As the lights go red on oil, it's time to go green

The revolution in transport, from canals, railways and steamships to the car and the plane, has underpined the economic and social development of the last 250 years. The prospects for a successful global economy depend upon it. But two factors have emerged to threaten this. Firstly, climate change: across all modes, there is increasing pressure to reduce carbon emissions from transport, and to decouple the growth of these emissions from ongoing transport growth. Secondly, oil is at $100 per barrel, and is expected to become increasingly expensive and harder to source.

Yet our love affair with the motor car is unlikely to diminish in the future, as managing director of Saab Great Britain, Jonathan Nash, explains: ‘As a larger proportion of the developing world attains greater personal wealth, more people aspire to own a motor car and the greater personal mobility and freedom that the car represents’.

Climate change, oil supply and affordability force society, and the auto industry in particular, to confront the dilemma of how to reconcile an increased global demand for its products with the need to reduce carbon emissions and mankind’s reliance on fossil energy sources.

Industry and government, along with scientific and academic commentators, agree that there is no silver bullet. Many different measures will be needed, embracing car design, engine efficiency, hybrid and electric powertrains, renewable fuels, local transport plans, public transport, travel-to-work policies and efficient driving techniques. There are roles for governments, car producers and consumers — ‘we are all very much dependent on each other’, as Jonathan puts it.

For many in the car industry, the ultimate aim is hydrogen fuel cells, ‘potentially taking the car out of the global warming picture altogether’ says Jonathan. However, despite vehicles such as the Equinox Hydrogen 4, recently launched by Saab’s parent company General Motors and now on commercial trial, wide availability of fuel cell vehicles is still some way off.

Currently still the world’s largest car manufacturer, GM is looking at bioethanol as an intermediate technology — and Saab is its centre of excellence for developing this in Europe. According to Jonathan, GM’s reasoning is that ‘bioethanol is available now, it works with the internal combustion engine, it behaves the same as conventional petrol, the refuelling infrastructure can be easily adapted and it requires little change from drivers’.

However, there has been recent concern regarding the negative impact of certain feedstocks on sensitive habitats, with tropical rainforest being cleared in countries such as Malaysia to provide land for the cultivation of palm oil and soya, a currently small proportion of which is used to produce biodiesel, with the balance (around 97 per cent) being used for cosmetics and food production.

Carbon-efficient production processes can and should be encouraged through carbon accreditation schemes, insists Jonathan. He also acknowledges concerns about the wider impacts of certain foreign-sourced biofuels, and is emphatic that sustainability certification will become much more rigorous in future.

‘But with an appropriately supportive policy framework, we shouldn’t need to rely on imports,’ he insists. Recent developments demonstrate how efficient local production of biofuels can generate huge and measurable reductions in CO2 compared to fossil fuel equivalents, without negative impacts on sensitive habitats.

In November last year, British Sugar opened the first of a new type of plant making bioethanol — and much else — out of sugar beet. Their plant at Wissington in Norfolk is state-of-the-art, and will produce 70m litres of sustainable bioethanol each year — this is around six per cent of the bioethanol required to meet the Renewable Transport Fuel Obligation (RTFO).

Efficient production methods at Wissington mean that by using by-products from production as animal feed, running combined heat and power generation alongside, and recycling CO2 generated during production for the cultivation of tomatoes, the plant delivers a 60 per cent reduction in carbon emissions compared to the equivalent fossil fuel. There are six similar plants — though in the main they will use wheat rather than sugar beet — being built or awaiting planning permission across the UK.

According to the National Farmers Union, domestically, the UK can produce 1.2 billion litres of bio-ethanol per year, equivalent to five per cent of future estimated petrol demand, by using surplus wheat. The UK usually exports two to three million tonnes per year, and by using set-aside land which is set at zero per cent for 2008.

Second generation biofuel production, made from agricultural waste by-products such as straw and wood residues, has the potential to make a significantly greater contribution to displacing UK demand for petrol and diesel.

Although commercial second generation production has yet to arrive, its value is that not only can it produce perhaps twice as much as first generation sources but the increased production volume won’t put pressure on food resources because it is produced from agricultural waste by-product rather than from the main crop.

To accelerate the move to second generation biofuels, GM has recently entered into a partnership with Coskata Inc, a company which is developing breakthrough technology to produce ethanol from waste. Scientific analysis of Coskata’s process has shown that for every unit of energy used, 7.7 times that amount of energy is ultimately generated in the shape of ethanol. The process can also reduce CO2 emissions by up to 84 per cent compared with a well-to-wheel analysis of conventional petrol.

So UK biofuels could play a critical role in helping the UK reach its intermediate target of a 26-32 per cent CO2 reduction by 2020 and the medium-term target of 60 per cent by 2050 — and properly certified, sustainably produced imports could make an additional contribution.

The UK RTFO will, by 2010, require that five per cent of all fuel sold in the UK should come from renewable rather than fossil sources. Most retailers will seek to achieve this objective via a five per cent blend of biofuels into mainstream fuels. Current European fuel standards allow up to five per cent of ethanol to be blended into conventional petrol or the same proportion of biodiesel to conventional diesel, with the effect that most manufacturers will only warranty their vehicles to run on low blend biofuels up to the five per cent threshold.

Government has claimed that the RTFO could deliver carbon savings equivalent to taking one million cars off our roads.

Many in government and beyond argue that the most efficient way of deriving maximum environmental benefit from biofuels at minimum cost and with no impact on existing refuelling infrastructure is to blend a certain level of biofuels into all mainstream fuels, and to increase this level of blending over time — starting at five per cent, then increasing to ten per cent and then beyond.

