Sweden excluded, E85 cars in the European Union are a rare phenomenon.
The E85 market is expanding very slowly and could be nonexistent within a few years if proposed rules on the monitoring of vehicle emissions materialize. Why is E85 in Europe such a slow business and why is there a risk it could stop altogether?
The main reason is the gasoline-to-diesel fuel use ratio. Europeans love diesel engines. We all know diesel cars are smelly, noisy and emit a lot of particles (and therefore are not good for public health), but at the same time, carbon dioxide emission reduction performance is unbeatable. Not that the average consumer really cares about emissions reduction. For the driver, it’s all about taxes. The popularity of diesel engines is caused by high fuel efficiency combined with low fuel prices, thanks to diesel’s lower fuel tax. These lower taxes were introduced to decrease costs for the economically important trucking sector in countries such as Germany, France, Belgium, Spain and the Netherlands. But because the fuelling logistics between trucks and passenger cars are not separated, the consumer can enjoy the same low taxation of the fuel. The low diesel price triggered a strong increase in demand for diesel cars and auto manufacturers invested substantial money into the production of more fuel efficient diesel engines rather than gasoline engines. As a result, there are many more diesel-fueled vehicles in Europe. In Belgium, for example, 90 percent of passenger vehicles are diesels. Europe imports around 25 million tons of diesel fuel annually, mainly from Russia.
Another reason we could see a decrease in E85 use or even see consumption halt has to do with proposed European rules on measuring car emissions. Earlier this year the EU set tough emissions standards for vehicles. Most of the saving needs to come from improved fuel efficiency. However, the rules also allow part of the savings to be achieved through the use of biofuels. For auto manufacturers, this could be a way to achieve a substantial saving, but only if E85 is available. Here is where the dilemma lies: oil companies have no interest in expanding the network of E85 filling pumps hence the European Commission argues no emissions credit for flex-fuel vehicle (FFV) manufacturers. The commission’s logic is that giving a credit upfront to an FFV will result in massive FFV production whereas the fuel will not be there. Therefore, the commission proposed to measure FFV emissions as if the car would be running on gasoline only.
The proposed rules underline once more the chicken-and-egg problem we face. There are no FFVs, so no need for E85 and there is no E85 so no need to manufacture FFVs. Instead of making the future of E85 impossible, the proposed rules should be changed to assume that every FFV runs on E85. The emissions benefits auto manufacturers can claim will result in greater FFV production and, most likely, greater pressure from automakers on oil companies to increase the number of E85 filling pumps. The oil companies in return could insist that car manufacturers produce more fuel-efficient gasoline cars so that this type of vehicle becomes more attractive for consumers.
The 27 EU member states need to determine how to measure emissions. If they support the commission’s view, it will mean a slow and certain death for FFVs because auto manufacturers will only produce FFVs if they can get the emissions benefits that E85 deserves. Governments also need to undo the discrimination between the taxation of diesel and gasoline. If this big wheel can be turned, the E85 chicken-and-egg problem will be solved one day as well.
© 2010 BBI International Media
