Transition 26
Volvo Trucks has now approved the use of hydrotreated vegetable oils (HVO) in all its Euro-5 engines with unchanged service intervals. In September 2015, there will be a global type-approval for HVO in FL and FE Euro-6 engines with other engine variants to follow
After extensive field testing of the renewable synthetic diesel HVO (Hydrotreated Vegetable Oils), Volvo Trucks has approved the fuel for all its Euro-5 engines and are preparing certifications for Euro-6. The HVO performed the same as regular diesel, but reduced CO2 emissions between 30% and 90%
In 2013, Volvo Trucks started a field test together with Renova, DHL Freight and OKQ8 to see how the use of 100% HVO affected engine performance and components. The six field test trucks were equipped with Euro-5 engines and covered approximately one million kilometres in commercial service over a two-year period.
“The field test showed that the HVO works very well in our engines and can be used under the same conditions as regular diesel. It is also possible to freely mix diesel and HVO,” says Tobias Bergman, product manager for alternative fuels and hybrids at Volvo Trucks.
The positive results from the field test mean that Volvo Trucks has now approved the use of HVO in all its Euro-5 engines with unchanged service intervals. In September 2015, there will be a global type-approval for HVO in FL and FE Euro-6 engines and, in parallel, work is also underway to certify FM, FMX, FH and FH16 engine variants.
“The fuel is suitable for all customers who want to reduce their CO2 emissions and we see no restrictions regarding the type of transport or business. Combining HVO with the low emissions of our Euro-6 engines will allow the environmental impacts of the trucks to be minimised,” says Tobias Bergman.
HVO is a synthetic diesel and is produced from renewable raw materials such as vegetable and animal fats, from rapeseed oil or abattoir waste, for example. The fuel can be distributed via existing diesel depots and uses the same type of tanks and pumps as regular diesel. HVO reduces CO2 emissions between 30% and 90% well-to-wheel, depending on the raw material.
“We believe in HVO’s potential and see an increasing interest from both customers and transport buyers. The major challenge is the availability of raw materials and refineries. We therefore hope that our investment in fuel will contribute to increased demand and that the HVO can be used in many other parts of the world in future,” says Lars Mårtensson, director environment and innovation at Volvo Trucks. www.volvotrucks.com
OFTEC is calling for a ‘more joined-up carbon reduction and energy policy’ which still includes renewable technology incentives but also offers ‘more affordable measures such as a boiler scrappage scheme’
“Evidence strongly suggests that the government is using the wrong vehicle to encourage people to cut CO2 emissions,” says Jeremy Hawksley, OFTEC’s director general.
“A more realistic, pragmatic solution is clearly needed if the country is to significantly reduce its carbon footprint,” says Jeremy.
“Latest statistics from the Department of Energy and Climate Change (DECC) show just 11,149 new renewable installations have been completed since the RHI launched in April 2014 – that’s less than 1,000 per month.
“The RHI scheme has failed to attract sufficient support, barely achieving in a whole year the number of installations required each month for DECC to meet its ambitious 2020 carbon reduction targets, says OFTEC which calculates that around 10,800 installations would be needed every month to reach the government’s goal of 750,000 installations by 2020.
“The high upfront costs of installing renewable technologies, which are typically between £9k and £14k, are prohibitive for all but the wealthy few,” says Jeremy.
“Even with RHI incentive payments, most people simply can’t afford to take up the scheme, even if they want to. Exacerbating the low take up of the RHI is also the complexity of both the application process and the practical issues involved in installing renewable technologies.”An overhaul of RHI and a boiler scrappage scheme
Before the election, OFTEC wrote to all parliamentary candidates in rural areas – where most off-gas grid households the RHI targets lie – urging them to support an overhaul of the RHI.
Jeremy Hawksley continues: “With the election now behind us, a full review of the domestic RHI is now essential. We believe it should be replaced by a more joined-up carbon reduction and energy efficiency policy that would encourage far greater consumer buy in. This would still include renewable technology incentives but also encompass more affordable measures such as a boiler scrappage scheme to incentivise the switch to high efficiency condensing boilers. There is still clearly a strong demand for these greener, cheaper to run boilers with sales for Q1 this year up 7% on the equivalent period in 2014.
“These simple changes would make carbon reduction and energy efficiency measures accessible to many more households – especially the elderly and fuel poor – which now are excluded from the RHI because of the high upfront costs of renewables.” www.oftec.org.uk
(l-r) Ron Tomal, Stuart Sealey, and Donald Smith
After 40 years in the oil industry, Ron Tomal, terminal manager at Certas Energy’s Aberdeen and Inverness terminals has retired. Donald Smith has been named as the new terminal manager.
After six years in the role, it will be a sad occasion for Certas Energy and its employees across Scotland when Ron says his final farewell to the business. Ron’s distinguished career began in 1975 with Ellis & McHardy Oils (a BP distributor) in the Forfar depot, which Certas Energy now owns. Ron has assumed a number of roles during his tenure with Certas Energy, including operational and health, safety and environmental positions.
