APPG for British Bioethanol: UK economy risks losing £1 billion bioethanol industry

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The All Party Parliamentary Group (APPG) for British Bioethanol has today published its interim report on an inquiry into Introducing E10 in the UK, which launched in March this year.

The inquiry was launched to consider barriers to the introduction of E10, a blend of fuel containing 10% bioethanol, into the UK, which is already being sold in many other developed countries including Germany, Belgium, France, Finland and the US.

In the foreword to the report, Chair of the APPG for British Bioethanol Nic Dakin MP said: “While there appears to be a broad consensus between policymakers of all political persuasions that we need to urgently address the threat of climate change, improve air quality in our towns and cities, and support job creation in emerging green industries, practical measures to achieve these goals have been painfully slow to materialise.

“With the introduction of E10 being one such measure which could address all three of these issues, the fact that it has not already been introduced is deeply frustrating for members of the APPG, for millions of motorists across the country and in particular for the thousands of people in the UK who depend on the bioethanol industry for their living…”

The report identifies a number of key findings raised during the first phase of the inquiry and proposes recommendations for the UK Government’s Department for Transport (DfT) to consider during its deliberations on the introduction of E10.

“We hope our efforts will dislodge a positive decision on this issue in the very near future, bringing forward the introduction of this cleaner, greener fuel by 2020 at the latest,” Dakin added. “A decision which members of this APPG as well as its Chair believe is a ‘no brainer’.”

Key findings

  • The UK economy will likely soon lose its £1 billion (€1.12 billion) bioethanol industry. Without the introduction of E10 (by 2020 at the latest) the British bioethanol industry will continue to decline and likely disappear, resulting in the loss of thousands of jobs.
  • Introducing E10 would help the UK to achieve its greenhouse gas (GHG) reduction targets, saving the equivalent of taking 700,000 cars off the road.
  • Petrol fuel sales volumes in the UK are now increasing, due to the decreasing popularity of diesel cars. With widespread adoption of electric vehicles still decades away, the use of increasing blends of biofuels in petrol to make cars greener and cleaner must be a priority.
  • E10, or a higher blend of bioethanol, could help tackle the UK’s air quality problems and health issues caused by high particulate levels.
  • If the British bioethanol industry is lost, the UK is unlikely to attract further investment, including for the next generation of biofuels and enhanced animal feed co-products, which would deliver further economic and environmental benefits.
  • Losing the bioethanol industry could also result in the UK becoming dependent on increasingly scarce and less sustainable imported biofuel, including used cooking oil from China.
  • It would also result in British farmers having to purchase an increasing volume of animal feed from less sustainable sources, exacerbating the problem of deforestation.
  • Without E10 or a higher blend, the UK is more likely to miss its fuels quality directive target, which is currently set at 4%, rising to 6% in 2020, without substantial availability of upstream emission reductions. The ‘buy out’ cost avoidance even with E10 is estimated at £100 million (€112 million), with motorists likely to suffer from increased fuel costs.
  • Achieving the same GHG emission reduction that E10 would bring through electric vehicles would be very expensive. LowCVP estimated a one-off grant charge of £2.45 billion (€2.75 billion) to the government and recurring annual costs of £350 million (€393 million) to replace the lost fuel duty revenue. This would be in addition to the investment needed to ensure the UK grid could supply enough green electricity, as well as other infrastructure investments.

APPG’s recommendations

  • The DfT should publish its response to its own consultation on E10, which closed in September last year, as soon as possible.
  • The Secretary of State for Transport should host an emergency summit on the future of the British bioethanol industry before the summer recess. This is needed to quickly agree the most efficient, transparent and cost-effective way of introducing E10 into the UK by 2020 to safeguard the industry, realise the numerous economic and environmental benefits it would deliver and avoid the addition of millions of pounds to drivers’ fuel bills.