Forecourt
Nov/Dec 2002

How Green was my
Forecourt?
Part 2 Alternative transport fuels

T

hings have definitely moved on since Australian Convenience Store News last looked at alternative transport fuels in 1999. We are at the dawn of a new millennium, and in the same way that last century belonged to the passenger car and the petrol engine, this century looks like it will belong to the hydrogen-powered fuel cell vehicle - well, eventually.

As concerns over air quality in Europe and the US are driving fuel standards, the search for "alternatives" to petrol (and diesel) is driven by the need to reduce greenhouse gas (GHG) emissions. Whether the Australian Government ratifies the Kyoto Protocol or not, the push to reduce emissions will only get stronger, and so will the intensity with which proponents of alternatives promote their part of the solution. But what does it all mean for the fuel retailers and workshop owners?

Gas alternative
There are 2 million CNG (compressed natural gas) vehicles in the World and only 2,000 in Australia, mainly buses and trucks. This low level of penetration is largely due to the lack of refueling facilities. This may be changing, as Origin Energy builds its first Melbourne retail CNG refueling station in Cambellfield in 2003, to be followed by five others in the Melbourne area. According to Origin Energy, CNG has the potential to emulate LPG.

Regarded by many as a mainstream fuel, automotive LPG (or autogas) accounts for 8% of all transport fuels, and is available through 3,500 retail sites which fuel 600,000 LPG vehicles (mostly passenger cars and light commercials). Half of these are in Victoria. According to Phil Westlake, Communications Manager, Australian LPG Association (ALPGA), "Australia has the most fully established LPG infrastructure in the world. Growth in consumption has flattened out in recent years, but we expect sales to pick up again with the introduction of more dedicated and dual-fuelled vehicles.

LPG options for vehicles are no longer the domain of the retrofit industry, with six vehicle manufacturers now offering 26 LPG options, either factory-fitted or factory-approved products. Ford's new Falcon will include a dedicated LPG option and Mitsubishi are introducing a dedicated LPG Magna by year's end. Toyota will have launched their HiLux with dual-fuel LPG in October, and they have just announced their intention to provide dual-fuel options on the new Camry and Avalon by the end of 2002. We are aiming for 10% of the national fuel market and 750,000 to 800,000 vehicles by 2005." These efforts will be assisted by the continued replacement of petrol vehicles with LPG (and other alternative) options by fleets under the Greener Motoring Program of the Australasian Fleet Managers Association.

Reductions in GHG emissions of up to 20% are claimed for dedicated LPG vehicles (less for dual-fuel vehicles). However, life-cycle analysis to confirm such claims can be complex and sometimes inconclusive. There is a consensus that further improvements such as the development of LPG injection systems will result in lower emissions.

"The new LPG fuel standard due for release by the end of the year should reassure consumers of a consistent fuel quality," adds Graeme Marshall, Director Clean Fuels and Vehicles, Environment Australia. "The new standard will determine the permitted range of butane and propane mixes by setting a limit on the proportion of butane, and will be decided after the final round of discussions with industry in November."

The most common complaint by consumers to the ALPGA is the difficulty they have in finding the LPG bowsers on forecourts. It could be time to change the way bowsers are marked, making it clearer from a distance which pump delivers which fuel, particularly with the introduction of even more fuel options.

Biofuel blends
There have been a number of trials using 100% biodiesel (made from canola, tallow, and other waste oils) in buses and trucks. However, due partly to supply constraints the main role of biofuels will be as a fuel extender, taking advantage of waste and low-value agricultural products to boost octane and reduce emissions. The main benefit of ethanol blends in terms of GHG emissions is the use of either waste or renewable biomass. In Australia, fuel ethanol is currently produced from starch wastes as part of the industrial processing of wheat and from C molasses, a low value by-product from the processing of sugarcane into crystal sugar. The former is blended with petrol by Manildra Park Petroleum and the latter is used by BP in its current trials of ethanol blends in Brisbane.

