Transition 24
Further underlining its commitment to reducing the carbon intensity of the fuels it produces, a huge processing unit rolls into the Phillips 66 Humber Refinery.
A UK leader in low carbon liquid fuel development and processing, Phillips 66 Limited’s Humber Refinery, based in Northern Lincolnshire has a proven history of developing new low carbon fuels, being the first in the UK to process used cooking oil. The refinery converts UK & International waste streams to finished bio road fuels.
In a significant investment that expands the refinery’s capability to process used cooking oil (UCO), it recently took delivery of a new processing module, developed by the refinery’s project group to facilitate this. The unit was transported from ENGIE Fabricom in Immingham where it was built arriving on a self-propelled modular transporter (SPMT).
Darren Cunningham, Humber Refinery general manager/UK director, said; “We are pleased to take delivery of our new UCO module at our Humber Refinery. I would like to congratulate all the teams that have been working so hard on this project through such a turbulent time, delivering the project safely. This investment further highlights the refinery’s commitment and investment to further expand our production of bio fuels and reinforces our reputation as the Refinery of the Future.”
Jeff Noble, head of UK operations, ENGIE Fabricom, also commented; “We are delighted to be partnering with Phillips 66 in successfully delivering the UCO Project. This includes off site PAU manufacture and assembly which was achieved on time, within budget and executed without incident. P66 are a valued customer and this project has provided ENGIE Fabricom with the opportunity to develop our relationship by demonstrating our full suite of capabilities. We look forward to supporting P66 with the remainder of this project and to provide long term sustainability for the refinery.”
“Our team at ENGIE Fabricom’s Immingham manufacturing facility, are proud to have worked closely with P66 in the safe delivery of this project, adapting brilliantly with the unique challenges faced by all in 2020’s unprecedented circumstances. With both companies also motivated by the environmental benefits from such innovative Bio-Fuel ventures.” Said Mark Astwood, manufacturing facility manager, ENGIE Fabricom Immingham.
This Humber Refinery expansion project enabling increased bio-fuels capacity further supports UK downstream low carbon fuels contributing to a net zero future for the UK.
Portico, a deep-water cargo terminal owned by Portsmouth City Council and based within Portsmouth International Port, is taking action to minimise its impact on local air quality by powering its cargo handling operations with a low emission alternative fuel.
The business is working with Certas Energy to implement the use of a cleaner burning diesel alternative, Shell GTL Fuel, in its port side fleet, plant and machinery.
Exclusively supplied in the UK by Certas Energy, Gas-To-Liquid (GTL) is a paraffinic fuel known for its improved combustion properties. It is proven to reduce emission levels of harmful pollutants such as nitrogen oxide (NOx) and particulate matter (PM) to immediately improve local air quality.
Trials have shown that Shell GTL Fuel can reduce NOx emissions by up to 37% and PM by up to 50% compared to conventional diesel. As a drop-in fuel, Shell GTL Fuel can be used as a direct replacement for diesel to improve air quality without the need for expensive modifications to existing engines or investment in infrastructure.
The fuel is free of unwanted components such as sulphur, metals and aromatics, which make it non-toxic, biodegradable and less harmful to the environment. This is a significant added benefit for Portico, which works in close proximity to marine ecosystems.
Shell GTL Fuel also produces less odour, smoke and engine noise than conventional diesel to create a more pleasant working environment for port operatives. Its improved engine starting performance in colder conditions makes it a year-round reliable fuel choice.
The low emission fuel will be used across Portico’s extensive fleet of vehicles, plant and machinery, helping to reduce ongoing maintenance costs.
Steve Williams, operations director at Portico, said; “We are constantly pursuing cleaner ways of working to minimise our environmental impact in the port area and for the local community. By transitioning to a cleaner burning fuel with Certas Energy, we can reduce harmful local emissions of PM and NOx to make an immediate and positive difference to local air quality.”
Last week UKIFDA announced, through social media, that it has begun the search for a new CEO.
Posting on LinkedIn, UKIFDA outlined the high-profile role and its desire to find an inspiring leader to drive a culture of collaboration and engagement, whilst continuing to deliver UKIFDA’s strategy and future vision to steer the transition to renewable fuels in future energy policy in the UK and Ireland.
Having taken on the role in February 2018, and worked tirelessly, in support of the membership, to keep liquid fuels on the future energy agenda, current CEO Guy Pulham commented; “I look forward to handing over to my successor. Someone with renewables experience who can help ensure that bio liquid fuels are included in consumers’ decarbonisation choices in the UK and Ireland.”
