Examination of Witnesses (Questions 280
THURSDAY 18 JANUARY 2001
280. On the question of the package of measures,
one of the other forms of taxation on motoring which is currently
being explored in the United Kingdom is the question of congestion
charging. We do not have motorway tolls but we are about to introduce
congestion charging in the near future. What are your observations
on congestion charging and in particular on the technology of
it. Do we now have the technology to introduce a very refined
system whereby people can be charged per kilometre of the journeys
they travel? Is this going to be an effective way of reducing
overall congestion? So far we have talked about the impact on
air quality, but we have not touched congestion.
(Mr Carey) There is electronic technology which can
do all of the things you mention, car tagging and monitoring.
My personal view is that there are two issues here: one is congestion
one is environment. You do not solve one by trying to solve the
other. If we have congestion problems and congestion charges are
the solution, then let us do that, but do not look at congestion
charging as a way of reducing pollution. We can solve pollution
through technology. We talked about fuel technology and engine
technology. Congestion charging is something different. You commented
the other week when the AA were here that driving across France
costs the same as driving across the UK because they have road
charges. You cannot introduce toll charges in some countries because
the motorway networks will not work. Imagine trying to come off
some parts of the M25 and queuing to pay and the congestion that
would cause rather than solve.
(Mr Frank) We have to make a distinction because the
vehicle technology will be available in a very short time; it
is really road technology. What we are missing so far is the management
of the traffic. We have to ask the question: what do we want?
Do we want to keep the people in the traffic jams so that the
revenue increases and do that every morning and only some people
have an alternative to do different things, or do we try to avoid
the traffic jam? Then we need a traffic management system to inform
the people in advance by planned management, so today they know
what may happen tomorrow morning, due to the weather conditions,
the holidays, whatever. That is one question. The second question
is: what do we do with the money? Do we spend it again on the
pension fund so that the Government is happy to have the money,
or do we feed it back into the system and use the money to reduce
the reason for the traffic jam by, let us say, increasing the
intermodal changes between personal transportation, public transportation,
enhanced cycling but also improve the road infrastructure? I should
be much more in favour of this circle: improve the system so that
at least there is a goal to reduce traffic jams and not give a
signal to the customer which says, "Sorry, we misused the
traffic jam to increase our revenue". This would not be a
good signal to the road user because then he will not understand
any other signals that he should behave properly in terms of the
environment, because he feels being misused in order to increase
revenue. That was a very frank statement as a road user.
(Mr Mumford) We have been involved in some research
in this area and there are several points I would make. The first
is that when you look at the social cost of transport, in particular
of road transport, congestion is the major element by a very,
very large way. Congestion is a very legitimate environmental
concern and is arguably the largest environmental concern that
we have. Also, even if you look at the impact on things like carbon
dioxide, a vehicle travelling at less than ten miles per hour
is producing twice as much carbon dioxide per mile as a vehicle
which is travelling at 20 miles per hour. There is actually a
carbon dioxide benefit from having free flowing traffic. Where
congestion charging has some benefits is firstly if you are applying
the principle that the person who is causing that problem should
pay for that problem; then congestion charging has some merit
because it is actually applying a charge to where there is a problem
and applying it to the people who are involved in that problem.
Secondly, if your objective is actually environmental improvement,
by targeting that charge very specifically on a behaviour, particularly
if it is a behaviour which is modifiable, then you can actually
alter behaviour. It comes back again to choice. If the objective
is one of traffic management, getting people to stagger journeys,
getting people to take different routes, then road user charging
is quite an effective tool in that environment. A number of countries
have used it in this way and it has been effective. There are
several related issues like where the displaced traffic goes and
how you actually ensure that the system is foolproof. The satellite
tracking systems, which are the most effective ones for this,
are good, but if a cloud goes over you could be viewed by the
system as being in one road when actually you are on the road
next to it. It is not perfect yet but it is an option to look
at in the future.