As discussed last issue, the debate over maximum ethanol - should it be 10% or 20% - continues, with the AAA coming out strongly against blends over 10% based on vehicle manufacturers' warnings over engine performance and warranties. The Australian Biofuels Association (ABA) argues that overseas experience demonstrates that vehicle changes are only needed for blends in excess of 22%, and that the 10% blend common in the US goes back to supply constraints in the 1970s rather than vehicle operability. The ABA says it is disappointed that the vehicle manufacturers do not provide advice in vehicle handbooks and manuals on warranties for ethanol blends. The ABA would like to see local car manufacturers developing vehicles to use higher blends such as cars being developed in the US that adjust to accept up to 85% ethanol and variations in blends. It likes to point out that Henry Ford's original Model-T was designed to run on ethanol.

We are all now waiting on the outcome of Environment Australia's technical assessment of E20 (20% blend), and its decision on the ethanol level to be included in the petrol standard. On this basis, a new standard is at least months away. In the meantime there is universal agreement that all ethanol blends should be labelled at the pump. This is particularly important for drivers of older vehicles whose components are more likely to be adversely affected by the presence of ethanol.

"The AIP strongly advocates informing the customer about the ethanol content of fuel," says Ewen Macpherson, Deputy Director, AIP. "Ethanol has less energy content and affects fuel economy. The service station is first in line for consumer complaints so it is better to inform customers about ethanol." The AAA agrees: "Putting 20% ethanol in fuel and not letting the consumer know is misleading and raises issues of liability. We want labelling for over 5%," says Lachlan McIntosh, Executive Director, AAA, "The fuel should be up to 5cpl cheaper as well. This compensates for the lower energy content." The ABA argues that the lower energy content is countered by the more efficient burn which gives more energy value from the blended fuel. "And, we agree all bowsers should be labelled as fuel containing ethanol and should give consumer information about the benefits as well," says Bob Gordon, Executive Director, ABA. "Further, there is an equal obligation for the oil companies to label and warn the consumer at the point of sale on the use of highly toxic compounds routinely used in Australian fuels."

"With ethanol, there are some important housekeeping issues for the service station," adds Ewen Macpherson. "Ethanol combines easily with water, so underground tanks need to be cleaned and dry before using for ethanol blends, and they need to be kept dry." Ethanol is also a solvent that will scour ethanol storage tanks at the point of sale, picking up contents such as mud and rust. "Together with removal of carbon deposits and gums in engines and fuel systems this could result in the need to change fuel filters in older vehicles," says Bob Gordon. "Also, although uncommon, both petrol and ethanol can cause problems with paint if fuel spills are not washed away."

"The introduction of ethanol blends is manageable, but requires extra attention," says Ewen Macpherson. "The AIP is putting together an ethanol blend code of practice for storage and handling which will be available in early 2003, and is based on the major oil companies' global experience."

Hydrogen heaven
If you think technology is changing your life now, imagine producing your own hydrogen gas from water in your own electrolysis machine on-site using electricity produced by the solar panels in the canopy, then storing the hydrogen in high-pressure tanks to decant into fuel cell electric cars. This is but one of the more incredible scenarios forecast for delivering the hydrogen future.

You can use hydrogen in a conventional engine but together with fuel cells, it is twice as efficient, well-to-wheel, as a petrol car. When the hydrogen is produced from water using electricity made from renewable sources such as sun, wind, or tide, then life-cycle GHG emissions are negligible. The only emission is water. To the vehicle technology business this is the holy grail, and all major car manufacturers are working on a version of the hydrogen-powered car.

Fuel cells are simply batteries that are continuously charged by hydrogen to produce electricity. Connected to an electric motor, they can power a car. Fuel cell vehicles are just around the corner - the electric motors are already working in hybrid-electric cars (see next section, The Hybrids are Here), and fuel cells themselves are a proven technology.

