Owning a biofuel car will be easier in future now that Britain’s top grocery market group Tesco Plc is set to expand its sales of biofuels over the next few months with UK duty incentives helping make them competitively priced, said company executive Lucy Neville-Rolfe.
But maybe the best answer is to make your own biofuel, and cut Tesco out of the loop.
The reason we can do it (expand biofuels) is partly because of the duty incentive, Lucy Neville-Rolfe, Tesco’s Company Secretary and Group Director of Corporate Affairs, told the Reuters news authority.
“If you talk to consumers they would like to help the planet, but when it comes to decisions about petrol they are very driven by price,” she added in an interview on Friday.
“It is quite difficult to get a price premium (for green fuels),” she said.
Tesco began in May putting five percent bioethanol in its unleaded petrol at 150 filling stations in London and the southeast of England as well as 31 in the northwest.
The retailer plans by mid-November also to sell a fuel for high performance cars with 5 percent bioethanol in London and the southeast while a standard diesel with 5 percent biodiesel is due to be rolled out early next year, she said.
Commodity traders said the rise in oil prices meant it reduced costs to blend in bioethanol, taking into account the duty incentive, although the economics have become less attractive during the last few weeks.
“It was most attractive a couple of months ago but prices (of bioethanol) have moved up more substantially during the last six to eight weeks so there is not now a huge differential,” one trader said.
Biofuels, which can be made from a range of commodities including sugar cane, grain and vegetable oils, are seen as a way of reducing emissions of greenhouse gases and have attracted government tax incentives.
Germany has been among the most aggressive supporters, scrapping duty completely on biodiesel, while the UK offers a 20 pence (35 U.S. cents) per litre duty incentive, which equates to 1 penny per litre for fuel with 5 percent biofuels.
“There is an incentive in this area which we welcome and are exploiting,” Neville-Rolfe said.
Fuel normally contains a maximum of 5 percent biofuels in Europe due to limits imposed by manufacturer warranties although in some parts of the world much higher levels are normal. In Brazil many cars run on 100 percent bioethanol.
The UK does not produce any bioethanol so companies such as Tesco have to rely on imports from Brazil although there are plans to build both bioethanol and biodiesel plants.
Neville-Rolfe said the company had held talks with British farmers to discuss opportunities for the biofuels to be made from UK crops.
Rapeseed, which has seen a steady expansion in its planted area in Britain, can be used to produce biodiesel.
Germany, with its zero duty policy, has seen rapid growth in rapeseed demand for biodiesel production.
Earlier this year Cargill announced plans to expand capacity at its oilseed crushing plants in that country to meet growing demand for vegetable oils from the biodiesel sector. Last week the U.S. agribusiness also unveiled plans to build a biodiesel plant in Germany.
Some trucking companies in Germany have even been using normal rapeseed oil as a cheaper alternative to higher-grade rapeseed biodiesel while thousands of French motorists are reported to be pouring pure vegetable oil into their tanks in a bid to dodge near record fuel prices.
In Spain, Spanish Institute for Energy Diversification and Saving (IDAE) and local consultancy Sarmet on Plus will invest 50 mln euro ($60.6 mln) in the second largest biodiesel plant in Spain, it was reported on October 9, 2005.
The construction works on the plant in Martorell, in northeastern Catalonia region, are scheduled to start in 2006.
The new plant will have a capacity to produce annually 100,000 tonnes of biodiesel from vegetable seeds like rape and sunflower seeds. Forty pct of the biodiesel made in the plant will be allocated to the urban transport companies in Catalonia and the rest will be sold to oil and gas companies like Repsol, Cepsa and British Petroleum (BP), which currently sell biodiesel in some of their petrol stations. (see www.invertia.com).
There is a high demand for biodiesel from countries like Italy, Germany, Turkey, South Korea, Columbia and India. Germany alone has an annual demand of two million tonnes.
Global demand for biodiesel is expected to touch 10.5 million tonnes in two years
Neville-Rolfe said Tesco’s policy of rolling out biofuel products gradually was in line with its normal strategy, noting “we tend to be incrementalist in our approach to business.”
She added a sudden reversal in oil prices would not derail the company’s plans.
“I think our plans are reasonably robust. We are planning to stick with it,” she said.
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