Stuart Sealey, operations & HSE director, commented: “Ron has been a valued employee for many years. On behalf of Certas Energy, I’d like to thank him for his hard work and commitment to the business over the years. We wish him well as he starts the next exciting phase of his well-deserved retirement.”Donald Smith takes over the reins
Following a successful transition from previous oil operators in 2010, Certas Energy has been operating the Aberdeen Pointlaw and the Inverness Cromwell Road terminals. As one experienced employee leaves, another begins, with Donald Smith taking the reins as terminal manager having joined the business at the beginning of April.
New terminals manager, Donald Smith, brings a wealth of experience to the role, built up over thirty years and with a particularly strong safety, international energy, engineering and project management background. In that period he has worked in a variety of management and leadership roles providing comprehensive technical and people support for companies in the UK, Middle East and internationally.
Welcoming Donald to the Certas Energy family Stuart Sealey said: “I look forward to working with Donald and the team at Aberdeen and Inverness to ensure the business remains a prominent player in the Aberdeen area and beyond.
“Donald holds full responsibility for the safe and efficient running of these terminals. This includes accountability for both sites’ operating safely, compliantly and cost effectively.
In Scotland, Certas Energy operates under the brands Caledonian Oils, Brogan Fuels, Emo Oil and Scottish Fuels.Ron’s retirement plans
Originating from Kirriemuir, near Forfar in Angus, Ron’s career in the oil industry led to his move to Aberdeenshire over 20 years ago. Outside of work, Ron is a family man, happily married for 43 years, 2 daughters and 4 grandchildren. With his retirement imminent, Ron plans to enjoy the outdoors life, playing golf, cycling and walking in the Royal Deeside area where he lives. www.certasenergy.co.uk
Rural households can face unique challenges says Janice Banks of ACRE who points out that the current delivery of government- backed measures is failing those without a connection to the mains gas grid
Supported by rural communities’ charity ACRE, OFTEC and FPS have written to more than 500 prospective parliamentary candidates urging them to support proposals for a radical shake-up to home heating policies for the UK.
The letter, sent to election candidates representing the majority of rural constituencies in the UK, calls for a greater and more pragmatic approach to reducing fuel poverty and carbon emissions.Recommendations put forward include:• Stronger emphasis on upgrading insulation in rural homes which have far poorer EPC ratings than urban properties• Incentivising the installation of high efficiency condensing boilers by re-introducing boiler scrappage schemes for oil boilers as well as mains gas boilers• Revising the domestic RHI to better incentivise hybrid heating systems and include bio-fuels such as B30K• Extend government funding to support low income off-grid households
Speaking about the letter, which has received significant positive support from many of its recipients, OFTEC’s director general, Jeremy Hawksley, said:
“There’s a great opportunity for the new government, whichever political colour it may be, to introduce much more realistic and all-inclusive domestic energy policies that address fuel poverty and carbon emission reduction simultaneously, rather than as separate goals.”
Janice Banks, chief executive of Action with Communities in Rural England (ACRE) which is the national body representing 38 rural community councils, added:
“With a high percentage of inefficient, solid-wall housing and many homes without a connection to the mains gas grid, rural households can face unique fuel poverty challenges. However, the current delivery of government-backed measures is failing households that live in difficult-to-treat houses and those that have to rely on heating oil or LPG for their energy.”
The organisations behind the letter plan to push their message further once the new government is formed with the aim of improving conditions for the off-grid heating sector.www.oftec.org.ukwww.fpsonline.co.uk
In changes under the rebrand, Martyn Lyons becomes chief executive of Inter Terminals with Richard Sammons in the new role of executive chairman
From January 1st Simon Storage is rebranded as Inter Terminals, a wholly-owned subsidiary of the Canadian company Inter Pipeline.
The combined Inter Terminals business, which includes operations in the UK, Ireland, Germany and Denmark, is one of the largest independent bulk liquid storage businesses in Europe, with more than three million cubic metres of storage capacity located across 12 terminals. Terminals store hazardous and non hazardous liquids, including oils, chemicals, biofuels and waste oils at the coastal ports of Immingham, Teesside and Tyneside in the United Kingdom and on the Shannon estuary in Ireland.
Inter Terminals will be led by Martyn Lyons who is promoted to chief executive. With over 25 years experience in the tank storage sector, Martyn is well known within the industry and continues to serve as chairman of the UK Tank Storage Association. He succeeds Richard Sammons who is moving into a new role as executive chairman.
“I am delighted to see the integration of our operations under one unified management structure,” said Richard Sammons.