281. Can we look at the question of purchase
tax on new cars? If you buy a new car which is less polluting
than an old car, has there been any research on the environmental
and social impact of getting older cars off the road in view of
the fact that the newer car is likely to be leaner burn than the
older one? How do you think that could be achieved?
(Mr Carey) It goes without saying that new cars are
better than old cars and every year in the UK we buy just over
two million new cars and we scrap about 1.6 million old cars;
the net increase is about 500,000 a year. The older cars' average
age at scrapping is somewhere around 14 or 15 years, so the benefit
of scrapping old cars, particularly now, because 15 years ago
most cars did not have fuel injection systems, so they would not
have catalysers, is 10 or 15 times less pollutive today in terms
of air pollutants than 15 years ago. There is definitely a benefit
in having more new cars on the road, but as a vehicle manufacturer
it is very difficult to push that as a solution to the problem.
However, I would say that perhaps one of the more significant
things the Government did last year in persuading manufacturers
to reduce the prices by 10 or 11 per cent did increase the market
and we are seeing signs now that more are coming back in to buy
new cars and that is probably a far more significant impact on
the environment than any of the fuel taxes of any of the vehicle
excise duty taxes, simply by the fact that you might have brought
100,000 to 200,000 new cars onto the road over a year.
282. The one tool which is around at the moment
is the MOT emission test. I wondered what your view was on that.
Is it of any value?
(Mr Carey) The MOT emission test has great value.
The SMMT campaigned for several years to bring more roadside testing
and more emission testing into that sort of thing. We had a programme
running for two years which we have now abandoned because the
emissions test has been brought more fully into the MOT. It very
much depends on how the penalty is applied. If you are told you
cannot drive your car, if you strictly apply the MOT test, because
it does not fulfil the emissions legislation, then that will work.
It is a good thing.
283. Hydrogen has been mentioned on quite a
number of occasions as the direction in which we should be going.
I think Mr Mumford made a comment earlier that a variety of options
should be kept open. How far is there a consensus that hydrogen
is the way forward? Is it likely to be suitable for all types
of vehicle as well? Would you see it as the sort of fuel which
would be used by buses, lorries as well as cars?
(Mr Mumford) There is a consensus at the moment that
it is likely to be the fuel of the future. My comment should not
be taken as saying that I am not fully supportive of hydrogen.
I am fully supportive of hydrogen. BP, in common with some other
companies, is actually putting a lot of money and a lot of people
into creating the ability to market hydrogen. There is a consensus
that hydrogen is a good way forward and there is also quite a
competition between fuel suppliers now emerging in the hydrogen
arena. There was a comment earlier about the fact that here was
nobody to talk to about hydrogen. At least two major oil companies
are very publicly doing things in hydrogen and I am sure others.
A nascent hydrogen industry is emerging already.
284. We had some evidence last week from Transport
2000 and it is mentioned as well in the IEEP paper that there
are different mechanisms for delivering hydrogen to a fuel cell,
the sort of mechanism which BMW were talking about earlier of
liquified hydrogen, but also the possibility of methanol and petrol
reformulated on board the vehicle. How do those different mechanisms
impact on the total lifecycle? What are the differences in terms
of emissions for instance?
(Mr Beckwith) We have published some work in this
area. Our view is that a compressed hydrogen fuel cell vehicle
could give a lifecycle CO2 benefit of something like 40 per cent
compared to current technology. That depends very much on your
source of hydrogen. The thing which is very attractive about hydrogen
long term is that if the hydrogen can be produced from renewable
sources, then you have the prospect of a sustainable system. Currently
the renewable resources for the production of hydrogen are nowhere
near economic and an awful lot of work needs to be done to make
them economic. When producing hydrogen from natural gas, which
at the moment is the most economic way of making hydrogen and
is probably the lowest CO2 option for making hydrogen, we see
a lifecycle benefit of about 40 per cent for hydrogen powered
fuel cell vehicles. If you have a fuel cell vehicle which generates
its hydrogen on board, either through methanol or through gasoline,
the lifecycle benefit is lower and our figures would indicate
that the lifecycle benefit is more like 30 per cent as opposed
to 40 per cent.