A spokesperson for UKIFDA said; “In order to fulfil this role, we are seeking to appoint a dynamic candidate. Whether a serving CEO, or you are looking for a career step, the ideal candidate will have experience or a strong working knowledge within the renewable sector and a good understanding of the UK fuel distribution industry, operating and influencing at government level with established industry and government contacts and relationships”.
The closing date for applications is August 28.
UKIFDA has submitted its views on the government’s latest consultation which is looking at ending sales of petrol diesel and hybrid cars by 2035.
The association believes that petrol/diesel and hybrid vehicles should still be allowed on sale after the 2035 proposal as the “virtually zero carbon by 2050” target will be met more quickly by encouraging a competitive market in cleaner vehicles.
UKIFDA chief executive Guy Pulham comments; “The government are again focusing on one technology as they are in their heat policies. We believe 2035 is too soon and should not be suggested at this stage due to the exclusion of possible technologies, supply/demand imbalances and infrastructure issues.
“While UKIFDA supports the aims of the Paris Agreement and wants to help the UK government achieve its ambitions of net zero carbon emissions by 2050, the current consultation to ban the sales of petrol diesel and hybrid vehicles after 2035 is flawed.
“Governments need to be technology neutral in their legislation rather than set one technology above others. To reduce CO2 emissions in the long term, a sensible move would be to design the regulatory framework such that technologies such as synthetic fuel, biofuel blends and hydrogen for internal combustion engine vehicles (ICEVs) are promoted on an equal footing as battery electric vehicles (BEVs) account the full life cycle.”
Following a record $6.7bn quarterly loss, BP has halved its shareholder dividend after the coronavirus pandemic hit global demand for oil.
UKIFDA has submitted its views on the government’s ‘Future Support for Low Carbon Heat’ and ‘Energy Efficiency in Existing Homes’ consultations.
Leading oil and gas professionals Hamish Wilson, Bill Senior, Tony Smith, Martin Dru and Sarah Milne have launched BluEnergy, committed to enabling oil and gas companies to leverage their existing asset base to create low carbon energy streams, generating value whilst reducing carbon intensity. The team is made up of former oil & gas company professionals that bring a unique combination of low carbon and oil and gas industry expertise, as well as business transformation experience.
Hamish Wilson, co-founder of BluEnergy, says; “Our focus is to identify low carbon investment opportunities where companies already have a competitive advantage through in-country relationships and capital project capability. These can bring commercial advantage when deploying the following established low carbon technologies through early entry in emerging markets such as Solar and Wind”.
The challenge facing oil and gas companies has been thrown into sharp relief by the recent Covid-19 crisis, with companies fighting for survival, seeing cash flow, investor returns, supply chain, and the fundamental value proposition under threat with a highly volatile earnings stream and borrowing base. In contrast, companies with high proportions of renewable energy in their portfolios not only suffered less during the crash but have quickly returned to pre Covid-19 levels. The founders of BluEnergy, along with many other experienced industry professionals, feel that companies that do not embrace the opportunities presented by the energy transition and grow broader asset portfolios, may not survive long term. They do, however, believe that oil and gas companies are ideally placed to lead the transition, and that It’s time to move on from simply discussing the energy transition to actively design and implement strategies that protect and sustain both industry and the wider world.
“We are passionate about the energy transition and we know that oil & gas companies have the global reach, scale and skills to lead the energy transition” says Tony Smith, co-founder. “We recognise the cultural challenges in embracing this strategic move that starts the journey to the long-term transformation of the energy sector. BluEnergy is focused on delivering tangible low-carbon projects, and we believe we are well-positioned to support the oil and gas industry in moving towards a lower carbon intensity future and a more resilient share price”.
A FuelsEurope pathway describing how low-carbon liquid fuels could enable the transport sector to contribute to EU’s climate neutrality objective by 2050, has been welcomed by UKPIA. The ‘Clean Fuels for All’ pathway also shows that intermediate CO2 reductions of 100 million tonnes (Mt) are achievable by 2035.
John Cooper, director general of FuelsEurope, commented; “Today we are setting out an ambitious pathway for enabling transport to contribute to EU’s climate neutrality ambition by 2050, based on scale up of low-carbon-liquid fuels (LCLF) supply and use, across several transport sectors. With a clear societal and scientific case for far reaching climate action and taking into account the economic and social impacts of the coronavirus crisis, we respect that there will be no return to business as usual for the fuels industries.“
Partnerships for policy discussions
“With the focus increasingly turning to recovery and new investments, we believe now is the time to start policy discussions with EU and national policy makers, and customer stakeholders to design the enabling policy framework for the deployment of these essential low-carbon fuels.”