“I wish Martyn and his team every success in their new roles. Adopting the Inter Terminals name across our European terminal network will strengthen brand recognition and the marketing of our integrated suite of storage services. It also creates a stronger branding affiliation with Inter Pipeline which continues to provide strong support for our operational and growth initiatives across Europe. We look forward to serving both existing and new customers in the future.”www.interterminals.com
IFC Inflow will be among the exhibitors at this month’s Tank Storage Association exhibition and conference which takes place at the Ricoh Arena on Thursday 18th September.
A leading supplier of tanker loading equipment and tanker safe access systems, the company offers a range of equipment including petroleum & chemical loading arms, tanker loading skids, loading platforms and gantries, self-levelling folding stairs, mobile safe tanker access equipment and high speed bulk loading systems.
Petroleum bottom loading arms – The 445 series arm is designed for heavy duty use at petroleum terminals and distribution depots. It is the ideal replacement for first generation arms reaching the end of their life and for new applications requiring high performance at a low cost.
Chemical loading arms – Articulated top and bottom loading arms for chemical and food applications. Custom designed and tailor made for individual customer requirements. Typically made from carbon or stainless steel, options include pneumatic control, overfill sensors, vapour cones, lagging and trace heating and PTFE lining for very aggressive applications.
Petroleum loading skids – Factory built & tested loading skids are ideal for terminal applications where flexibility and speed are essential. Offering flow rates up to 2500 l/min, high accuracy metering, up to 6 product arms per system, fully compliant with ATEX regulations. Optional blending and additive injection control systems.
Safe tanker access – Gantries and platforms designed to comply with the latest work at height regulations and when fitted with our self-levelling folding stairs provide the safest way for operators to access the tops of tankers.
Folding stairs – Providing safe access to any height tanker, stairs come in a range of sizes and when fitted with an optional safety cage offer total operator safety while working on the tops of tankers. Options include pneumatic control, cages in special sizes and materials, press down facility and cage infill grating.
Two petrol stations have been raided and seven men and two women from across southern England have been arrested for their involvement in a suspected £3m fuel fraud, during an operation by HM Revenue and Customs (HMRC).
Around 170 HMRC officers, assisted by the Vehicle and Operator Services Agency (VOSA) and Sussex and Hampshire Police, searched 12 residential premises, five business premises and two petrol stations in East and West Sussex, Kent, Essex, Hampshire and Somerset.
The investigation is focused on the suspected illegal purchase and sale of rebated kerosene and biofuel to motorists as duty-paid road diesel. It is believed the fraud is worth an estimated £3m in unpaid excise duty and VAT.
All those arrested were questioned by HMRC investigators and released on bail while enquiries continue.
Meanwhile, in Co Tyrone, a man and a woman have been arrested and nearly 8,000 litres of fuel seized as part of an ongoing HMRC investigation into a suspected VAT and excise fraud worth an estimated £300,000.
HMRC officers, accompanied by the Police Service of Northern Ireland, searched a private address and a retail site in the Cookstown area where they seized computers and business records linked to the fraud investigation.
And a woman has been arrested after a laundering plant, capable of producing nearly 3.6 million litres of illicit fuel a year and evading over £2 million in lost duty and taxes, was discovered by HMRC officers during a search of domestic premises in Co Armagh. Four tonnes of toxic waste was safely removed from the site.
Jeremy Hawksley, director general, OFTEC
Targets set out in the impact assessment produced by the Department for Energy and Climate Change (DECC) state that Renewable Heat Incentive (RHI) will support around 750,000 renewable heat installations by 2020 – that is approximately 10,800 new accreditations per month.
Latest figures from OFGEM show that since the RHI was launched in April, 5,158 renewable heating systems have been accredited under the scheme. At the current rate of take up, DECC’s goal of 10,800 new accreditations per month looks unrealistic.
According to OFTEC, a simple, all-inclusive boiler scrappage scheme would go much further than the costly and complex RHI in helping the government achieve its ambitious goal of 80% less carbon emissions by 2050. This is because it would appeal to a far wider audience.
Jeremy Hawksley, director general at OFTEC, comments: “Even before the RHI was launched, we voiced concerns that the scheme would suffer the same fate as the Green Deal. RHI payments only come into play once the renewable heating system has been installed and the average consumer simply cannot afford to get started due to the high upfront costs of between £8,000 and £19,000 to install these technologies.
“Whilst we recognise that the initial take-up of any such scheme is often low and that momentum may build, there is going to have to be an enormous surge of interest in the RHI to meet government targets. We are doubtful that with such a costly and complex scheme this will happen.”
Jeremy Hawksley continues: “What the country needs is a simple, accessible scheme which consumers can really get to grips with. We already know that a boiler scrappage scheme works as a similar initiative in 2010 saw 120,000 old, inefficient boilers replaced.”
OFTEC’s concern about lack of interest in the domestic RHI is supported by a recent survey conducted by OFTEC and Watson Petroleum of 750 oil heated homes. This revealed that just 4% would consider switching to an air source heat pump, with 73% choosing to upgrade to a new oil condensing boiler.
