TSA questions UK government strategy

While recognising the need for decarbonisation and the focus on road transport as a major contributor to this goal, the Tank Storage Association (TSA) has issued a statement claiming that the strategy raises several significant concerns for the bulk liquid storage sector, and more widely for the downstream oil industry.

Terminal operations and energy security

Bulk liquid storage in the UK is an essential part of the supply chain, providing an interface between sea, road, rail, inland barge and pipeline logistics. The tank storage sector provides many of the raw materials and finished products required to ensure that the UK economy thrives, and energy needs are met. It is worth noting that the UK is a net-importer of both diesel and aviation fuels¹, fuels imported to, and distributed from, bulk liquid storage facilities.

Hydrocarbons account for over 60% of the volumes of bulk liquids stored at TSA member sites and provide the infrastructure necessary to support the UK demand for transport fuels. UK businesses also rely on these facilities for the export of bulk liquids including gasoline. Import facilities also provide greater resilience within the supply chain by ensuring flexibility to meet demand, particularly in periods where domestic supplies of transport fuels cannot be guaranteed.

Recent reports² have indicated that a global peak oil demand will not be expected until 2036, a failure to manage decarbonisation and any unintended consequences on the supply chain may have significant impacts on the ability of the sector to meet demand.

All industrial facilities are subject to continuous maintenance and improvement to ensure that they are efficient, meet the demands of their customers and are compliant with relevant legislation and standards. Financial performance is measured against the returns that those investments make, which ultimately determines viability. Without careful consideration and planning regarding the impacts of decarbonisation, assets that are required to meet current and near-term demand may no longer be viable for owners and investors – impacting on energy security, as well as those businesses that rely on the import and export of bulk liquids in the chemical, agricultural and food markets.

Alternative fuels

One of the fundamental policies in the strategy is ‘Continuing to take a technology neutral approach to meeting our ambitions’; however, the strategy predominantly focuses on electrification and the subsidies that will be made available.

Emerging technologies should also be considered, e.g. e-fuels and Power to Liquid (PtL), which are carbon neutral and can utilise existing infrastructure (and vehicles). Consideration must be given to these alternatives, which may have less impact on the environment, economy and required investment within the supply chain as part of the overall strategy. Fuels Europe recently published a vision for 2050 which looked at different viable energy sources which collectively could be developed to meet government targets.³

Replacement infrastructure

Electrification is an important aspect of the strategy for decarbonisation, particularly for shorter journeys carried out in urban areas and in hybrid vehicles for longer journeys. The strategy sets out how it intends to grow and encourage installation of electric charging points both in domestic dwellings and within the existing retail network.

Careful consideration must be given to the logistics for installing charging points on the existing retail network – the number of charging points and their nature (for example fast chargers) will have a significant impact on how and if these can be installed.

All charging points, and access and egress to them, will be required to comply with the current industry best practice as described in the Energy Institute ‘Blue Book’.⁴ Where space is available to install charging points, in many instances separate feeds will be required for the site which will necessitate obtaining the appropriate planning consent and wayleaves.

Legislating sites to provide charging points without providing access to funding may also result in many existing retail sites closing, particularly in rural areas where the demand will be highest.

Fuels duty

The duty paid on fuels, either as import duty or fuels duty paid by the consumer is a significant contributor to the UK economy. For all fuels this is estimated to be £28.2 billion in the UK for 2018 - 2019,⁵ a large proportion of which will be for petrol and diesel sales.

Duties paid on transport fuels imported to the UK will be much higher, estimated at between £40 – £60 billion.

No consideration has been given to how this deficit in duty will be addressed during the transition toward full decarbonisation.

The TSA asks that the UK government fully engages with all those businesses engaged in the supply of transport fuels to the UK market and provides appropriate opportunities for formal consultation as necessary.

Reference

1. UK Petroleum Industry Association Statistical Review 2018 table 2.9, http://www.ukpia.com/docs/default-source/default-document-library/ukpia-statistical-review-2018.pdf?sfvrsn=0
2. Wood Wood Mackenzie’s oil price outlook 2018, https://www.woodmac.com/reports/oil-markets-wood-mackenzies-oil-price-outlook-5262
3. Fuels Europe Vision 2050, https://www.fuelseurope.eu/vision-2050/
4. Design, construction, modification, maintenance and decommissioning of filling stations (Blue Book), https://publishing.energyinst.org/featured/the-blue-book
5. Office for budgetary responsibility, http://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/fuel-duties/

Read the article online at: https://www.hydrocarbonengineering.com/tanks-terminals/23072018/tsa-questions-uk-government-strategy/