Low-carbon liquid fuels have a strategic role to play in the transition to a climate-neutral economy by 2050, particularly in sectors such as aviation, maritime and heavy-duty transport where no equivalent technological alternatives currently exist. These sustainable fuels are from non-petroleum origin with no or very limited, CO2 emissions during their production and use. First blended with conventional fuels, these low-carbon fuels will progressively replace fossil-based fuels.
John Cooper stressed; “Complementary to electrification and hydrogen technologies, low carbon liquid fuels will be essential throughout the energy transition and beyond 2050, ensuring security of supply, providing consumer choice and also building Europe’s industrial leadership.” He added; “We have worked very closely with our member companies over the last 3 years on the low carbon pathways for liquid fuels. This thinking has been the starting point for development of an extensive technology set by our industry which now has potential to be deployed across Europe to deliver low-carbon liquid fuels at substantial scale.”
A pathway aligned with the UKPIA vision
UKPIA voiced support for the FuelsEurope pathway which, it says, aligns closely with its own Future Vision Report, released in July 2019. The report outlined a belief that the downstream oil sector can be a force for positive change that can help all users of our products to reduce their carbon footprint.
‘Clean Fuels for All’ is the latest publication on the role of the downstream oil sector in a lower carbon world. The pathway follows on from FuelsEurope’s 2050 Vision and UKPIA’s own Future Vision, which sets out a potential blueprint for how proven and emerging technologies make the UK downstream oil sector a vital part of economic growth, while continuing to meet government net-zero ambitions.
UKPIA director general Stephen Marcos Jones, said; “Achieving the enormously challenging targets of reducing emissions to net-zero by 2050, will require a significant transformation of the UK and EU energy systems but the downstream oil sector and low carbon fuels can have a large part to play. FuelsEurope’s latest publication “Clean Fuels for All” and UKPIA’s Future Vision, continue to show the positive role in decarbonisation that our sector can have. However, it will require pragmatic and supportive policymaking to unlock this potential.”
Ambitious but achievable
The pathway could enable reducing emissions from transport in 2035 by up to 100Mt CO2/y and contributing to EU’s climate neutrality ambition by 2050 as John Cooper further outlined; “Evaluation of scenarios by Concawe describes first new plants to produce up to 30 MToe of low-carbon fuels by 2030, with an investment cost estimated at €30- €40 Billion. This would include several first-of-a-kind plants at industrial size for the newest technologies.
“By 2050, depending on the scenario and technology cost evolution, up to 150MToe of fuels could be produced with the cumulated investments in the range €400-€650 Billion.
“In the most ambitious scenario, climate neutrality could be achieved for all remaining liquid fuel in road transport, with a 50% reduction in carbon intensity for EU’s aviation and maritime sectors. All of these achievements would be fully consistent with the Clean Planet for All scenario.”
FuelsEurope is outlining a set of policy principles, which it believes is central to delivering the industry’s climate-neutral ambition, with these points serving as a start for discussion with policymakers, supply chain partners and customer groups.
John Cooper concluded; “This pathway is ambitious, but achievable with multi-stakeholder collaboration. These new technologies are exciting but capital-intensive and their development at scale will require investor confidence and political vision. Everyone must be on board. We call on EU policymakers to establish a high-level dialogue with all relevant stakeholders as soon as possible. For the fuels industry’s part, we are ready to take the lead.”
Click here to subscribe to Fuel Oil News, which next month features an in-depth analysis of the roles of alternative liquid fuels and hydrogen in relation to the UK government’s decarbonisation ambition.
The trade association, UKIFDA, whose members supply not only heating oil for homes and businesses but also fuel for agriculture, construction, road transport, marine fuels and importantly fuel for back-up generators for hospitals, schools, care homes and data centres across Ireland, congratulates Fianna Fáil, Fine Gael and the Green Party on being elected to form the new government with Leo Varadkar and Micheál Martin sharing the Taoiseach over the 5 year period but urge consideration of alternative home heating solutions in the future energy plan.
