customers have been let down on alternative fuel in the past. The environmental advantage of LPG will get less and there is a challenge to manufacturers and fleets to ensure alternative fuels maintain their viability.'

Maintenance discipline vital for opt-out drivers

FLEET drivers who swap their company cars for cash allowances and privately run cars should be taken off the road if they fail to maintain their cars properly, a leading consultant has warned.

David Rawlings, senior manager at Deloitte and Touche, told attendees at the Hit for Six conference that: 'Taking a driver off the road because they do not properly care for their car may sound like overkill, but you have to make sure the vehicle is fit for the purpose of being used for work.'

He added that it was also vital that private cars driven on business were properly insured for work purposes 'or the penalties could be severe', saying that a third party involved in a major accident caused by an employee driving for work purposes was likely to sue the employer, rather than driver, for damages.

Rawlings presented delegates with a series of guidelines to follow before implementing cash for car schemes.

He said it was vitally important that fleet executives know exactly how much their are paying for traditional company car provision before they can judge whether a cash option makes better financial sense, and he advised fleet decision makers to review regularly the cost and efficiency of current funding policies.

He also warned fleets that there is no 'magic pill' that ensures a cash option is the right choice for all drivers, saying: 'No two employees will ever be the same.'

Instead, Rawlings said that by splitting a fleet into manageable groups, for example high mileage drivers with low incomes, employers could identify sectors of their fleets for whom cash for car plans make sense and those for whom it is not appropriate.

He said the main reason cash for car schemes have a low take-up is because drivers fail to understand how they work, with many being suspicious of a company's motive for launching such a scheme.

'They always think there's a catch', he said.

Overall, Rawlings said it is an employer's responsibility to 'help, not force' car drivers through the process, provide them with access to the right software so they can calculate the figures for themselves and explain the potential risks and pitfalls.

'If you look at any fleet there will be one driver who would better suit a cash option and another who would be better off with a company car,' he said.

Tax warning on ECO schemes

CLEAR differentiation is appearing between employee car ownership (ECO) schemes that achieve Inland Revenue approval and those plans that are rejected, according to a leading tax expert.

Alastair Kendrick, director of PAYE and NI solutions at Ernst & Young, said ECO schemes that rely on employees buying their cars with a loan provided 'by reason of their employment' must use credit sale agreements to pass Inland Revenue scrutiny.

'You cannot use personal contract purchase, hire purchase or personal contract hire if the loan arrangement is by reason of employment,' said Kendrick at the conference, in a session sponsored by GE Capital Fleet Services.

ECO schemes have been a hot topic for discussion and an area of rapid growth because of their ability to provide employees with all the traditional benefits associated with a company car (including guaranteed holding cost, service, maintenance and insurance) without the burden of benefit-in-kind tax.

Kendrick said: 'The Inland Revenue is looking at this area and knocking back schemes initially introduced on a PCP basis. If you are in any doubt use a credit sale agreement, but it's imperative that the Revenue understands what you are going to do, how you are going to do it, and then approves the scheme.'

He added that as a rough rule of thumb ECO schemes could deliver savings to high business mileage drivers who can qualify for tax-free and NI-free business mileage reimbursement of 40 pence per mile for the first 10,000 miles a year and 25ppm for every mile thereafter; and to employees with high emission company cars who will escape punitive levels of benefit in kind tax under the new company car tax system. Conversely, ECO plans are much less likely to prove cost effective for low business mileage drivers who will not qualify for the advantageous mileage reimbursement payments.

What is an ECO scheme?