Source: www.fuelcells.org

What's not just around the corner is the technology and infrastructure for fuelling with hydrogen which is highly explosive and very light. To drive the average vehicle 100km using currently available Proton Exchange Membrane fuel cells requires 11 cubic metres of hydrogen gas! The cylinders required to compress the gas sufficiently to make the vehicle practical do not yet exist.

The first fuel cell vehicles will have on-board reformers to produce the hydrogen from more familiar fuels such as petrol, LPG, methanol, and ethanol. Each has its advantages and disadvantages in terms of technical performance, environmental performance, infrastructure and supply.

The Victorian opposition environment spokesman wants to phase out petrol vehicles and replace them with zero-emission hydrogen cars by 2020. No-one in the know considers this feasible, but there is agreement that by then the dominant hydrogen production, storage and delivery technology should have emerged, and hydrogen-powered fuel cell vehicles will be readily available, if not cheap. Fuel cell cars are already on trial in the US and Japan, and Western Australia will build a hydrogen supply point in 2003 and take delivery of three hydrogen buses in 2004. For the service station, the hydrogen future could mean anything from very little change to complete transformation. What we do know is that hydrogen-powered fuel cell cars will have much lower servicing needs.

In the meantime, petrol sales could slowly decline as the electric hybrid makes inroads into the vehicle fleet.

Hybrids are here
The transition technology and the practical research ground for hydrogen cars is the hybrid electric - a combination of advanced petrol engine and an electric motor. Neither are new technologies, but they are being combined in a novel way to make a vehicle that uses 50% less fuel and creates 80% less emissions.

How the Prius hybrid electric car works:
The Toyota Hybrid System (THS) driveline consists of a purpose-built 1.5 litre petrol engine, a continuously variable transmission (CVT) which also functions as a power-split device, a generator, an electric motor and reduction gears to the front axle.

The petrol engine drives through the power-split device (an advanced type of planetary gear assembly), which sends part of the power to the wheels and part to a generator. Electricity from the generator can be fed directly to the electric motor to help propel the car, or through the inverter to be converted into direct current and stored in the battery. The high torque of the electric motor from zero revolutions brings excellent initial acceleration. For maximum acceleration, the system uses power from both the petrol engine and electric motor (using energy stored in the battery).

• When moving off, moving at extremely low speeds, descending long gentle hills and for other conditions where the petrol engine would not operate at peak efficiency, the engine is turned off. The electric motor alone propels the car.
• During normal operations, the petrol engine's power is split, with some power used to propel the car and the remainder used to generate electricity. The electricity is fed to the electric motor and/or the batteries, to assist in powering the car. The Toyota Hybrid System computer controls the ratio of power to each path, for maximum efficiency.
• The battery is regulated to maintain a constant charge. If the battery charge is low, the Toyota Hybrid System uniquely sends more engine power to the generator to generate electricity.
• During full-throttle acceleration, additional energy is drawn from the battery to boost the electric motor's output.
• During deceleration or braking, the electric motor acts as a generator, transforming kinetic energy from the wheels into electricity. The recovered energy is stored in the battery.
• The petrol engine shuts down automatically after a period of time when the vehicle is stopped.

Toyota leads the world in production and sales of hybrids. It has sold nearly 100,000 around the world, including 89,000 Prius, and makes 40,000 per year (which is still not many when you compare it to the 100,000 Camry's made in Australia alone). Currently, deliveries in Australia are around 30 per month, with interest from government fleets in the Prius, the only Toyota hybrid available in Australia. Toyota plans to sell 300,000 hybrids in Japan by 2005 and 3 million by 2010, with a range of six models including a 60-seat bus. In the US, they can't keep up with demand. All major car manufacturers have hybrids in production or prototype, such as the Honda Insight already in production and the world's most fuel efficient car, the Holden ECOmmodore prototype and the Mitsubishi 4WD Sports Utility Pack concept vehicle.

"Hybrid cars can be serviced by normal workshops, but mechanics and technicians will need some additional training," says Vic Johnston, Manager Alternative Fuel and Specialised Vehicles, Toyota Motor Corporation Australia. "Many of the service parts are the same as Corolla, and the service cost is about the same."

Carrots and Sticks
When the Minister for the Environment and Heritage, Dr David Kemp, took delivery of a new Toyota Prius in September, he encouraged Australians to follow his lead and look at environmentally-friendly transport alternatives. But, a price premium of around 20% for the hybrids has limited their market in Australia to government fleets. Alternative fuels and vehicle technologies need some form of financial support to compete with the most common form of transport - the passenger car driven by a petrol engine. Consumers have generally been reluctant to adopt new vehicles and fuels unless they are either cheaper or offer more than just environmental benefits. The current system of excise, exemptions and rebates is a mess, and control over the potential carrots and sticks - excise, funds for environmental programs, levels of stamp duty and registration fees - resides with different levels of government and in different portfolios.

Japan, the UK, a number of European countries and the US all offer substantial financial incentives ranging from $2,000 to $7,000 for the purchase of hybrid electric cars. Similar incentives apply to other alternative fuels and technologies. Should Australia adopt similar policies, the changes implied by the emerging technologies will arrive sooner rather than later.

And we thought ethanol was an environment issue!

Until recently, the ethanol debate was firmly in the hands of the environment ministry, the car manufacturers, the ethanol suppliers and the oil companies. It focused on the issues of environmental performance and vehicle operability. Although the debate is heated, these issues are expected to be resolved in the near term. The Federal Government's target of 350 Ml per year of biofuels by 2010 reflects its environment policy.

Then along came the National Party, the trade ministry, and the sugar lobby, with the issues of energy security, regional development, and domestic industry support and protection.

In a matter of weeks we saw the imposition of excise on ethanol sales (equal to petrol excise of ~38 cpl), a matching subsidy to domestic ethanol producers, the imposition of a sugar tax of up to 18 cents a kilogram on retail sugar for four years, a $150 million rescue package for the sugar industry, including a $400,000 federal grant to the Sugar Research Institute to fund a study that aims to halve the price of making ethanol from sugar for use as a petrol substitute, and continued calls for mandatory levels of ethanol in petrol of up to 10%.

"The Australian Biofuels Association makes no apologies for the support it has sought for ethanol producers," says Bob Gordon, Executive Director, ABA. "The Brazilian industry is controlled by a few wealthy families and ethanol production is heavily subsidised. If we allow cheap ethanol from Brazil there is no way a domestic ethanol industry will be established. The regional benefits from supporting the domestic industry are significant in terms of economic activity and rural employment. Ethanol also has an important role to play in future energy security."

These political decisions may reflect regional community expectations, but when governments intervene in markets this way there are winners and losers. In this case, the clear losers are the importers and, to the extent that the subsidy is not fully passed on, the oil industry and consumers.

"Trafigura Fuels and Neumann Petroleum advised the Government that they were seeking to sell petrol containing 10% ethanol to establish a market that would encourage investment in Australian ethanol manufacturing," says Barrie Jacobson, Managing Director, Trafigura Fuels. "We also advised the Government that they were unable to buy the ethanol locally and were proceeding with an import. On the eve of shipment from Brazil, the Federal Government imposed an excise on ethanol which retrospectively added A$5.7 million in excise tax to this shipment. The shipment was doomed and had to be sold to Europe at a loss to Trafigura and Neumann. The decision will also do damage to investment in local ethanol production."

The subsidy will only apply for the next 12 months. Uncertainty over longer-term policy and an effective tax on imports raise the issue of domestic supply constraints and the possibility of higher prices. According to the ABA, there is currently enough capacity to supply the Government's initial target of 2% of national petrol consumption from existing wheat and sugar by-products. "By 2020, if one-third of the Queensland sugar harvest of 30Mt was allocated to fuel production, we could produce 800 Ml of ethanol per year which would go a long way to meeting the 2 billion litres implied by a mandated use of 10%," adds Bob Gordon.

Eighteen years is a long time, and ethanol is only one component of the alternative transport fuel contribution to reductions in GHG emissions.

Click Here to read Part 1