Saturday 24 August 2019

High-tech 'greener' fuels will make shift to electric cars more gradual - DCC boss

Fast-moving changes: The Government plan includes a ban on sales of petrol and diesel vehicles by 2030
Fast-moving changes: The Government plan includes a ban on sales of petrol and diesel vehicles by 2030

Shawn Pogatchnik

Lower-emission substitutes for diesel and petrol that work in traditional engines will play an important role in achieving carbon reduction goals, according to the chief executive of global fuel distributor DCC.

The Government's Climate Action Plan envisions a rapid consumer take-up of lower-range electric cars and a ban on sales of new diesel and petrol vehicles by 2030.

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But Donal Murphy of DCC, a diversified investment company with major stakes in liquefied natural gas and motor fuels, sees the future unfolding differently.

"The reality is it's going to take a very long period of time before there's any material shift from diesel and petrol cars," Mr Murphy told the Irish Independent in an interview.

Mr Murphy said the limits of electric power - both in grid generation and battery capacity - and the development of greener fossil fuels would ensure a long-term place on Irish roads for fuel-burning vehicles. "There will be a whole host of fuel changes in the mix. Not everything will be electric," he said.

"The Government has set its targets. But there's the practicalities of being able to, one, generate enough electricity, and two, change a fleet that on average remains on the road for 10 to 12 years across the European market," Mr Murphy said.

To achieve the Government's 2030 vision, he said: "You'd want nearly every car being sold today to be electric."

Mr Murphy forecast that Europe's engines were as likely to be powered by new-technology fuels, such as the Shell-produced diesel substitute GTL (gas to liquid), which already is being sold in the UK by DCC subsidiary Certas Energy and in Denmark by DCC Energi. According to Certas, GTL works in diesel engines without modification, is sulphur-free and produces much lower emissions of nitrogen oxide, carbon monoxide and particulates.

High-tech fuel looks particularly useful for operating heavy goods vehicles, said Mr Murphy, whose company uses more than 2,700 trucks in DCC subsidiaries from Hong Kong to the US Pacific Northwest.

As for petrol stations - some 1,400 of which DCC's Retail & Oil division operates in eight European countries - Mr Murphy said those businesses are already diversifying to boost profits.

He said the expected decline in demand for diesel and petrol would come more slowly than many expect, perhaps by 1pc to 1.5pc annually in the coming decade.

"Petrol stations won't need much change in their margin to compensate for that. Fractions of a penny," he said.

"Profits in the retail petrol station market over the past 10 years in Europe have inflated well north of the cost inflation in the business, because there has been consolidation of sites (and) bigger sites selling more products on them," he said, highlighting the potential of high-performance car washes and more enticing convenience stores to compensate for lost revenue at the pump. "What happens on fuel is important, but it's not the only thing generating income for a retail petrol station."

In Britain, where DCC is the top oil distributor and operator of fuel loyalty cards, Mr Murphy sees the threat of Brexit as a headache, but not a deterrent to increased investment.

"The UK in a hard Brexit situation has to become a harder market for a time. But it's always going to be a very big market and therefore a good place for us to do business," he said. "We buy from the refiners and importers. Fuel will get into the market because the economy would grind to a halt if there wasn't fuel in it."

Irish Independent

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