Memorandum submitted by People, Paper,
Oil and Cans
This submission has been written by People, Paper,
Oil and Cans, a community based organisation located in Wandsworth,
London. Our organisation is starting a scheme to combine waste
recycling, biodiesel production and meaningful and productive
employment with particular emphasis on people with learning and
We believe that the rate of duty on fossil fuel
derived motor fuels should not be reduced, but that income raised
from this source will be required to develop an active biofuels
industry in the UK and support the tax relief and incentives that
will be required to promote change.
The impact of motor fuel taxation should not
be considered in isolation from the other costs that make up the
price to the public. Currently motor fuel used in the UK is exclusively
derived from petroleum oil, which is traded on world commodity
markets and therefore the price is subject to the effects of supply
and demand. Estimates of the unexploited reserves of petroleum
oil remaining vary, but the majority are within the 50 to 100
years timescale. In the UK our supplies of domestically produced
petroleum oil are even more limited; supplies may be available
for 10 to 20 years. Predictions of the longevity of petroleum
oil supplies are also affected by the rate of usage, which is
currently increasing at 5 per cent per annum.
The limitations in the ability of petroleum oil supply to meet
demand are demonstrated by events such as took place on Thursday
19 October 2000 when motor fuel prices rose by 2 pence per litre
(see attached report).
Therefore, this type of price rise can be expected to continue
with the progress of time.
Various lobbies have suggested that motor fuel
taxation should be reduced by 15 pence per litre and the Conservative
party has proposed a three pence per litre reduction. It should
be plain that reductions in excise duty could be wiped out very
quickly by movements in the commodity price for petroleum oil
and therefore a taxation reduction of this type can only be a
short term fix for the current situation.
It has been suggested that it is extravagant
in the extreme to prospect for such a valuable resource as petroleum
oil and then burn it. The most important uses for petroleum in
future generations may well be for the manufacture of plastics
and other important petrochemicals. Therefore we have a responsibility
to ensure that they are available for as long as they are required.
In addition to the problem of the limited supply
of petroleum oil, the effects of the use of fossil fuels, including
motor fuels derived from petroleum oil, are well documented. Pollution
and carbon dioxide emissions stand out as being particularly significant
problems caused by the use of motor fuels derived from petroleum
oil. Pollution causes health problems, building and environmental
damage. The Intergovernmental Panel on Climate Change has been
established because increasing carbon dioxide levels may present
the greatest problem yet to the world we live in. The burning
of fossil fuels is largely responsible for the increase in carbon
dioxide levels, which have been linked with changing weather patterns
and rising sea levels. Consequential costs such as health care,
insurance and land loss are not borne by the petroleum industry
on a "polluter pays" principle.
Anyone who is concerned to provide the best
possible future for their children and future generations can
understand the benefits that will result from reducing the consumption
of petroleum oil. However, in order to maintain their quality
of life, people will expect replacements for existing motor fuels
to be available. This will require considerable investment and
incentives to change.
Situations involving rapidly rising petroleum
oil prices have occurred at previous times in history, most notably
during the 1973 crisis. Following the initial stages of this period,
the petroleum oil consuming nations invested in energy efficiency
and alternative energy technology. Significantly, the petroleum
oil producing nations took heed of the threat to their industry
that arose from reducing oil consumption and consequently prices
fell back over the years following the crisis.
If the Government considers that it is appropriate
to give leadership under these circumstances, rather than appeasing
popular demands, then maintaining the level of motor fuel taxation
for fuels derived from fossil sources is an appropriate response
to the current situation. This should be accompanied by reductions
in taxation and other incentives for alternative fuels and other
developments that will reduce the consumption of fossil fuels.
A replacement for diesel fuel is already well
developed. It is known as "biodiesel" and many countries
around the world have active industries and research programmes.
A study by the Austrian Biofuels Institute,
published in January 1998, investigated 28 countries and found
that there were 85 biodiesel plants in 21 countries. The UK was
not among the countries with a biodiesel plant.
In 1998 the following countries, within Europe,
had tax policies relating to biodiesel as shown:
Austria95 per cent tax relief;
Belgium100 per cent tax relief for experimental
Francetax incentives for the use of biodiesel
blended with petroleum diesel;
Germany100 per cent excise tax relief;
Italytax relief up to a maximum quantity
of 125,000 tonnes;
Netherlandstax relief under review;
Spaintax relief on experimental projects;
Swedentax incentives in place.
Development of biodiesel in the UK has been
hindered by the lack of an appropriate tax policy and consequently
the relevant expertise and infrastructure for manufacturing biodiesel
has not been fostered.
Biodiesel is the first (and so far only) alternative
fuel to have a complete evaluation of emission results and potential
health effects submitted to the US Environmental Protection Agency
(EPA) under the Clean Air Act Section 211(b).
These programmes include the most stringent emissions testing
protocols ever required by EPA for certification of fuels or fuel
additives in the US. The data gathered through these tests complete
the most thorough inventory of the environmental and human health
effects attributes that current technology will allow. This implies
that the US authorities consider that biodiesel offers worthwhile
advantages over petroleum diesel and that biodiesel will form
a significant part of their programme to reduce emissions. Over
30 million miles of testing have been carried out using biodiesel
in the US.
Biodiesel can be manufactured using waste cooking
oil; in this case it could replace up to 2 per cent of current
petroleum diesel consumption.
Biodiesel offers many advantages:
1. biodiesel is renewable and produces no
net carbon dioxide output when burned;
2. extensive testing has shown that Biodiesel
can offer significant improvements in emissions, particularly
in terms of polyaromatic hydrocarbons (PAH) which are the major
carcinogenic compounds present in "petrodiesel" exhausts
and sulphur compounds which contribute to acid rain;
3. using waste cooking oil to produce biodiesel
minimises a major waste disposal problem and health hazard which
would either go to landfill or be incorporated into animal feed;
4. biodiesel is biodegradable and has a low
toxicity and therefore presents a lower risk to the environment
5. biodiesel can be used as a direct replacement
for petroleum diesel and therefore can be used without expensive
vehicle modifications or new engine design;
6. biodiesel can be blended in any ratio
with petroleum diesel;
7. if biodiesel is in short supply, vehicle
operators can return to using petroleum diesel when necessary;
8. existing storage and distribution systems
can be used for biodiesel;
9. biodiesel has high lubricity and cetane
number, which can be used to offset the loss in these properties
caused by the move to using low sulphur petroleum diesel.
Biodiesel is then a first step in the search
for acceptable, clean, sustainable fuels. Other alternative fuels
will also need to be developed and will be encouraged by the successful
deployment of biodiesel in the UK.
Maintaining the current levels of tax on fossil
fuels and using (some of) the revenue to support the development
of an alternative fuels industry is the appropriate response to
the current situation.
30 October 2000
1 The Certainty of Oil, http://www.iea.org/new/speeches/priddle/1999/certoil.htm. Back
Keyvan Hedvat, Reuters, displayed on http://www.btinternet.com
20 October 2000. Back
Review on Commercial Production of Biodiesel World-wide 1997,
Austrian Biofuels Institute. Back
Update July 1998, The Non Technical Barriers Network, Altener,
Directorate General for Energy (DGXVII) European Commission. Back