UKIFDA chief executive Guy Pulham comments; “We want to work with ministers within government and newly elected Taoiseach Micheál Martin, who will hold the post until 2022 when Leo Varadkar takes over, in developing a pathway for off-grid heating in rural communities to help to achieve ambitions for a net-zero carbon economy. We are though, disappointed that there is not much detail in the published ‘Programme For Government – Our Shared Future’ with no specifics on numbers behind all the objectives. They say they are developing a new area-based and one-stop-shop approach to retrofitting, to upgrade at least 500,000 homes to a B2 by 2030 and provide €5 billion to part fund a socially progressive national retrofitting programme, targeting all homes but with a particular emphasis on the Midlands region and on social and low-income tenancies, but with the effects of COVID 19 on the economy how is this being done?”
Financial disadvantages must be avoided
“We will be emphasising to the government that we must not put the 686,000 oil heated homes across Ireland at a disadvantage. Our supply chain, for domestic liquid fuels (used for home heating and hot water) accepts the urgent need to decarbonise heating. Liquid fuel, more specifically a bio product, can be part of the solution to achieve net zero. We believe large scale electrification through the use of heat pumps is not the answer and government need to look at alternatives as this is not feasible, due to high installation and running costs of installing heat pumps for off grid homeowners.
“Importantly though, we are hopeful that statements such as – “As we set our society on a trajectory towards net zero emissions by 2050, it is vital that there is adequate time and effort devoted to working with communities and sectors in designing and delivering the pathway to achieve the goal in a fair way.” means the government are open to talking to our industry about biofuels.”
The John Lewis Partnership has announced that it is stepping up its commitment to reducing carbon emissions by building a dedicated biomethane gas filling station to enable its largest heavy goods vehicles to use a low-carbon alternative to diesel. This will aid the Partnership’s ambition to stop using fossil fuels across its entire 4,800 strong transport fleet by 2030.
Serving approximately 120 Waitrose heavy goods trucks, the vehicles will run on biomethane made from food waste and waste materials rather than diesel. This will reduce CO2 emissions by 80%, with each truck saving over 100 tonnes of CO2 every year.
The new biomethane gas filling station will be built in conjunction with Air Liquide and will open at the Partnership’s head office in Bracknell in December 2020, making it the business’s first on-site gas filling station. It will facilitate the conversion of the Bracknell Waitrose fleet to biomethane and complement gas filling stations already in use near to John Lewis and Waitrose regional distribution centres in Leyland, Lancashire, and in Northampton.
Since 2015, 85 of the Partnership’s heavy diesel vehicles have already been replaced with biomethane trucks, and a further 143 will be purchased and in operation by the end of 2020, making this the largest order of biomethane trucks in the UK.
All vehicles to run on non-fossil fuels by 2030
To reduce carbon emissions across its transport network further, the Partnership’s ambition is to eliminate fossil fuels from its commercial vehicle and car fleet by 2030. This radical initiative could see 1,750 electric vans and light trucks introduced and approximately 750 refrigerated trailers converted from diesel to electric drive. In addition, the Partnership’s 1,300 strong car fleet would become 100% electric and any remaining vehicles that could not be converted to biomethane or electric will use HVO biodiesel.
Justin Laney, partner & general manager of Central Transport at the John Lewis Partnership, said; “The evidence of climate change is all around us, so it’s important we act now using available technology rather than wait for unproven solutions to appear. We are working hard towards our new aim of removing all fossil fuel from our transport fleet by 2030, which will reduce our carbon emissions by over half a million tonnes and gets us well on the way to our ultimate target of operating a net zero carbon emission fleet.”
Centre Tank Services Ltd (CTS) has added another reputable, quality, and well-known brand to its list of distributorships with the announcement that it is the new agent of GoldenRod fuel tank filters for the UK and Ireland.
Goldenrod has been a leading filter brand, particularly popular in the agricultural market thanks to their compatibility with gravity systems, for many years. Their range of filters, designed for the removal of either particles or water content from diesel, petrol, kerosene and biofuels, includes the 495 Fuel Tank Filter, 496 Water Block Fuel Tank Filter and 497 BIO-FLO Fuel Tank Filter.
GoldenRod filters from US based Dutton-Lainson group, are widely recognised in the fuel industry thanks to their distinctive amber coloured bowl. Dutton Lainson were established in 1886 and have gone from a manufacturer of agricultural goods, to a leading manufacturer of quality products for the agricultural, marine, industrial, and automotive markets all over the world. This includes their market leading GoldenRod fuel tank filter range, making them a perfect addition to the distributorships held by Centre Tank Services.
As the new agent for the UK and Ireland, CTS has heavily invested in stock levels to remain a reliable source to its network of distributors.
Buyers or resellers should contact CTS for trade and quantity-based pricing.