Jeremy Hawksley concludes: “The government needs to think again and instead of pushing expensive renewables which will only appeal to the wealthy few, it should channel its resources into realistic boiler upgrade schemes that will encourage millions of home owners to take simple yet effective energy efficiency measures which will collectively make a greater contribution to CO2 reduction targets.”
OFTEC’s view that only the relatively wealthy can afford the high initial investment. As such it’s clearly a regressive policy. This is important because rural dwellers and, by extension oil heating users, contain a higher proportion of people living in fuel poverty than the population as a whole. So the people who most need help to upgrade and improve their energy efficiency are effectively prevented from accessing RHI because the upfront cost is unaffordable – exacerbated because their homes are often difficult to improve. By contrast, the scrappage scheme that we advocate would be much cheaper both for homeowners and for government to implement and more likely to be successful as a result.
Millbrook will exhibit its extensive range of facilities and capabilities at this year’s Low Carbon Vehicle event on 10-11 September 2014.
The annual event, which attracts visitors from across the globe and combines a technology exhibition, Ride & Drive, networking activities and an extensive seminar programme, is the ideal forum for the business to reinforce its message that there is more to Millbrook and to demonstrate to current and potential new customers its full service offering.
Millbrook’s engineers perform repeatable tests on all types of vehicles in a secure and safe environment. With a range of facilities for components and full vehicles, the company can perform tests using engine dynamometers, environmental chambers, crash laboratories and advanced emissions testing systems.
CEO, Alex Burns, says: “Our extensive laboratory facilities, 70km of varied test tracks, including hill routes, high speed areas and challenging off road courses and 45 years’ of engineering, test and validation experience, makes Millbrook an ideal partner at any stage in the development and launch of the vehicles of tomorrow.
“We have some exciting plans for the future of Millbrook, including a new technology park and upgraded engine test facilities and I look forward to sharing these forthcoming investments with visitors at LCV.”
www.millbrook.co.uk
www.cenex-lcv.co.uk
Current perspectives
The recent (2011) OFT Off-Grid Energy Study assessed that approximately four million UK households were not connected to the gas grid, of which around 1.6 million use kerosene for domestic heating, representing 6% of the total heating fuel market. LPG use as domestic fuel accounted for a further circa 200,000 households. In comparison, natural gas is used by almost 20 million households and accounts for just over 80% of the heating fuel market.
In addition to its use in the domestic sector, there are estimated to be between 200,000 and 250,000 commercial heating oil users.
A snapshot of the trend in total UK domestic regular kerosene demand since the start of the millennium shows the following:
Source: DECC Energy Trends: Oil & oil products, Supply & use of petroleum products.
So, it appears that the market has moved from the range of 2.2-2.5 million tonnes/year (2.7 to 3.0 billion litres/year) to one of slightly under two million tonnes( 2.5 billion litres) in the past couple of years – although the exceptional, extended winter of 2013 is likely to result in this year’s total demand climbing back towards 2.2 million tonnes.
Against this backdrop, it was encouraging to learn that oil boiler sales were 22% higher in Q1 2013 vs. Q1 2012, and that overall 2012 sales were up on those in 2011.
What might the future hold?
To gauge future market prospects, we will consider a range of ‘what if’ possibilities, as a way of mapping out the boundaries that may define the future for the sector. To do this, an approach from probability and decision analysis will be used, which identifies three possible cases or scenarios:
→ best possible outcome, known as the P10 case- where there is only a 10% probability of things being better
→ an average outcome, known as the P50 case- where there is a 50% probability of things being better.
→ a worst possible outcome, known as the P90 case- where there is a 90% probability of things being better.
In looking at these possible outcomes, there are three underlying assumptions which are common to each case:
• that the requirements in the Code for Sustainable Homes will result in negligible new build potential for oil fired systems, so enabling little/no scope for market expansion.
• that B30K (bio kerosene) will not qualify for incentives under the Renewable Heat Incentive (RHI), given that it comprises 70% fossil fuel and so could raise questions, at least from a PR standpoint, about the true credentials of the green agenda that underlies the scheme.
• that oil boilers will be capable of meeting the maximum permissible NOX emissions’ limit of 120 milligrams per kilowatt hour set by the EU for 2018.
The future state of the market is taken to be that in 2020, the key milestone date for achievement of the GHG (greenhouse gas) emissions’ target and contribution of renewable energy sources.
Three possible scenarios for kerosene
Best Case (P10)
This is one where the sector, through initiatives such as Oilsave, is able to mount effective efforts, through promotion of improved fuel efficiencies of boilers, better insulation and lower emissions etc., that enable it to retain the lion’s share of its existing outlets. However, these fuel saving initiatives result in reductions in consumption, which are projected to average 3% per annum over 2013-2020.
From a starting point ( 2013), assumed to be circa 2.2 million tonnes ( 2.75 billion litres), this results in a decline of just over 420,000 tonnes (525 million litres) over the period, to a market of just under 1.8 million tonnes.