In this context, the argument goes, why invest in a new fuel such as E85 (85 per cent bioethanol, 15 per cent petrol), given the significant costs associated with installing a new refuelling infrastructure for it, when we can introduce an increasing amount of biofuel into mainstream fuel supplies? This would enable all drivers to reap the benefit, not just those who happen to own a flexfuel car.

However, as Jonathan explains, this fails to acknowledge that there is a good engineering reason why blending of biofuels into mainstream fuels is currently limited to five per cent. ‘In the case of bioethanol, this is significantly more corrosive than petrol, therefore at blends above five per cent there is no guarantee that existing vehicles will not suffer corrosion problems with fuel lines and the fuel tank, unless they have been specifically engineered for a higher blend’.

As a consequence, even if a ten per cent blend of ethanol to petrol (otherwise known as E10) were to become the norm for all petrol sold in the UK, there would still be a need to have separate pumps dispensing this grade of fuel to those vehicles specifically engineered to support it, with a separate lower blend available to those vehicles which are not.

In this context, argues Jonathan, rather than tinkering with lower blends, as an established fuel grade E85 offers maximum benefit in terms of carbon reduction (with the 15 per cent fossil fuel content there purely to deal with cold starts), and also importantly represents a conscious shift in consumer behaviour — but one that is so compatible with petrol/diesel that it is easily manageable for drivers to make the move. ‘From the car industry’s perspective, getting drivers engaged with technology and fuel change is crucial if transport is to become sustainable,’ he argues.

The strategy Jonathan outlines could be supported by existing refuelling stations by switching those pumps currently dispensing high octane (and high carbon), high performance fuels to E85. Indeed, Sweden has already established legislation requiring 50 per cent of the country’s petrol stations to be equipped with a renewable fuel pump by 2009. ‘Most fuel suppliers have opted for E85 as the easiest switch from conventional fuel’, he explains.

Jonathan believes that in a level playing field, flexfuel cars running on high blend biofuels could account for 20 per cent of the UK market — and significantly more with the introduction of second generation biofuels.

But today, the market is extraordinarily sensitive to price: a high-blend Saab 9-5 Biopower is only £600 more expensive than the petrol version, yet in the UK 99 per cent of customers choose the petrol version — because of a lack of availability of the fuel (20 public pumps currently across the country) and because consumers incur a significant penalty in running costs.

E85, although better for the environment, has a lower energy content per litre than fossil fuel equivalents, meaning that drivers require 25 to 30 per cent more fuel to travel the same distance on E85 compared to petrol. Unfortunately, because fuel is taxed according to volume rather than energy content and well-to-wheel carbon impact, users of E85 incur a significant penalty in running costs as a result.

At the same time, the current 20-pence per litre fuel duty rebate on biofuels is all but eaten up by the comparatively higher production costs associated with this fuel versus petrol, meaning that the 20-pence rebate translates to a two pence discount over petrol at the pump — although this will become less of a disadvantage as fossil fuel prices climb ever higher.

‘For individual consumers at the moment, unless they are really passionate about the environmental issue, the economics of owning a flexfuel car just don’t add up,’ Jonathan admits.

He points again to the Swedish approach, which was to gain cost parity through lower congestion charges, road tax, and the maximum fuel duty rebate permissible under EU law which is around 30 pence per litre.

The result, he says, is that ‘out of 24,000 sales in 2007, 16,000 were for the Biopower car. Where 66 per cent of customers went green in Sweden, only one per cent did so in the UK.’ The evidence seems to be overwhelmingly that cost parity is essential: ‘Drivers are the drivers of change; but the majority will ultimately only make the green switch if it doesn’t burn a significant hole in their pocket,’ he reasons.

A policy aimed at stimulating a conscious shift in consumer behaviour and greater demand for biofuels today will yield benefits not only in the short term. Longer term, as manufacturers bring electric and hydrogen powered vehicles to the market, the new production processes that convert renewable feedstocks to biofuel can be adapted to convert this biomass to electricity and hydrogen. Jonathan expands: ‘In an energy diverse future, getting customers used to the concept of multiple fuels (as exemplified by the Saab BioPower) will also prepare them for these breakthrough technologies.’

For policy makers — and indeed all of us — it seems that ‘well-to-wheel’ renewables offer the potential to effect a significant reduction in road transport emissions now, in a way that is both cost-effective and consumer friendly. Other reductions will have to come through continued improvements in engine performance: ‘We’re using six speed transmissions, variable valve timing, direct injection, turbo-charging and downsizing to squeeze even more efficiency out of conventional engines and looking further ahead, we foresee an increasing electrification of the automobile that will ultimately replace internal combustion’.

Beyond vehicle technology, changes in business and consumer behaviour facilitated by local government congestion charging, park and ride schemes, bus contracts, and central government taxation and information campaigns will also have an important role to play.

‘Manufacturers cannot make this shift alone’, Jonathan concludes. ‘We’re doing what we can on the technology side, in a way that allows us to maintain affordability, profitability, and consumer appeal. But we need our customers, governments, and fuel suppliers to meet us half way — they have an important role to play as well.’

Reducing emissions from road transport is likely to remain high on the political agenda for some time to come. In this context, industry clearly identifies consumers as key to market transformation and government will need to think hard about how best to encourage consumer behaviour to change.

Biofuels are one important strand of a much broader and comprehensive strategy being pursued by the world’s largest automotive company, aimed at reducing the environmental impact of the products it manufactures and sells. A company like GM realises that, in order to maintain a market for its products in tomorrow’s carbon-constrained world, a wide variety of renewable energy sources will have a role to play in delivering sustainable personal mobility to the world’s burgeoning population. And for an agriculture-rich country like the UK, biofuels can make an immediate impact whilst paving the way for the exciting technologies of tomorrow.

Duncan Hadfield is a senior researcher at Parliamentary Brief