The man behind plans for 3,000 hydrogen buses across the UK says a report by think-tank Policy Exchange, calling for more capital investment in hydrogen, is exactly the kind of action the UK government should be taking.
With a brand-new website and the introduction of a sister company, Halso UK Fuels Ltd continues its exciting journey from modest beginnings to a thriving business recognised as one of the country’s experts in petroleum, gas & oil supply and distribution.
Progressing from its launch in a caravan in 1967 through the wooden huts which still exist to the current modern offices it has always been renowned for excellent customer care and service which remain second to none.
Supplying fuels to industrial, commercial and domestic customers, this family run business is now in its third generation. Emma Osborn-Wilkes, granddaughter of founder Sid Osborn, is managing director of both Halso and its new sister company EL Oils which has been trading in some capacity for the last 50 years.
Emma commented; “We still supply fuel, oils and lubricants to our local farmers and domestic, residential customers but now we also service commercial clients nationwide.
“It was little over 12 months ago we decided to diversify, offering our lubricants, oils and greases under our sister brand EL Oils. We find this to be a much cleaner way of showcasing our varied product portfolio.”
Emma continued; “Halso continues to be our brand for fuel management and distillates, and EL Oils offers our additional products, as well as services including tank cleaning, oil changes and tank monitoring.
“EL Oils, like Halso, is a very proud family business with high standards offering a personal service to all customers. We want to seamlessly support all of our commercial or domestic clients with their fuel, oil and lubricant needs. It’s our job to power your business and home.”
BP has announced plans to cut 10,000 jobs worldwide following the global slump in demand for oil. Having paused redundancies during the peak of the pandemic the CEO of the oil giant told staff at the start of this week that the company is responding to the economic fallout of the Covid-19 pandemic.
Chief executive Bernard Looney laid the blame squarely at the door of the drop in oil prices and the global collapse in demand for oil owing to the coronavirus pandemic as he told staff; “You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company.
“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day. And as a result, our net debt rose by $6bn in the first quarter.”
An industry reducing costs
The job losses represent about 15% of the oil group’s 70,000 staff worldwide with the jobs due to go by the end of the year. The London-headquartered group has not said how many jobs will be lost in the UK but it is thought the figure could be close to 2,000. BP employs around 15,000 people in the UK with the firm’s office-based workers expected to bear the brunt of the redundancies which will not affect any of its retail staff.
The changes are expected to significantly impact its senior ranks, cutting the number of group leaders by a third with the company saying it will make the senior structure flatter. The CEO emphasised that BP must reinvent itself and emerge from the crisis a “leaner, faster-moving and lower carbon company”.
Looney, who took over as chief executive of 111-year-old BP in February, said: “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year. The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations.”
The Brent crude oil price started the year at about $64 (£50) a barrel but plunged as low as $19 in April as the pandemic took hold. It has since recovered to about $35 a barrel but the drop has taken its toll on the industry.
Professor David Elmes, energy expert from Warwick Business School, said; “The job losses at BP are symptomatic of the wider challenges facing the industry.
“Coronavirus has reduced oil demand and the price per barrel has plummeted, but that has happened in a wider context of short-term and long-term decline.”
“All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.”
The latest addition to the Crown Oil tanker fleet is ready to deliver HVO across the UK.
The 8-wheeler DAF tanker joined Crown Oil’s fleet last week, and with the registration number BIO HVO, it is no secret as to what it will be carrying across the country.
A spokesperson for Bury based Crown Oil, said; “We’re excited to announce a brand new edition to our fleet! Our green tanker is ready to deliver our green diesel across the UK.”
Speedy Fuels and Lubricants, a member of the Crown Group established in 2012 to serve the London region, also added a 6-wheeler DAF tanker to its own fleet in March this year. The company, which has gone from strength to strength and now deliver to customers nationwide also uses its new tanker to transport HVO.
Find out more about Crown Oil’s journey into low carbon fuels in the next issue of Fuel Oil News out in July.
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Last week, in another significant industry step towards contributing to the UK Government’s Net zero objectives, Phillips 66, Uniper and VPI Immingham announced a memorandum of understanding to co-develop Humber Zero.
A multi-million pound carbon capture and hydrogen project on the South Humber Bank, Humber Zero will decarbonise eight million tonnes per annum of CO2 emissions, with the potential to target 30 million tonnes of CO2 emissions from the wider Humber cluster to the west of Immingham
The leading representative body for the UK’s offshore oil and gas industry, OGUK, has called for the transition to net-zero greenhouse gas emissions to be at the heart of its recovery plan after a stark warning that up to 30,000 industry jobs could be lost.