Average Case (P50)
This is one where the government’s various initiatives, such as the RHI and Green Deal etc., in pursuit of its green agenda, result in a measure of attrition of existing oil outlets. When coupled with the fuel reductions pursued by the sector in defence of its existing market, described above, this results in an average decline in oil use projected at 5% per annum over 2013-2020.
The reduction in this scenario amounts to 660,000 tonnes (830 million litres) to a market of just over 1.5 million tonnes.
Worst Case (P90)
This is a more extreme version of the previous case (P50), the key difference being that the government decides to pursue a much more aggressive/ ambitious approach to its green agenda and provides more generous and attractive incentives to encourage transfer from oil use.
As a result, consumption falls by 50% from its 2013 level i.e. by 1.1 million tonnes (1.4 billion litres), to a market of 1.1 million tonnes in 2020.
As already stated, these ‘what if’ scenarios represent no more than an attempt to map out what the future may hold for kerosene’s use as a heating fuel, generating a range of possible outcomes in terms of changes in demand and resulting market size. Their plausibility rests primarily in the exercise of being able to identify the boundaries that may define the market in 2020 – the future state. As the range is a substantial one, there is a higher likelihood that the market size will fall somewhere within the best/worst case scenarios for 2020.
Food for thought and, hopefully, opportunity to consider and adapt business models, as appropriate, to ensure the future viability and success of the heating oil sector – with the P50 type scenario providing a starting framework for planning purposes.
Comment on the above is invited to jane@fueloilnews.co.uk
Volvo has teamed up with Gasrec
Volvo Trucks has teamed up with biofuel supplier Gasrec to help business customers cut haulage costs and reduce carbon emissions.
Gasrec is Europe’s largest supplier of Bio-LNG; a blend of liquefied natural gas and liquid biomethane (LBM). Volvo Trucks is the first truck manufacturer in the world to produce trucks tailored to run on renewable liquid and gaseous fuels. When substituted for diesel, Bio-LNG can cut fuel costs and CO2 by around 20%.
For many years, BP, with a certain amount of supporting fanfare, has produced an annual Energy Outlook, which takes a forward looking view of future energy supply and demand, accompanied by a welter of statistics and tables. The latest publication, released in January 2013, comprised projections through to 2030.
In March, with rather less fanfare but of comparable authority, substance and weight (131 pages), Exxon Mobil updated its annual review in a publication entitled Outlook for Energy: a View to 2040. Given its size and scale/spread as a supplier and presence in the global energy market, its key findings are worth capturing.
Oil will remain the number one global fuel
What are the key findings of this ‘window to the future?’
Oil will remain the number one global fuel. Natural gas will be the fastest growing major fuel with demand rising by 65%, overtaking coal for the number two spot. World oil demand, excluding biofuels, will rise to 105 million barrels per day by 2040 (88m bpd in 2012).
Efficiency will continue to play a key role in solving energy challenges. Energy-saving practices and technologies, such as hybrid vehicles and high-efficiency natural gas power plants, will help countries in the Organisation for Economic Cooperation and Development (OECD), including those in North America and Europe, keep energy use essentially flat, even as OECD economic output grows 80%.
Energy demand in developing nations (non OECD) will rise 65% by 2040 compared to 2010, reflecting growing prosperity and expanding economies. Overall, global energy demand will grow by 35%, even with significant efficiency gains, as the world’s population expands from about 7 billion people today to nearly 9 billion people by 2040, led by growth in Africa and India.
CO2 emissions from OECD countries will fall by 20%. Those from non-OECD countries will rise by 50%, to represent 70% of the world’s total. Energy related CO2 emissions will plateau by 2030 and then start to fall, the main driver being the substitution of gas for coal.
Transportation demand will grow by 40%, led by expanding commercial activity (trucks, aircraft, ships, trains), where growth will be 65% (of which 80% will come from developing countries) as economies and international trade grow. However, energy consumed by personal vehicles will gradually peak and then begin to fall as our cars, sports utility vehicles and small pickup trucks become much more fuel-efficient.
Diesel will account for 70% of fuel demand growth, with gasoline remaining relatively static in spite of the number of personally owned vehicles doubling.
Aviation – demand for fuels will rise by 75%.
Shipping – demand will increase by 90%.
Industry, residential and commercial sector demand will increase by 30%, with natural gas and electricity accounting for over 60% of fuel consumed in the latter.
Technology is enabling the safe development of once hard-to-produce energy resources; significantly expanding available supplies to meet the world’s changing energy needs.
Electricity generation – with this growth comes a greater demand for electricity. Today, and over the next few decades, this represents the largest driver of demand for energy. Through 2040, it will account for more than half of the increase in global energy demand, growing by almost 80% over 2010-2040.
Nuclear power and renewable energy will grow, while demand for coal peaks and then begins a gradual decline.
