Select Committee on Environmental Audit Minutes of Evidence

Memorandum by BP


  1.  BP is the United Kingdom's joint largest retailer of petrol and lubricants in the United Kingdom. Our market share is 18 per cent, and there are around 1,528 BP branded sites within the United Kingdom. Some 800 of these are company owned. We have two main refineries—Grangemouth in Scotland and Coryton in Essex—and thirteen terminals.

  2.  The terms of reference for the inquiry are wide-ranging and some aspects have been covered in recent submissions to other committees. Therefore we have attached as Annex 1 and 2 our submission to the Trade and Industry Select Committee on the impact of motor fuel taxation and also our memorandum to the Treasury Select Committee on the Pre-Budget Report.

  3.  BP has led the introduction of a range of clean fuels in the UK and globally in recent years. We are introducing our greener fuels in more than 50 of the world's major cities that are most troubled by pollution and smog. This campaign was launched in the UK in February 1999 with the introduction of ultra-low-sulphur diesel and since then we have extended this range to include ultra-low-sulphur petrol, Autogas (liquefied petroleum gas) and lead free four-star. In addition to these cleaner fuels, we have undertaken to incorporate solar power at some 200 of our service stations worldwide.


  4.  Whilst we have commented generally on fuel taxation in Annex 1 more specifically we do support the use of duty incentives as a means of encouraging the uptake of cleaner fuels by the general public when they are introduced into the market. As we have commented in Annex 2 we introduced ultra-low-sulphur petrol in advance of any duty changes and we have absorbed the additional manufacturing costs ourselves. We have undertaken to pass on any duty reductions directly to the consumer. We would certainly advocate continued use of the duty incentive as a means of encouraging cleaner or alternative fuels into the market.

  5.  We have seen a marked increase in the use of LPG (Autogas) as an alternative transport fuel. This has been greatly assisted by the use of duty incentives in the late 1990s. Indeed it is highly unlikely that we would have seen the growth in the market had there not been generous tax incentives. However, LPG as a transport fuel is still in its infancy and sustained use of the incentive is needed to ensure that the public's confidence in the fuel remains. Many consumers who are considering converting to Autogas are concerned that as the market grows the fuel will be taxed more heavily. The example of CNG/LPG in the New Zealand in the 1980s, and elsewhere, is a good one. Substantial duty incentives were given to promote its use but were then abruptly withdrawn; this subsequently led to a near-market collapse. We would encourage the government to provide a degree of certainty about alternative fuels. Certainly, maintaining the duty differential between motor fuels and Autogas for a minimum of five years would give greater stability as would the continuation of the Powershift programme and possibly a higher discount level for company car tax for cleaner vehicles.


  6.  BP is committed to introducing cleaner fuels that will achieve a sustainable improvement in urban air quality. Both of our products meet the European sulphur regulations for 2005 and have been introduced some five years ahead of legislation. BP's Greener Diesel is available at all BP service stations and is a premium quality ultra low sulphur diesel product that reduces harmful emissions. It emits 85 per cent less sulphur dioxide and nearly a third less particulates and black smoke than standard diesel.

  7.  BP's ultra low sulphur petrol is marketed as Cleaner Unleaded. It has less than 50 ppm sulphur and less than 35 per cent aromatics. Specific benefits are: sulphur levels in the fuel are reduced by 66 per cent which results in more efficient performance of the catalytic converter and reduced vehicle emissions; hydrocarbons are cut by up to 25 per cent and it creates less carbon monoxide and nitrogen oxide emissions.


  8.  As long as the market for natural gas and LPG remains stable BP envisages continued and increased use of these fuels. They use an established technology and little new development is required. They are particularly effective in niche applications where the benefits are significant and can be very clean fuels for urban areas. The greater problems associated with Autogas have related more to rejections from local authorities for planning permission on forecourts and also vehicle conversions by non-authorised companies. Regulations need to be tightened to ensure only authorised installers undertake conversions so that the safety and integrity of LPG is maintained and real emissions benefits are achieved.

  9.  As motor manufacturers develop their vehicle technology we are committed to keep pace with our fuel developments; together we can then ensure that motorists can get the best possible emissions performance from their vehicles. BP has been very encouraged by the help and support from several motor manufacturers, especially General Motors, with whom we have several collaborative projects.

  10.  Fuels cells with hydrogen are expected to play an important role with both mobile and stationary energy applications. Hydrogen is the cleanest alternative to the fossil fuels used today in transport. Hydrogen can be used to fuel internal combustion engine vehicles and BMW are actively developing these vehicles. Fuel cell technology will also have an important role to play with several motor manufacturers developing hydrogen fuelled fuel cell vehicles prototypes. BP worked with General Motors to refuel the hydrogen powered Zafira fuel cell vehicle in demonstrations in Beijing and at the Sydney Olympics.

  11.  However, there are still potential problems which must be resolved if we are to ensure the viability of safe and effective storage of hydrogen for its use in a passenger vehicle. Several car manufacturers have announced plans to start commercialisation of cars with a fuel cell system from 2003-2004 using liquid fuels that liberate hydrogen on-board the vehicle to avoid this storage issue with hydrogen. BP is working with General Motors to develop the on-board conversion of liquid fuels such as gasoline to hydrogen using its knowledge and experience of reforming technology.

  12.  BP is also a member of the California Fuel Cell Partnership and the first hydrogen refuelling station opened on 1 November 2000. The aim of the project is to support the commercialisation of fuel cell vehicles with the plan to have 50 vehicles operating by 2003.

  13.  The use of hydrogen for urban fleet vehicles is already possible. These fleet vehicles already operate from central depots, frequently along a known route and refuel at a depot on a daily basis where it will be easier to store hydrogen and dispense it. These vehicles will operate predominantly in urban areas and so the impact of zero tailpipe emissions will be significant. Daimler Chrysler announced the introduction of 30 fuel cell buses in a pan European project, starting in 2002. Ten cities will each operate three hydrogen powered fuel cell vehicles. BP will be one of the major suppliers of hydrogen to these vehicles.

  14.  BP is using its expertise in the safe production and handling of hydrogen from many years of operations within its refinery and petrochemicals operations to allow the development of supply options to a number of fleet and passenger vehicles projects.


  15.  BP is committed to providing a range of cleaner fuels to the general public. In the short term they are predominantly conventional fuels with tighter specifications but increasingly we are looking to provide alternative fuels such as LPG/Autogas. All of these fuels give substantial air quality benefits especially in urban environments and they are aided by the duty incentives made available by HMG. Longer term we continue to work with a variety of motor manufacturers as they develop new technologies with the earliest benefits being achieved in urban fleets.

January 2001

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