285. May I ask Mr Fergusson to comment on that
because in his paper he was suggesting that maybe using methanol,
using petrol was not the way we should be going, that we would
not get any great benefit out of it? However, you obviously felt
there were some concerns that some industrial interest might want
to go down that road.
(Mr Fergusson) I put that study in, only one study
of many, and they will differ, because it does make the point
which is broadly supportive of your point, that it makes a great
deal of difference where you get your hydrogen from, where you
reformulate it and so on. That is the sort of question it is very
important we do look at early on rather than commit to a particular
technological route, which does not produce big benefits. For
example, even if you are talking about something like a 20 per
cent benefit in CO2 terms, we are supposed to be having conventional
engines which are 20 per cent better in ten years time, so why
develop a whole new technology for that? You have to look at the
real big long-term benefits or there is really no point in doing
it. That is a point which should not be missed in this. Yes, if
I were a betting person I would say that hydrogen with fuel cells
does look like the winner now; it does look like it might actually
happen in our lifetime which has not been something you could
have said about any alternative fuel until relatively recently.
It does look like that will be the way we go. Whether we go the
route of hydrogen with internal combustion or whether we go a
different intermediate route with fuel cells and methanol or whatever,
that is just the sort of debate we need to be having. It is not
being had at the moment and therefore it will be pursued by particular
sectoral interests in other ways.
286. Do you mean it is not being had in the
UK but it is more in continental Europe?
(Mr Fergusson) Yes, that is right. It sounds to an
extent at least it is being had in Germany certainly. They obviously
are rather ahead of us in terms of having made their own choices
about that. I would add that we should make some choices along
the way. Yes, we cannot have hydrogen fuel cells tomorrow and
maybe it would be wrong to put all our eggs in one basket. But
distributing all our eggs between all the possible baskets would
be a mistake. Do we want CNG buses and LPG cars and biofuels for
something else while we wait for hydrogen to come along? I would
say the answer must be no. We cannot really afford to fund all
these options simultaneously, especially as we are coming rather
late into it. If we had done this 20 years ago, perhaps, but at
this stage some choices should be made.
287. I think it was Mr Frank who made the implication
about the infrastructures which were needed. I think Mr Mumford
said we cannot support a variety of infrastructures. We have to
make some decisions about the direction we are going and develop
the infrastructure which will then take us there. I was a little
bit puzzled, in the light of that sort of comment, at what BMW
said which was that obtaining hydrogen from petrol, methanol or
using natural gas in compressed or liquid form could be a stepping
stone to the setting up of a full hydrogen supply infrastructure.
If the technologies are different, if it is reformulation from
methanol, that is a different technology from a tank which has
liquified hydrogen in it. How can the infrastructure support both?
(Mr Mumford) The way I would answer that from a fuel
supplier's point of view is that we can hold a variety of fuels.
However, each fuel takes up space, it adds to the cost. If you
are dealing with a number of alternative fuels which can use the
same storage and delivery system, then it is quite easy to bring
them in as substitutes or to bring them in in parallel. A route
like taking a form of gasoline or chemical naphtha onto a vehicle
where it is reformed to create hydrogen is something which is
very easy to do with the existing infrastructure. If you then
go to something like methanol, you are dealing with something
which is highly toxic, it is a poison, it is something where you
would need a different level of safety and probably different
technology in the delivery system. You would not want to bring
that in unless you were sure that was actually a long-term option.
You would not want to bring that in if it only had a life of five
or ten years.
288. And liquified hydrogen is completely different.
(Mr Mumford) Yes. We have experience of dealing with
LPG and with compressed natural gas on forecourts. We are trialling
hydrogen but hydrogen will have some big issues with it. We know
from our experience of bringing in LPG in this country that the
opposition we received from local councils to the siting of LPG
facilities was quite extreme in some areas. It is not as easy
as just saying it is a great fuel, let us go and deliver it. People
do not always like these fuels in tanks next to their housing
289. Why do you think there was that opposition?
Was that mistaken, was that people having mistaken concerns about
safety or the environment?
