Our fleet managers need the continental touch
Noel Lock urges the government to take notice of the environmental credentials of liquid petroleum gas as a serious alternative fuel for our business fleetsBoardrooms across the UK are filled with talk of environmental responsibility and carbon neutrality. The growing awareness of all things environmental is set to dramatically impact upon UK businesses this year. Companies must become more environmentally friendly or risk damaging their brand, losing customers or suppliers - or even affecting their share prices.
For an increasing number of UK businesses the environmental spotlight is turning towards their fleets. Changes to vehicle excise duty highlighted in the latest Budget give fleet managers the ideal opportunity to make environmental and financial savings by running vehicles lower than a band G. However, in terms of encouraging the use of alternative fuels, the Chancellor has done little to encourage their use.
With a number of European countries' governments increasingly encouraging the use of alternative fuels such as liquid petroleum gas (LPG), should the UK government be looking to its European counterparts for an environmental steer?
Many would say that the UK is falling behind much of the rest of Europe by failing to meet the challenge of cutting the levels of carbon dioxide emitted by vehicles with the use of alternative fuels, such as LPG. Other countries have embraced the benefits offered by such a fuel and Germany, Italy, Poland and Holland are all current leaders, in terms of their use of automotive LPG.
The boardrooms of Europe are now driving the environmental agenda and increasing their business use of LPG is often the first and most simple step taken to reduce corporate carbon footprints on the continent. However, the majority of UK fleet managers are yet to harness the benefits. A reduction in carbon emissions by 20%, in line with EU targets by 2012, while cutting their fuel bill by a phenomenal 40% does not yet seem to be enough for many fleet managers. Nor does the fact that an LPG conversion could save fleets £2,000 in fuel costs for every 20,000 miles driven.
The problem facing many fleet managers in the UK is the confusion surrounding the switch to vehicles fuelled by such an alternative as LPG. With little clear support from central government, a general misunderstanding of vehicle performance and cost, as well as misplaced concern over whether fleet drivers will be able to find a station to fill up have, in many circumstances, left the switch to LPG on the back burner. A prime example of this was a feature of this year's Budget. Granted, Gordon Brown did extend the rebate on biofuels to 2010, but he made no move to discount them at the pump.
In terms of government backing one only has to look at Germany. The German administration has invested heavily in its LPG infrastructure, increasing awareness of the benefits of this type of energy to the extent that it is now the fuel of choice for many of its fleets, across the country. And it is only by providing this kind of education, combined with sufficient incentives that will encourage our businesses to do the same.
Tax incentives for purchasing or converting to LPG are successfully in operation in both Italy and France. Similar advantages have been granted to LPG drivers in both countries - LPG vehicles are allowed to operate during periods of high pollution where the use of conventional vehicles is limited.
However, the drive to take up LPG can not solely rest with one group and it is true that here in the UK, LPG and its advancement is being resisted, to a degree, by fuel suppliers and the vehicle manufacturers. This is very much due to a number of stumbling blocks that the industry needs to get over, rather than through a lack of desire.
For instance, the fuel suppliers' logistics supply chains are made more complicated by an increasing number of fuel types. Indeed, neither bio-ethanol, nor LPG, are able to share the fuel pipelines used across the country to transport petrol and diesel. In addition, forecourts can only accept a finite number of different fuel pumps through restrictions on forecourt size and consumer confusion with different fuels.
However, the numbers are getting better and better, week by week. If we look at the case of LPG, nine years ago, there were only 100 LPG outlets across the country.
Now, there are almost 1,500. So, impracticality is becoming less of an issue for fleets.
However, this increase is not as big as elsewhere in Europe and the benefits of LPG are still largely unknown, with the government doing little to encourage the use of the environmentally-friendly fuel. However, the number of filling stations across Germany is rapidly increasing, seeing up to 700 new stations in 2006 alone taking its total to 2,000. Ambitious plans see a target of 6,000 filling stations across Germany, in the next four years.
Another example is Poland. Here, the promotion of LPG in as an alternative fuel has been possible thanks to a well-developed distribution network. More than five years ago 1,900 filling stations were already in operation in Poland, and the maximum distance between stations distributing LPG does not exceed 30 miles.
However, it's all very well to be able to fill up a vehicle with LPG but how easy and cost-effective is it to purchase an LPG fleet? The attitude of the vehicle manufacturers, until recently, has also been one of frustration towards the first wave of environmental fuels and, in particular, LPG and this has been evident across Europe. A number of them entered, enthusiastically, the LPG market, in a bid to grab a slice of the fleet marketplace. But this was the mid-nineties and there was still a problem with production lead times. Indeed, by the time some systems were homologated, they were already out of date. And many dealers found that it was uneconomic to train their mechanics in LPG, given the low market take-up.
Finally, the nature of mass car production is essentially 'clip on'. To allow an LPG system to be an OE fit, a manufacturer has to provide the necessary bracketry to all vehicles going down the line. This is simply not economic if the take up is less than 1 in 300, which is the present level of market penetration. The answer, here, is to have a separate post production facility to convert the cars. This will only work, however, with steady demand, facilitated by a government more proactively involved in promoting a shift away from the traditional fossil fuels.
However, once these hurdles have been jumped over, the benefits are clear. Although maintenance costs of an LPG car are marginally greater than a standard model, fuel costs are dramatically reduced. Although LPG gives fewer miles per gallon, the costs to fill up are far less - only 43p a litre, compared to 90p or more for petrol or diesel alternatives.
Consequently, businesses that invest in LPG vehicles can expect to cut their annual fuel costs by a significant 40%. When this is added to reduced VED and class 1a National Insurance liability, the switch to LPG becomes well worth investigating.
There is no reason why the UK cannot catch up with the major European users of LPG. This type of fuel could and should be playing a more central role on the UK fleet stage and, with more of a lead from central government coupled with a little imagination and a lot of enthusiasm from fleet managers, is a very real possibility.
UK businesses now have a prime opportunity to drive the environmental agenda by developing green fleets, increasing their carbon neutral credentials and, thus, their brand reputation and leaving an eco-friendly legacy for the future of Britain's transport network.
Noel Lock is managing director of Greenfuel. For more information visit www.greenfuel.org.uk
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