Evolving demand and supply patterns will open the door for increased global trade opportunities. Around 2030, the nations of North America will likely transition from a net importer to a net exporter of oil and oil-based products. The changing energy landscape and the resulting trade opportunities it affords will continue to provide consumers with more choices, more value, more wealth and more good jobs.
Plentiful energy supplies but no mention of price
The Outlook is seen as providing ‘a window to the future’, helping to guide the company’s strategies and investments. Over the next five years, ExxonMobil expects to invest an eye-watering sum of approximately $185 billion in energy projects.
A key premise underlying the forecasts is that they are based on current technology, so by not allowing for future technological advances, it could be considered to err on the cautious side.
A significant omission from the Outlook is any projection, or commentary, around future price levels. With an underlying theme suggesting plentiful energy supplies over the period considered, this points to any upward price pressures being suppressed?
On the basis that we often struggle to forecast with any high degree of confidence price levels merely in the weeks/months ahead, the omission is probably a sensible one!
www.exxonmobil.com/energyoutlook
Jeremy Hawksley (director general, OFTEC), Martyn Bridges (new OFTEC chairman), Nick Hawkins, DESO Engineering (new OFTEC vice chairman) and Barry Gregory, Riello (outgoing OFTEC chairman)
This was just one of the many questions asked at OFTEC’s AGM last month when the long term future of the oil heating industry was under debate.
Although the government says it ‘remains committed to introducing a Renewable Heat Incentive (RHI) scheme for householders,’ the scheme’s introduction has been further postponed. It is now expected to be up and running in spring 2014.
Details about how the RHI scheme will work, together with tariff levels, will be published this summer with research into householder views on renewable heat helping to inform the scheme’s design.
In the meantime, the Renewable Heat Premium Payment (RHPP) scheme, which offers money off biomass boilers, solar thermal panels and heat pumps, has been extended until the end of March 2014. RHPP is targeted largely at those living off grid.
An RHI scheme for industrial and commercial customers was launched in November 2011. DECC plans to carry out a review of the tariffs under this scheme to drive forward further uptake.
As the Budget fast approaches, the Freight Transport Association (FTA) continues to press the case for a reduction in road fuel duty to ease the pressure on freight operators.
In its pre Budget submission to George Osborne, FTA argues that the chancellor’s priorities must be to:
• Ease cost pressure on domestic freight activity and stimulate economic growth through consumer demand by reducing road fuel duty by 3ppl with commensurate reductions in the duty rate for gas oil.
• Stimulate investment in low-carbon fuelled vehicles by fixing fuel duty rates for natural gas and biomethane relative to diesel rates for at least 10 years.
• Ensure that the introduction of the HGV Road User Levy will be tax neutral in practice by confirming: the rates of the levy that will apply; that Vehicle Excise Duty rates will not be subject to increase simply to allow that neutrality to be achieved; and that holders of Reduced Pollution Certificates will be compensated by replacement grants. www.fta.co.uk
From a standing start, Prax is achieving its sales targets in the Midlands and the north of England says sales and marketing director, Neil Robertson
Well established to meet demand in the south of England from storage facilities on the Thames, Prax Petroleum is using Simon Storage’s Immingham West terminal as a strategic storage and distribution hub for market expansion.
Simon Storage took the first deliveries of diesel and gas oil for Prax into Immingham West in September 2012. Securing a second terminal at Immingham allows Prax to meet growing demand for its commercial fuels on a wider national scale.
Since then product throughput has risen and last month the contract with Prax was extended to include storage of biodiesel (B100) for intank blending to comply with the Government’s Renewable Transport Fuel Obligations. Under the contract at Immingham West, Simon is providing Prax with more than 18,000m3 of storage capacity, together with road loading facilities for onward delivery to customers.
Neil Robertson, Prax’s sales and marketing director, says: “Immingham provides an optimal distribution point for supplying our customers in the Midlands and the north of England. From a standing start just a matter of months ago we are achieving our sales targets in these regions and increasing fuel supply security for all our customers.”
In addition to strategically located UK terminals, Simon’s expertise in the storage, blending and distribution of green fuels makes it an ideal partner for Prax’s venture north. Richard Sammons, Simon’s chief executive, comments: “Simon provides fuel storage and handling solutions for some of the world’s leading oil producers and distributors. We are able to offer fast-expanding fuel suppliers like Prax Petroleum a fully integrated package from receipt through to redelivery with intank or inline blending of biofuels with conventional hydrocarbons to meet RTFO regulations.”www.simonstorage.com www.praxpetroleum.com
The recently published UK Renewable Energy Roadmap Update states that biofuels for heat, transport and electricity must offer genuine carbon savings and be cost effective in meeting climate change objectives.
Following changes in 2011, incentives only reward biofuels which meet specific criteria, while double incentives are now available for biofuels derived from waste material and advance processes.