(Mr Mumford) It was a little bit of fear of the unknown.
In some instances it was misunderstanding. We are now in a position
where virtually 100 per cent of our applications for LPG are being
passed by councils. In the early days it was not like that at
all; we had a lot of education to do. There are still questions
as to how much distance you need from the petrol station to the
nearest housing with some of these fuels. There are also issues
about the soil underneath the petrol station. If you are dealing
with something which is dangerous, you would not want to be holding
it somewhere where there was a risk. There are technological issues
there which have to be solved. Particularly if you are dealing
with liquid hydrogen, it does have technical problems, it is a
potential environmental hazard in its own right. We have to get
the technology right before we roll it out.
290. May I ask BMW to comment on that? I understand
that there has been some collaboration between a number of companies
in Germany and the Government to start developing an infrastructure
(Mr Frank) Yes.
291. Is that something which has come from the
companies or has there been a political push from the Government
to do that?
(Mr Frank) Frankly speaking the first push came from
our side as well as from our competitors looking for the fuel
of the future. We think it is hydrogen. Thinking of the opportunity
to take intermediate steps and not expand to the ten or so choices
we theoretically have, we said if we could not achieve a liquid
hydrogen infrastructure as the first step, then the intermediate
step would be natural gas. We can step from compressed natural
gas to liquified natural gas if necessary and use the same engine
technology. Then we can go from liquified natural gas to liquified
hydrogen using the same tank and fuelling facilities. So we do
not have to get rid of all the infrastructure and vehicle technology
and this could be a stepping stone to the final goal. That is
the main idea. For the choice of the fuel, this German collaborative
group set some prerequisites for that final choice. They said
that the fuel we want to have has to fulfil three prerequisites.
One is that it should at least be available for 30 per cent or
more of the market. It must be available for 50 years or longer.
Finally, it must be producible from renewable energy. These are
the three basic prerequisites. Therefore they boiled it down then
to hydrogen; maybe as an intermediate step liquified natural gas.
That is the position so far. There is some suggestion that methanol
may be a step and methanol only could be used in fuel cells, but
it makes no sense for the internal combustion engine. If you produce
methanol from natural gas, then it is better to use this natural
gas in the internal combustion engine instead of loosing 30 per
cent of the efficiency when you convert the methanol in the car
in the reformer into hydrogen. That is an inefficient way. That
is a little complicated because it mixes chemistry and mechanical
292. I believe you have a hydrogen filling station
at Munich airport. How has that been operating? Have there been
any problems with it?
(Mr Frank) Yes, I am sorry, the second part of your
question was: how did we come together? It was under pressure
from the vehicle manufacturers to take care of the long term perspective
but it has been taken up by the politicians and we included the
mineral oil industry, natural gas industry and energy providers
for electricity. They formed this coalition two and a half years
ago. That is the political background.
293. How has the filling station at Munich airport
(Mr Frank) The filling station is being built up by
a company who normally builds service stations and handles supercooled
liquids, Linde for example, and Aral is the filling station operator.
It runs quite well. It has to run automatically. Because it is
so cold you cannot put a nozzle into any driver's hand. So far
we have had no problems. We also have some mobile filling stations
because, for example, in Hanover where we ran a service in the
Expo 2000 World Fair, we had a mobile filling station and we are
now starting a world tour with our fleet and in some places where
they do not have a filling station we are taking this mobile filling
station with us. In general it is not a problem because for purposes
other than mobile applications Linde and other partners, are used
to handling liquified natural gas or liquified hydrogen because
it is being used already, for example to improve the fuel quality
by using hydrogen. It is unusual as a transport fuel but it is
not unusual in the chemical industry.
Chairman: Thank you all very much indeed,
that was an extremely useful session. We are indebted to all five
of you for your contribution. Thank you.