Thursday, 14 June 2007

A couple more points from Sweden

A very full and interesting day finding out about renewable fuels in Sweden - more detail later but just a couple of quick thoughts for now.

The first is that Britain is a long way behind not just Sweden but several other countries when it comes to policies on renewables. Remember that for all its faults, the UK is usually several years ahead of continental Europe in most areas of public policy debate. Privatisation, deregulation, public-private partnerships, labour market reforms and a genuinely open market for corporate control; all were invented or reinvented in the UK, and eventually copied just about everywhere else.

But when it comes to facing what is probably the biggest challenge of the lot, climate change, Sweden's impressively comprehensive package of measures is far superior to the UK's miserably timid and piecemeal efforts. Ford, Saab and now Volvo have done their bit by offering cars in the UK market that can run on bioethanol-based E85, while Morrisons has been offering the fuel for over a year now at a limited number of forecourts at a modest 2p per litre price advantage compared with unleaded. That's all that's left of the smallish 17p per litre tax break E85 enjoys when other factors such as the underlying price of E85 and the cost disadvantages of distributing comparatively small amounts of the fuel are factored in.

It's difficult to see E85 taking off in a big way in the UK unless a far more attractive tax regime is introduced - in particular, some way needs to be found to shift the basis of the UK car taxation system and the London Congestion Charge from tailpipe CO2 emissions (in fairness, this was considered a rather bold and imaginative approach when it was introduced) to some sort of 'well to wheel' measure that reflects the 'built-in' carbon offset provided when the crops that are used to make bioethanol absorb CO2.

The second thought is this. We've now covered a number of cars that can run on E85 on the Verdict, and this has provided an opportunity to explain the issues involved - namely the limited number of refueling points, the higher octane rating E85 provides compared with unleaded, the mpg penalty of running on E85 and the small per litre price advantage E85 enjoys. More E85-capable cars are coming onto the market but the pros and cons of these models compared with their petrol-powered counterparts are always the same, so it's difficult to take the story forward. I think it may make more sense from now on for us to treat the E85-capable version of any car as our default choice for testing so that we can be as green as possible, but no longer to make such a fuss of the fact that a particular car runs on the stuff.

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