The government is also proposing to expand the energy from waste criteria to include commercial and industrial waste, and to implement minimum air quality criteria as a condition of Renewable Heat Incentive (RHI) support.
The update, which also includes plans to extend the non-domestic RHI to cover air source heat pumps and biomass, can be found at www.gov.uk/government/uploads/system/uploads/attachment_data/file/68637/7382-uk-renewable-energy-roadmap-update.pdf
The Northern Ireland Executive’s target of 12% electricity consumption from renewable sources by 2012 was exceeded during the year, while in Scotland an update on plans in October included a new interim target to meet the equivalent of 50% of Scottish electricity demand from renewables by 2015.
The government’s domestic RHI scheme is due to open to applicants in the summer.
The Task Force on fuel efficient, low emission HGV technologies has recommended a range of solutions to tackle efficiency improvements.
Ricardo-AEA was commissioned by the Low Carbon Vehicle Partnership to conduct a high-profile study to identify the opportunities to overcome barriers to the uptake of low emission technologies and fuels for HGVs. The project was completed to a very tight timescale and the final report, which was presented to Stephen Hammond MP, minister for transport, has received very positive feedback.
According to the recent report, three key areas with the greatest potential to reduce the CO2 emissions of fleets are switching to gas to replace diesel, improving aerodynamic efficiency and supporting the uptake of hybrid and pure electric vehicles.
For both long haul and regional delivery vehicles, the optimum solutions presented were a dual fuel engine, using a combination of biomethane and CNG for vehicles used for regional deliveries, and a combination of biomethane, LNG and CNG for long haul use. The alternative is a dedicated natural gas engine, which would save less CO2 emissions but have a smaller payback period – between 3-6 years for regional vehicles compared to 5-10 years for a dual fuel engine, and 1-3 years for a long haul vehicle, compared to 2-4 years for dual fuel.
After a series of interviews and online responses, key barriers to fleet efficiency were identified as concerns over upfront costs and uncertainty about the payback period, and a lack of trust in the technology provider’s fuel economy claims.
Speaking to many fuel distributors in Ireland recently, the most frequently used word to describe the current market was ‘challenging.’
“It’s been a tough year to date,” said Donall O’Connor, managing director of online distributor www.ValueOils.com based in County Antrim. “Customers are trying to extract the best price for everything – including their oil – and at the same time they’re also buying lesser quantities. On top of that, oil is less attractive for heating and gas is making significant inroads.”
FON asked distributors what they were doing to tackle the tough times and to ensure their business survives, and even thrives.
Be prepared
“We spend a lot of time preparing the company for the busy periods, so that when they arrive we’re in the best position to take advantage of opportunities,” added Donall.
“Being web-based, we have a lower cost structure; 99% of our orders are online. That means we can compete at the sharper end of the price strategy, and offer a more attractive deal.”
“We introduced a budget prepayment scheme following customer feedback. While we don’t offer credit, customers can choose to put an amount on a card each month, and then just pay the balance when the bill comes in.”
Stay positive
Agreeing that customers are increasingly price focused is Gordon Halnon, of County Wexford-based Gordon Halnon Oils. “You can lose a customer for the sake of €10 here or there. Service is much less important to them.
“It’s extremely competitive but important to stay positive. Hold onto your customers as best you can – the market will get better eventually and we all want to be there when it does!”
Reward customers and staff
Another distributor spoke about benefits now being offering to customers and staff.
“We incentivise staff with new account and upgrade bonuses, and seasonal prizes – last year’s was a 42-inch television; this year we’re offering free iPads for the highest upgrade to our premium kerosene.
“When they purchase 700 litres or more of heating oil, customers are being offered 10ppl off their next fill of petrol/diesel from one of our retail sites.”
However, this distributor emphasised that the biggest way to safeguard business was to protect reputation. “Deliver on promises, be fair and do the right thing when situations arise.”
Diversify
Brian Uprichard, who owns Armagh-based Brian Uprichard Fuels, said: “We diversified about a year ago and acquired a petrol station. As well as added sales from petrol, we also have a kerosene pump for heating oil. For those who might be struggling, it’s a way to budget for small amounts of oil at a time.
“We’ve also put a PayPoint logo in the shop, so when customers come in to pay for petrol they see the logo and ask about the delivery business.”
Brian’s last piece of advice is the easiest to implement. “Get down on your knees and pray a lot!”
Teresa Sayers, Downstream Fuel Association
After October’s Distributor Debate, Teresa Sayers of the Downstream Fuel Association has answered more questions received on the subject of biofuels.
With the audience keen to ask questions at October’s Distributor Debate, time ran out before all the issues shaping today’s oil market could be discussed. Teresa has provided more comments on the introduction of E10 in the January issue of Fuel Oil News. With restrictions to the bio content from food crops, what future do you see for biodiesel?
This is just a proposal at this stage and will be subject to intense lobbying and further political negotiations before becoming law in the UK. We anticipate that the process could take over two years to be finalised and implemented in the UK.
Earlier versions of the Indirect Land Use Change proposals indicated that crop based feedstocks used for the production of biodiesel would be given a significantly higher GHG default value than feedstocks used to produce bioethanol. This clearly would have disadvantaged significantly the European biodiesel industry. UK biodiesel producers would have been affected to a lesser extent due to their focus on waste feedstocks.
The current version, however, whilst maintaining a 5% limit by energy content on biofuels derived from land based feedstocks, has seen the default values as a means to calculate GHG emissions dropped from the proposal.
One of the biggest risks for the biofuels industry is the lack of policy stability and a long term trajectory for the UK biofuel mandate. This is needed to encourage R & D and investments and to develop supply chains for feedstocks that use less land and save more carbon. Read Teresa’s comments on the introduction of E10 in the January issue of the magazine.
Jeremy Hawksley, OFTEC director general
The proposed Renewable Heat Incentive (RHI) is unlikely to tackle the problem of carbon emissions from rural homes, according to OFTEC.
In a written response to the RHI consultation, OFTEC stated support for the principle behind the tariff, but was concerned that the practical impact of RHI will be to increase, not decrease, CO2 emissions from rural homes, because the incentivised technologies will run on carbon-rich electricity.
The statement also provided statistics which showed that the relevant technologies, including air and ground source heat pumps, could emit twice as much CO2 as B30K bioliquid fuel up to 2020-21. Other concerns include the cost of installing renewable technologies, when compared to converting an existing oil boiler for biofuels.
OFTEC director general, Jeremy Hawksley said: “In its current form, the RHI strategy incentivises renewables such as biomass and air source heat pumps, which can have high carbon savings. However, this is only true if they run efficiently and the electricity they use is sourced from renewable sources. Our response demonstrates that bio-liquids would be more effective at reducing carbon emissions in off-gas areas, and much cheaper and simpler for homeowners to adopt. With the weather growing colder I’m reminded of the harsh winter of 2010/11 when heat pumps performed poorly, causing higher running costs w hile failing to keep homes warm. By contrast, oil heating is much more compatible with rural homes off the mains gas network.”
Around 300,000 households could face fuel poverty in the next few weeks thanks to the continued rise in energy prices.
Fuel poverty has been defined as a household spending more than 10% of income on heating, and the Fuel Poverty Advisory Group’s tenth annual report predicts that this will apply to around nine million people by 2016.
It also shows that energy prices rose by 7% in 2012, with the average energy bill at £1247. In the case of oil, at the start of December average prices are virtually unchanged from a year ago – see prices and margins 2012, page 6 of the January issue.
The group calls for the government to use the carbon tax revenue for the benefit of low income households, and to provide a more coherent strategy to combat fuel poverty, including making homes more energy efficient.
“With a cold winter, welfare reforms cutting incomes, and all at a time of austerity measures and other rising household costs, the plight of the fuel poor has never been more serious,” Derek Lickorish, chairman of the FPAG, told the BBC.
“A toxic cocktail of rising wholesale prices, the high cost of energy reforms and cuts in incomes for many households means fuel poverty levels are set to sky rocket without radical action,” he added.
Read the report
Householders who install a high efficiency oil-fired condensing boiler to replace an existing model will be eligible for £310 cashback under the Green Deal.
Up to £40m of government funding has been set aside to help householders improve their energy efficiency, and the cash is available from 28 January 2013.
To qualify, householders must get a Green Deal assessment and arrange for the work to be done through a Green Deal provider. OFTEC is already offering Green Deal registration for installers to take advantage of the new scheme, and both owner occupiers and landlords are eligible, providing they pay part of the installation costs.
Initial cashback rates have been set at £100 for loft insulation, £250 for cavity wall insulation and £390 for flat roof insulation.
Turriff Fuels and CPL Petroleum have implemented the Federation of Petroleum Suppliers (FPS) new fuel certification scheme.
Developed in conjunction with tank hygiene specialists, OTS TankCare and Scarletts Systems, the scheme will enable FPS members to guarantee fuel standards, thereby safeguarding themselves against the potential risk and any claims resulting from post-delivery contamination.
FPS chief executive, Mark Askew, said: “With the introduction of new biofuels and current FAME content up to 7%, better housekeeping is essential throughout the supply chain. The FPS scheme sets standards for fuel testing, cleansing and best practice for preventing contamination by water, particulates and microbial growth in storage tanks.
“The scheme methodology has been fully evaluated and we can announce its implementation with two major FPS distributors – Turriff Fuels of Aberdeenshire and the CPL Petroleum network’s flagship depot in Thurrock, Essex.
“By declaring their tanks have been certified to this scheme – to guarantee fuel quality standards – fuel distributors will be able to draw a line under any disputes concerning fuel quality.” www.fpsfueltest.co.uk