2013 Autumn Statement comment
The autumn statement that was delivered by the Chancellor of the Exchequer on 5 December 2013 has set out a positive and clear duty 10 year trajectory for LPG autogas and other gaseous fuels.
Whilst welcoming the announcement which removes any doubt that consumers will suddenly be faced with a fuel duty increase, UKLPG believes LPG autogas should have been included alongside LNG and CNG in having its duty differential level maintained until 2024. Whilst LPG autogas remains the cheapest, most widely available fuel on the market, the industry strongly believes that it should receive the same level of support as other gaseous fuels.
LPG autogas has a full infrastructure already in place in the UK and is used widely throughout Europe. With a network of over 1,400 refueling points and circa 150,000 vehicles on the road, it is the best placed fuel to reduce vehicle carbon emissions and tackle the growing problem of UK urban air pollution.
Rob Shuttleworth, chief executive of UKLPG said: “Whilst welcoming that LPG autogas is recognised as a key part of the alternative fuel mix, we call on the Chancellor to recognise industry investment and consumer choice and provide the same level support as he has done to other green road fuel gases. This level of support would encourage greener motoring and reward individual motorists who make that choice.
“UKLPG will continue to challenge Her Majesty’s Treasury on the long term duty differential reduction between conventional fuels and LPG autogas as the Chancellor next decides to increase duty rates.”
LPG autogas, has practically no particulate emissions and is very low in nitrous oxides. Globally, the 21 million LPG autogas vehicles already on the roads are making a significant contribution to the health and well-being of all, but especially those living in cities. There are currently around 150,000 vehicles in the UK that are converted to run on LPG autogas and it has been proven that once converted, drivers can immediately save around 40% on their fuel bills, when compared to petrol or diesel.
Earlier this year AEGPL published an updated Autogas roadmap entitled 'Autogas in Europe, the Sustainable Alternative', demonstrating the huge potential for automotive LPG going forward and the significant growth seen within Europe in recent years.
LPG Autogas – The Case for a Greener Auto Fuel
Automotive LPG (Liquefied Petroleum Gas) or ‘autogas’ - an alternative to traditional road fuels - is an immediate and proven solution to reduce carbon emissions from transport and improve local air quality in the UK. It can deliver low cost, low carbon motoring – BUT needs the same stable fuel duty regime as is being offered for CNG and LNG in order for the sector to grow; fuelling infrastructure already exists in the UK, so no additional financial investment, over the current fuel duty differential, is required from Treasury.
By doing this, the British Government will give the autogas industry the confidence to maintain their investments and automotive manufacturers the security they need to make autogas vehicles available ex-factory - benefiting motorists, businesses, the environment and the wider economy.
• Poor air quality is an issue affecting many urban areas across the UK. Approximately 29,000 deaths annually in the UK are directly linked to particulate air pollution - with a cost to the economy of over £15 billion per year.
• The UK Government is committed to reducing carbon emissions by 80% by 2050 and is subject to air quality standards under the EU Air Quality Directive, which limits harmful emissions such as nitrogen oxides (NOx) and Particulate Matter (PM10 and PM2.5). Road transport has an impact on both of these objectives.
Benefits of Autogas:
• Available Now: Autogas can deliver low carbon driving, today and in the future, both in the UK and across Europe. Autogas is already the most widely available alternative fuel in the UK. 160,000 vehicles are served by a £50 million investment by the autogas industry in over 1,400 refuelling sites and a national network of vehicle installers. The industry employs around 900 people and is worth over £150 million to the UK economy. 10% of UK forecourts already sell autogas; it is available from outlets such as Shell, BP, Morrisons and Sainsburys. The average driving distance to an autogas site in the UK is now a little over 5 miles.
• Cleaner: Autogas is a clean fuel, exceeding the highest performing combinations of conventional fuels and new vehicles in terms of air quality. Average emissions for autogas, according to 2003 EDC Type 1 European Emissions Testing Programme tests, were 0.018 gm/km NOx, with PM levels too low to measure, substantially better than current Euro V or proposed Euro VI standards. One diesel vehicle emits more NOx than over 20 autogas vehicles. Diesel vehicles emit up to 120 times more PM than autogas vehicles. Vehicles running on autogas are estimated to reduce noise pollution by 50% when compared with diesel.
• Lower Carbon: An autogas vehicle generates 11% lower CO2 emissions than its petrol run equivalents respectively (based on wheel to well analysis). The average motorist, converting to autogas from petrol, driving 12,000 miles per year will save 1.5 tonnes of CO2 emissions in just over two years.
• Cheaper: Autogas currently costs around 75p/litre. Due to the current fuel duty regime, autogas is considerably cheaper than petrol (£1.35/litre) and diesel (£1.42/litre). The average motorist will recoup the initial cost of an autogas conversion after three years. As such autogas is a significantly cheaper alternative for those in lower income households and for the thousands of SME’s who face rising costs for travel and distribution. Petrol & diesel sales fell by 9% in 2012 (3.5 billion litres). Some decrease can be attributed to higher numbers of fuel-efficient vehicles on the road, but the larger portion is due to a dramatic decrease in private and commercial travel due in part to high fuel prices.
• Security of Supply: LPG is currently produced in surplus in the UK; over 2 million tonnes is currently exported per year. It therefore has a critical role to play in ensuring the future of the UK’s energy security.
• Diverse Energy Mix: Autogas has an important role to play as part of the UK’s energy mix and the industry believes that this should be acknowledged through references to the role of alternative fuels in future policy announcements. Expanding access to autogas vehicles and infrastructure would improve domestic resilience through diversifying domestic fuels and capitalising on the increased availability of gas. Furthermore, as the pressure of reducing carbon emissions and meeting air quality commitments intensifies, it is important that no solution is left untapped, and that no single solution is favoured over all others.
• Treasury Revenue: The conversion of vehicles to autogas provides immediate upfront revenue for the Treasury – approximately £350 in VAT is paid to the Exchequer for a typical conversion, equivalent to 700 litres worth of fuel duty that they would otherwise pay (assuming a 50p differential).
The UK is falling behind other EU Member Governments who have recognised the benefits of gaseous fuels and have provided long term policy support (10 years) to encourage higher take up of the fuel. There are currently more than 35 million autogas vehicles globally with over 10 million in Europe which represents over 3% of the total vehicle parc. The EU target is 10% by 2020 thereby saving 350 million tonnes of CO2 and €20.3 billion in external costs saved, due to reduced emissions.
Availability of OEM supplied ‘factory fitted’ models is the single biggest driver for the wider uptake of autogas; there are currently 17 manufacturers who retail vehicles with an autogas option in mainland Europe, but all 17 fail to make the same offering in the UK.
In order to show how a long term and stable fuel duty regime can encourage autogas market development, in 2006 the German Government announced that the fuel duty on autogas would be fixed until 2018. The market is now growing with over 100,000 conversions per annum and factory fitted autogas options available direct from the showroom. Other European governments have encouraged autogas use over many years via a mixture of policies, including favourable fuel taxes, incentives for clean vehicles including grants and traffic regulations and this has seen the growth of the autogas vehicle parc as set out below.
Key Policy Recommendations:
1. Freeze the duty differential for LPG as it has for CNG/LNG.
2. Provide support to end users to convert – A £15m fund would provide 20,000 half-price conversions.
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