The burning of petroleum in transport, despite its contribution to climate change, is a choice made by customers in a society that runs on liquid fuel, John Cooper has said. The director-general of FuelsEurope added that there had never been a referendum asking whether people were prepared to pay more for a low carbon future.
John Cooper is director-general of FuelsEurope, a trade association representing companies conducting refinery operations, which published a report on its vision for the future of Europe’s transport sector. 94% of transport is fuelled by oil refined liquid fuels.
You can listen to the interview with euractiv.com News Editor James Crisp below, or read the transcript.
What are you looking for from the European Commission’s transport and climate policy and what’s new in your report?
We recognise that liquid fuels remain somewhat controversial but it is important that we recognise too that they are likely to continue and have some kind of a role. There will be discussions between ourselves and the Commission about what way forward we have there. There are some key questions of what regulatory instrument is likely to be proposed by the Commission, there is still controversy over indirect land use change for biofuels and the sustainability of certain biofuels.
We believe there are a range of technologies, including advanced and waste biofuels that can be used in the long term to reduce the greenhouse intensity of liquid fuels. However, we need to recognise that such a transition would also be really a long-term vision, will be expensive and we need clarity on the policy objectives before the industry can make a major investment plan.
The transition to biofuels has been hindered by too much change in the regulation, too much challenge over sustainability so we still feel we have a lot to learn from what’s gone wrong with biofuels before going forward.
You say you need more time and it’s too expensive. Frankly, you would say that wouldn’t you? And on cost – you are the polluter. Why shouldn’t the polluter pay?
The use of petroleum fuels we have today is a societal choice. The chain starts typically with nation states that realise they have petroleum reserves, and allow them to be extracted, typically after payment of substantial royalties and taxes. There are typically a number of companies involved in extracting and producing petroleum. The companies we represent are in the business of refining and turning it into fuels.
It then takes a decision by member states to allow those to be put on the market at typically very high levels of tax, taxed at what 400% or 300% taxation. And then customers chose to use them and burn them. So yes, we are in the middle of that chain, but there is a whole series of different choices where people understand they will lead to an increase in greenhouse gases.
Burning oil is bad for people’s health and it is killing the planet. Saying it is taxed and it is down to the customer’s choice – I don’t see much difference between that argument and those used by tobacco companies.
I think there is a huge difference. The use of petroleum actually powers the normal life that we have for a great number of people and the majority of businesses have this in their value chain. It is massively different from the use or maybe abuse of a substance.
The fact that there have been uses in the past with high emissions from fossil fuels – well we have moved on from that. State of the art technology from diesel and gasoline is extremely low emissions. We would point to state of the art gasoline hybrid cars that are almost inaudible and have levels of emissions that are extremely low. In some cases, greenhouse gas emissions could have zero emissions or even negative emissions; those are known facts in the industry today.
In terms of greenhouse gas (GHG) emissions, we are showing there are routes to better efficiency. We need to make GHG emissions improvements, we need to use every option we have possible, but with an understanding of what are the costs.
If we simply pick on transport and say transport has to do this hard target and ignore the costs….at the margin we are now being driven to very high costs. Somebody should ask, on behalf of the planet, is it worth spending this amount of money on this improvement here, where we may be able to consider different things, either inside of transport or outside of transport, to achieve the same reduction in emissions?
Do you recognise that time has been called on oil? We’ve got the Paris Agreement. That’s what it means, doesn’t it? There was a time when whale oil was used to light all the lights in the world. We switched to electricity and it was bad news for Hull and Nantucket but life goes on…
We have a climate conference in Marrakesh in two months. Several thousand people will go there including climate scientists and activists. They will all take long haul flights there. Every one of those people can know and should know that their choice will result in GHG in the atmosphere. They are making that choice. It is a societal choice.
It just so happens that liquid fuels are one of the most expensive to replace when looked at in carbon terms. Let’s consider what else is happening in the world as we try to replace and reduce our emissions from transport. Several parts of the world continue to build coal power stations.
What do we know today about the cost of replacing coal with lower carbon alternatives? The Emissions Trading System tells you something about that. The ETS price is typically a proxy for the cost of replacing coal with gas or renewables. Going from coal to gas is probably €10 to €20 a ton of carbon. Going to renewables is maybe €50 to €100. Whereas going from jet fuel to a completely waste-based biofuel is somewhere between 200 to 1,000, depending on various processes. Going from light transport to electricity, €500 to €1,000 a ton. We are in a strange situation if Europe chooses to go the most expensive routes for transport, while other parts of the world don’t.
Ultimately we need to find a system where we have an economy-wide carbon price and a system that finds the lower cost options within Europe. And we would say, ultimately, we need to find a way to do that globally to meet the climate objectives.
Do we have time to do that?
That’s a political question.
Yes. You’ve put out a vision paper, so..
There’s an article in the Paris Agreement that talks about connecting carbon markets globally. We advocate that that indeed should be done. The biggest opportunities at lowest cost are not in European transport, there are in many other parts of the world that are now still developing their power generation.
On European transport, we need to take a whole range of options. That includes efficiency in vehicles, it includes operational efficiencies, digitialisation of transport to reduce congestion and achieve efficiency of use. It certainly includes exploring and supporting the implementation of lower carbon liquid fuel technologies, which is something we [the industry] will have to do. We understand we have to do something there. We have less detail on that at the moment, because we are in a deep conversation with the Commission. That has to be part of the conversation but we are saying wherever you are doing this, let’s be clear about what the costs are and focus on the lower cost options.
+Customer demand and referendums+
Climate change isn’t new. You guys have known this is coming and you have loads of money. It’s bad business planning you’ve been caught on the hop. You should have invested in finding other solutions. You deserve to go to the wall for not running your business properly.
What do customers want? The business model that the oil companies represented here are serving is a business model that customers demand.
Smokers demand cigarettes..
There’s a huge difference. I don’t know if you have ever spent a day in a service station. I have. People don’t come in and say “I want a low carbon way to get to work.” They just want to fill their tank and go, and the majority of businesses want to do the same as well.
But customers also elect governments to make decisions that are in their interests and those governments have appointed the European Commission to come up with regulation on those matters.
I don’t think we have ever had an election or a referendum which said would you be prepared to pay x amount more for your fuel in order to have a lower carbon future.
No, we have politicians so we don’t have to answer every single question that could be put to us.
What you are proposing here is a route to much more expensive fuels in transport.
No, you are saying is that we can’t do this because customers don’t want it, but I am saying is that customers – the people – have elected politicians to make decisions in their best interest. And in this case, in the best interests of their health and the planet.
First of all, there’s the cost, and our observation in the market, corporate and otherwise, is that customers are very wary of new solutions.
Is that why all of the money, the billions and billions, oil companies have earned over the years hasn’t been spent on preparing for this transformation to a low carbon economy?
Actually, quite a lot of the companies have invested significantly in renewables. The record of that frankly has been patchy. Several of those have been written off or massively underperformed. The oil companies we represent typically have large institutional investors that want to see performance.
But there are divesting aren’t they? Institutional investors are divesting from fossil fuels, or so we are told? There are divestment campaigns.
There are divestment campaigns. You just have to look at share prices. Share prices are still typically driven by oil prices, the outlook for oil prices and the outlook for possible margins on refining petrochemicals but it is mostly oil price.
+Green revolution a mirage?+
So when the Commission’s Energy Union chief stands up and says we are on the brink of a green revolution, that companies are fighting over words like sustainability, and that green industries can be a goldmine for jobs and growth, he’s just talking rubbish?
I think it is an aspiration.
He says it is a reality.
The reality today is that there will be 50 million customers coming to the companies we represent looking for the fuel to get them to work and to get them into the sky. While many of them would like to see a more sustainable future, the evidence shows that when they are offered the same product at a higher price, they tend not to go for it.
It’s not only customer response. We’ve talked about the fundamental cost and should we look at doing this in a different way in a different place. The other point is what the physical alternatives that are available are. Let’s talk about waste-based fuels. We have to be clear the volumes available are very small indeed. They are working to scale this up but you cannot improve the supply of waste oils by wasting more oils. The available quantity today is tiny.
What exactly do you want policymakers to do?
The starting point is to have a long-term vision for liquid fuels and recognise the importance of technologies around that. We would like to have across all policies the transparency of costs and a way of finding the most cost-effective solutions.