Becoming the fourth oil major to commit to ‘net zero’, Total has announced its target of net zero emissions in Europe by 2050. The company has also committed to becoming carbon-neutral across its worldwide operations by 2050 or sooner and confirmed its target of a renewable generation gross capacity of 25GW in 2025.
Patrick Pouyanné, chairman of Total’s board, declared; “Energy markets are changing, driven by climate change, technology and societal expectations. Total is committed to helping solve the dual challenge of providing more energy with fewer emissions. The Board believes that Total’s global roadmap, strategy and actions set out a path that is consistent with goals of the Paris agreement.
Emphasising the role the company has to play in the future energy transition, Patrick continued; “Only by remaining a world-class investment can we most effectively play our part in advancing a low carbon future. This is the reason why our people are already in action across Total, seeking opportunities to reduce our emissions, improve our products and develop new low-carbon businesses.”
This ambition is supported by the strategy to develop Total as a broad-energy company, with oil and gas, low-carbon electricity, and carbon-neutrality solutions as integrated parts of its business.
Total says the new climate strategy is already in action as the firm has already achieved a 6% reduction of its average indirect carbon intensity since 2015.
Active support of the energy transition
Regarding the commitment to become a net-zero energy business in Europe, Patrick commented; “As the EU has set the target to achieve net zero emissions by 2050 and thereby lead the way for other regions to become carbon neutral over time, Total takes that commitment to become neutral for all its businesses in Europe. Total wants to be an exemplary European corporate Citizen and offers its active support for the EU to achieve net zero emissions by 2050. Total will work together with other businesses to enable decarbonization of energy use.”
Total confirms its target of a renewable generation gross capacity of 25 GW in 2025 and will continue to expand its business to become a leading international player in renewable energies. Total currently allocates more than 10% of its Capex to low carbon electricity, the highest level among the oil majors. To actively contribute to the energy transition, Total will further increase its allocation of Capex in favour of low carbon electricity to 20% by 2030 or sooner.
UKIFDA says off grid homeowners across Great Britain are seeing prices of heating oil drop by up to 27% since the same time last year, according to the latest figures from Sutherland Tables, a provider of comparative home heating costs for the most common fuels in the UK and Republic of Ireland.
This drop has prompted UKIFDA to urge households who use oil to heat their home to reap the rewards of using liquid fuel as their heating source and to consider how they can benefit from these low prices and also consider their future energy options.
Guy Pulham, CEO of UKIFDA comments; “The Sutherland Tables data is fantastic news for everyone using heating oil as it confirms that this form of energy is the cheapest right now. The price of oil has continued to fall over the last quarter and the cost of home heating using oil is now cheaper than gas heating, regardless of the type of property you live in or whether you have a conventional or condensing boiler. The latest data shows that families in an average 3-bedroom house with an oil boiler in Great Britain are paying around £808 a year for heating and hot water, compared to £938 for those using a gas boiler, £1392 for those using air source heat pumps with underfloor heating, £1502 for wood pellets, £1551 for those using LPG, £1819 for those with air source heat pump with radiators and £2084 per annum for those on Electric.
“At the same time as enjoying low prices we do want to help domestic consumers of oil in the UK and Ireland understand how the decarbonisation of off-gas grid home heating could impact their home and impact the choices they need to make either now or in the future. As a result, we have over the last year been working with our Members and other trade associations on a pathway to decarbonising liquid fuel to help consumers find a personal pathway that fits the finances of the household but still contributes to lower carbon emissions in a timescale that meets net zero goals.”
The UK Government has outlined its intentions to replace the Renewable Heat Incentive (RHI) with a new Clean Heat Grant which aims to help households and businesses decarbonise through technology and push the nation towards its net-zero target for 2050 by phasing out high carbon fossil fuel heating.
In the Government’s publication of its consultation on future support for low carbon heat its proposal to make grants of £4,000 available for consumers wishing to replace fossil fuel boilers has drawn particular attention. The grant would provide support for heat pumps and, in limited circumstances, biomass and would replace the Domestic RHI tariff scheme which is due to close on March 31, 2022.
In its introduction to the consultation BEIS highlights that currently, heating our homes, businesses and industry is responsible for a third of the UK’s greenhouse gas emissions meaning that the decarbonisation of heat is one of the biggest challenges faced in meeting climate targets. The government Heat and Buildings Strategy which will be published later this year will set out actions to reduce emissions from buildings.
