Fleet News

Is the government ready for bioethanol?

Ethanol is all set to power a string of top-selling business cars – but fleets are still waiting for crucial government moves to encourage the switch to the fuel which could play a leading role in sustaining road transport.

While carmakers continue to invest in broadening the range of vehicles capable of running on E85 (85% bioethanol, 15% petrol), the “clean” mix of ethanol and petrol has yet to be turned into a more attractive proposition on filling station forecourts, experts told a conference in Sweden.

“Fossil fuel is expected to run out in about 30 years’ time and there is no doubt that ethanol provides an answer,” said Jan Brentebraten, alternative fuels director at Ford of Europe.

“We have also proved that this new fuel gives us an affordable way to combat CO2, which is the major problem facing the motor industry. But while E85 offers significant benefits at minimum cost, getting people to drive on it takes incentives and tax reductions.”

Volvo’s international fleet sales director, Alan Carpenter, added: “What we need is holistic and clear thinking from the government to stimulate the market.

“We know this will take a lot of lobbying, but the fact is that clean vehicles are in no way controversial because they represent a big part of providing transport in the future.

“The industry is bringing these cars to market – all we need now is for the legislators to create the right environment through tax advantages and incentives.”

Speaking exclusively to Fleet News, Mr Carpenter said changes in taxation were necessary for E85 to become cost-neutral when it was retailed alongside petrol and diesel.

“We should be thinking about formulating tax on the energy content of fuel, rather than on the basis of cost per litre,” he said.

“And because E85 makes such a big contribution to cleaning up exhaust emissions, we really should be prepared to throw in additional incentives like free parking in city centres and exemption from congestion charging,” he said.

According to Eva Sunnerstedt, of Stockholm’s department of the environment, Sweden already derives 30% of its energy from biofuel and is aiming to become an oil-free economy by 2020.

“Transport is important and we will all need cars in the future,” she said.

“In Stockholm, we have stopped buying diesel-powered buses and are switching to biogas.

“By the end of the decade, every vehicle operated by the city council will be 100% clean. What is being achieved here has been driven by the politicians and no tax is being charged on renewable fuels until 2013. There are already 50,000 clean cars in Sweden and the number will double this year.”

Volvo’s government affairs director, Anders Karrberg, told the conference that Ford and Volvo sold more than 15,000 Flexifuel cars in Sweden last year.

“This country wants independence from oil and favours co-operation between government and industry in order to achieve it,” he said.

“It is one of the most influential in the EU with regards to creating a sustainable high-blend biofuels market.”

Mr Brentebraten said: “Apart from the vulnerability of oil supplies, greenhouse gas emissions are another reason why we need alternative fuels.

“What has happened here shows that if the oil tap were to be turned off tomorrow, Sweden would not come to a stop.

“Fleets here get major tax concessions to run on E85 and retail customers get a €1,100 (£743) rebate when they buy flexifuel cars.

“Road tax is reduced by one-third compared with petrol-only cars, and E85 models also attract no congestion charge in Stockholm as well as free parking in all cities.

“France and Austria are following Sweden in the introduction of tax incentives on E85. Government support is very important and there are many ways it can be implemented. If E85 is going to make a meaningful difference, consumers have to buy into it.

“We believe E85 is viable and has environmental benefits. The market is growing and more governments should take action over a fuel that is able to take the place of a large amount of petrol.”

Phil Maud is fuel director for the Morrisons supermarket chain. He told delegates that the 2% tax reduction for E85 vehicles in the UK was insufficient to bridge the efficiency gap between ethanol and petrol – estimated to be around 25%.

But he added: “My prediction is that in the long-term, diesel fuel will become much more expensive than petrol. “Relative to ethanol, the difference could be sufficient to offset the economy issues.”

EDF Energy’s head of transport Chris Pascall said: “As a fleet, we’re committed to a 20% reduction in CO2.

“Some of our drivers have shown in the Focus Flexifuel, but we see little point until there’s better access to supplies of the fuel.”

Marcus Puddy, head of fleet management at Lloyds TSB autolease, told Fleet News: “Most companies want to reduce CO2 emissions but they also want to keep the cost base neutral and E85 needs a government incentive to balance out the E85 fuel economy loss compared with petrol, which would be around 40p per litre.

“I believe this fuel has a future, but at the moment, I can’t see people moving away from diesel.”

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee