Looking Beyond the Obvious

By Robert Vierhout | April 11, 2012

For the average non-European it is difficult to understand why in Europe so many passenger cars run on diesel instead of gasoline. Knowing that trucks, buses, ships, trains and planes all need diesel to get propelled, you could expect that the preferred fuel for lighter modes of transport would be gasoline. The logical result: Europe’s supply and demand for fuels is not in balance. We are rather short on diesel and long on gasoline.

The unbalanced tax structure on fuels is making the situation worse by the day. By subsidizing diesel, drivers will not move away from diesel cars. As the diesel price at the pump stays well below the price of gasoline, there is no direct visible incentive to change over to gasoline engines.

Take as an example the country where I live, Belgium. Why do 9 out of 10 passenger cars run on diesel? More miles per gallon and lower costs per gallon are all good for the consumer. But at macro-level there are some real negatives: less income for the state (lower taxes); more environmental costs to adjust the supply shortage and shipping massive volumes of diesel from Russia to Europe;  increased health costs as there is an increased risk of heart and respiratory diseases due to more polluting particles in the air.

Looking at the total picture, the case for stimulating diesel is not that obvious at all. As long as regulators refuse to change the dynamics of the fuel market, however, the situation for gasoline demand will continue to decrease. In almost every EU member state we see consumption of gasoline going down. Even in an ethanol/gasoline-loving country like Sweden, diesel cars are becoming more popular by the day.

Of course, the decrease in gasoline consumption is not just due to an increased number of diesel drivers; it is also partly the result of gasoline engines finally becoming more fuel efficient. Also, the fact that smaller cars are getting more popular for economic reasons means less fuel consumption. For the ethanol sector, this is potentially a worrying development: less gasoline volume obviously means less ethanol blended in.

So, is it possible to change the tide and still get more ethanol into the motor fuel stream?

Besides the obvious, but contentious change in taxation structure, there are options such as promoting E85 and going from E10 to E20/25. These higher blend solutions will not be hailed by the oil industry as great solutions. Promoting E85 is most likely a kind of horror scenario for the oil industry. An E20 scenario is possibly a more palatable solution. Due to expected indirect land use change implications, the environmental performance of biodiesel is now under scrutiny. More ethanol use could then compensate for the reduced use of biodiesel.

But there is another solution: getting ethanol into the diesel fleet. This option would kill two birds with one stone: countering the effects of less gasoline demand and contributing to closing the gap in diesel supply. In Europe, there is a good example of such a way forward.

The Swedish truck company, Scania, has shown for a number of years that it is possible to have diesel trucks/buses running on ethanol. A mixture of 95 percent hydrous ethanol and a few chemicals (ignition improver, lubricant additive, corrosion inhibitor) will run in a converted diesel engine. In the Swedish city of Stockholm, over 400 buses use this engine and fuel, in what is viewed as a very successful project.

Scania has plans to roll out more of these engines in the rest of Europe. To my mind this could be a clear win-win situation: more ethanol, less diesel—looking beyond the obvious.

Author: Robert Vierhout
Secretary-general, ePURE