The government is considering a range of measures to improve energy efficiency and support the move to low carbon heating and has pledged significant financial support. The consultation sets out plans for a successor to the current RHI scheme – a Clean Heat Grant scheme – to help deliver the phase-out of high carbon fossil fuel heating. The stated aim is to build on the 2017 Clean Growth Strategy, with its announced intention to phase out the installation of high carbon fossil fuels in the 2020s for properties off gas grid.
According to BEIS, the grant will support the deployment of air source, ground source and water source heat pumps and high and low temperature systems, but hybrid heat pumps will not be included.
The full consultation, including details on how to respond, is available online at: https://tinyurl.com/ydyhzvb5
UKIFDA has urged the Scottish Government to consider the 135,000 households in Scotland who use oil to heat their homes when setting the energy policy in its response to the recent ‘Energy Efficient Scotland: Improving energy efficiency in owner occupied homes’ consultation.
Proposals outlined in the government consultation which closed earlier this month include the introduction of a legally binding standard to ensure all homes in Scotland meet Energy Performance Certificate (EPC) rating C, at point of sale or major renovation, from 2024.
UKIFDA chief executive, Guy Pulham comments; “In submitting our views to this consultation by the Scottish Government, we expressed our support for the proposals to improve the fabric of homes and improve energy efficiency and we agree EPC Band C is a realistic target. It is important though that this must be rolled out in a way which does not adversely affect owner occupiers who are already struggling with household costs. Energy efficiency improvements must not be pursued at the cost of making housing unaffordable for people and put added burden on those currently in fuel poverty. The focus must be on providing tailored support, including financial, and advice on the most suitable technology available to households.
“We agree that new homes should be first to adapt new technologies given the fabric of the building allows for a range of solutions but off gas grid homes are not the easy low hanging fruit that many seem to suggest. The very specific nature of the housing stock that our UKIFDA members serve – generally larger, older homes, in rural locations with poorer than average insulation means they are difficult to adapt to new technologies such as heat pumps and are perfectly suited to new drop in liquid biofuels.
“The design of these houses (and this includes a very high proportion of farmhouses and buildings) is such that retrofitting heat pumps will require a huge capital expenditure to improve the insulation of the properties. If this work is not carried out, the running costs of any form of heat pump would be prohibitive.
“A further challenge here is that the demographics mean that many of the owners are cash poor and asset rich (pensioners, farmers etc) and they will find it very difficult to raise the required capital to undertake major refurbishment of these homes. With the introduction of biofuels as a replacement to heating oil it would mean off grid households would not need such a large capital investment to improve the energy performance of their homes”.
In the run up to this consultation being published, UKIFDA has been lobbying the Scottish Government to consider liquid biofuels as part of any energy strategy and is currently working with other industry trade associations OFTEC and the Tank Storage Association on the introduction of a low carbon liquid fuel to replace heating oil.
Guy Pulham adds: “To ensure that the whole industry can invest and implement engineering advancements such as biofuels, we believe government should outline the energy efficiency plans in 2020 for implementation.”
“We also believe it is also important that once an Energy Efficiency standard is in place it should be subject to periodic review, where it can change with improvements such as technology, innovation, fuel prices and carbon emissions. In the longer term where it can be assumed that energy efficiency will improve over time, improved EPC targets could be then introduced.
“Ultimately, we would like policy-makers to recognise the positive contribution that evolving liquid fuels can make to an economically and socially fair energy transition. It is crucial to maintain a varied energy mix and a free choice of technologies by consumers to alleviate fuel poverty. By focussing on the consumer and meeting their individual needs, we can meet both the net zero targets and do so in a realistic, supportive fashion.”
The trade association for the liquid fuels sector in Ireland, UKIFDA, has lobbied Finance Minister Paschal Donohoe in a bid to get the Irish government to consider a delay to the €6 increase of carbon tax on heating oil, used by over 686,000 households across Ireland, and gas oil, used by the farming and construction industry, due in May this year.
Following the publication of a report by the Sustainable Energy Association (SEA) UKIFDA is looking forward to “digesting the detail” and “working with SEA on lobbying government to engage on these plans”
Calling on the government to bring in a ‘carbon intensity standard’ for the UK to drive down emissions in heating, the SEA report ‘Off Grid, Off Carbon: Regulating the Decarbonisation of Heat in homes off the gas grid’ followed a consultation with industry stakeholders. It outlines the benefits of introducing a carbon intensity standard for heating within the Buildings Strategy allowing for carbon reduction to be achieved by a combination of means including insulation, installation of new technologies or replacement fuel solutions, depending on consumer choice and situation.
The proposed standard would be administered at industry level and encouraged through a range of enablers to facilitate its introduction including rebalancing fuel duties, customer incentives and a robust enforcement framework. SEA argues that, together, these would complement energy efficiency improvements and encourage greater uptake of insulation and low carbon heating systems in a way that guarantees lower carbon emissions while also maintaining consumer choice.
It is this focus on the customer that ties in with the approach of UKIFDA. Representing a distributor membership that delivers over 70% of the domestic heating oil in the UK and Ireland UKIFDA accepts the need to decarbonize but is also lobbying for a customer focused transition plan emphasizing the need to achieve significant carbon reduction without putting unseasonable measures and costs on off gas grid homeowners which could lead to fuel poverty for many.
Highlighting the SEA report, CEO of UKIDFA Guy Pulham stated; “We are currently digesting the detail but the idea of a customer focused transition plan for oil heating ties in with our own consumer focused blog and our commitment to ready our part of the supply chain for increasing percentages of biofuels in the 2020s.
Collaborations
A collaboration at the start of 2020 between trade associations OFTEC, the Tank Storage Association (TSA) and UKIFDA showcased a future vision for liquid fuels which detailed steps to be taken toward a transition to 100% biofuel to replace heating oil in 1.5m homes across the UK and 686,000 homes across Ireland, reflective of SEA’s vision for replacement fuel solutions as one contribution to carbon reduction.
In the light of the ongoing challenge of heat decarbonization Guy comments; “I look forward to working with Sustainable Energy Association on lobbying government to engage on these plans”
Jade Lewis, Chief Executive of the Sustainable Energy Association commented; “This report is a demonstration of how industry can collaborate to tackle some of the greatest challenges ahead of us, and there is no doubt that heat decarbonisation is one of those.
“At a time of great uncertainty is it paramount that regulation is introduced to provide confidence and stability so that investors and manufacturers of low carbon heating systems can scale up investment and production, encourage innovation, and upskill the workforce.”
She added: “The SEA is hopeful that the proposals put forward will influence Government plans to decarbonise the UK’s building stock and ensure that homes are fit for the generations to come.”
The leading representative body for the UK’s offshore oil and gas sector has warned the latest oil price developments could fundamentally undermine the ability of the industry to recover and serve the energy transition.
It comes as US crude oil prices continued to drop reaching the historic low on Monday evening, while the international benchmark Brent crude fared better with OPEC+ cuts due to take effect and storage constraints less pronounced, trading at just over $25 a barrel. While WTI is a localised trading market in the US, OGUK warned that it remains concerned about the continued low prices of Brent crude.
OGUK Chief Executive Deirdre Michie said; “While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.
“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact. Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”
As Coronavirus lockdowns continue around the world, the oil industry faces serious challenges to demand and supply chains resulting in the collapse of many prices and margins. With restrictions to travel and broader economic activity across the world, demand for transport fuels has dropped resulting in a twofold challenge, a drop in oil’s value and a consequential price war.
A deal announced last week between Opec and its peers to cut production by about 10 million barrels per day from May appears not to have been enough to convince markets that supply lines weren’t being flooded. The agreement was viewed as “too little and too late to avoid breaching storage capacity and to stop spot prices from falling”
Professor David Elmes, who leads the Global Energy Research Network at Warwick Business School and has more than 20 years’ experience in the energy and management consulting industries, said:
“The fact that oil prices have sunk to a level not seen since 2002 will set alarm bells ringing. It’s not just the price per barrel, it’s the wider challenges facing the industry.
“The battle to supply, whatever the price, is happening in a climate of both short-term and long-term decline in the demand for oil.
“We are starting to see how the coronavirus is reducing oil demand, but some industry forecasts were acknowledging a flattening off in long-term demand last year, before the pandemic began.
“All companies in the sector will be looking at how they can cut costs, shift their activities to the lowest cost field they can, trim investment, and thinking hard about what dividend they can pay.
“There will also be more serious conversations taking place.
“State-owned oil companies around the world will be having tense discussions with their governments about how long they can expect government sympathy for low prices. That will be made more difficult by governments needing to pump money into their economies to address the slowdown caused by coronavirus.
“The European-based large, international companies have started to say they will become less focused on oil and gas over time. There will be intense discussions on what can they do to move faster.”