PURPOSE

The purpose of this policy is to outline the company procedure for evaluating the use of alternate fuels.

POLICY

The company will always investigate methods of operation and vehicle acquisition that reduces our impact on the environment. Any such initiatives considered must not reduce our operational effectiveness, efficiency or result in an increase in cost.

Where alternatives are being considered approval must be obtained from management before any commitments are undertaken.

INTRODUCTION

Changing fuel type is one of the most obvious avenues for investigation. The lower costs and greater distance per litre offered by some fuels compared with petrol presents, on face value, a compelling case for change.

However, as with all things there are advantages and disadvantages.  Higher vehicle procurement costs and lower resale values need to be factored into any evaluation before any decision should be made to switch to alternative fuels.

Additionally the fuel market is developing very quickly to the point where some conventional fuelled engines, petrol and diesel, now not only meet but provide a lower fuel consumption than several Hybrid model vehicles.

CHOICE OF FUELS

Many see the use of alternate fuels as an option for the reduction of emissions, but there can be difficulties associated with their use.

Any alternative fuel policy deliberation requires a proper understanding of what the change will mean.  A number of considerations must be taken into account such as likely usage pattern, fuel availability, storage and filling requirements, changes in vehicle appreciation or depreciation, servicing and repair characteristics and a realistic payback period.

It cannot be emphasised too strongly that with all initiatives seeking alternative methods of operation a full and realistic cost benefit analysis must be undertaken.  All costs and savings must be identified and factored into the analysis before you commit to any policy change or alternative option.

A proper understanding of what the payback period will be must be pattern. Questions asked in this analysis would be: –

• Is it logical to expect the vehicle to run exclusively on the alternative fuel? If not, what will be a likely alternative fuel use to petrol use ratio?
• Will the ratio push out the expected payback period, time and/or distance travelled, and will it still be cost effective?
• Are there any additional costs in time taken to fill the tank? It should be remembered that a tank full of petrol might take you further than a tank of the alternative fuel.
• Is financial assistance available for any change programs?

ALTERNATIVE FUELS

Alternate fuels fall into a number of groups each with its own characteristics. The following table indicates some benefits and/or drawbacks associated with their use.

Compiled from an article by the National Association of Fleet Administrators (NAFA) USA 1999 reference book, page eight, ‘alternative fuels’. Derived from an USA Department of Energy publication.

*Per unit volume Petrol equivalent

Relative fuel volumes and loaded tank weight for a 75litre petrol equivalent: –

* Assumes steel construction

The growing participation of Original Equipment Manufacturers (OEMs) including GM Holden, Ford, Mazda, BMW, Volvo, Toyota etc on the global stage has led to the development of truly integrated and factory warranted alternate fuel vehicles.

The most common alternative fuels currently considered suitable for commercial application are: –

LIQUEFIED PETROLEUM GAS (LPG)

Already a relatively mature technology its make-up ranges from predominantly propane to a 40/60 mix of propane and butane.

Fully factory warranted LPG vehicles are now available from Holden, Ford, Mazda, ISUZU and Volvo, with others expected to follow. Fleet lease companies now offer LPG vehicles to their customers, particularly for the higher kilometre vehicles.

With refuelling, servicing, reliability, performance and increased resale value all being issues of the past, under the right implementation strategies LPG vehicles can provide significant economic and environmental benefits to the operating company.

LPG offers most of the environmental benefits of CNG but has an advantage in its superior range for an equivalent storage capacity.  As well as providing operating costs for users, LPG offers potential benefits in terms of greenhouse gas emissions particularly in lieu of petrol and diesel.

Add to this an established large LPG distribution infrastructure network of over 3,400 sites throughout Australia.  LPG is clearly the most commonly used alternative fuel available.  As well as a number of OEMs supplying factory fitted duel fuel vehicles, there is a strong LPG conversions after-market industry.

Caution needs to be exercised should retro-fitting be considered. Contact should be made with the original vehicle supplier to confirm that the vehicle is suited to LPG running.  It is essential that qualified personnel must do any installation of equipment and engine management modifications. Not adhering to these two important issues could result in a very unpleasant outcome.

NATURAL GAS (CNG AND LNG)

Natural Gas attracts significant interest. Predominantly methane, it can be either compressed (CNG) or liquefied (LNG).  As CNG it has been used extensively in Italy and New Zealand and is beginning to enter the Australian transport fuel market, where its main application has been fleets of heavy vehicles operating from central locations in urban areas.

Natural Gas as a vehicle fuel is not new; it has been around since the turn of the century.  Australia has an abundance of Natural Gas.  It is ideal for use as a transport fuel until other renewable fuels (e.g. hydrogen fuel cells) are commercially viable.  Emissions from Natural Gas are generally considered the best of current commercial fuels.

The major disadvantage of compressed natural gas is potential range but this is overcome with LNG. There are issues of storage and the availability of refuelling facilities.  At the present time its application is best suited for situations of relatively short trip cycles from a centrally located refuelling station.

ALCOHOL FUELS

Alcohol fuels can be made from sources other than imported crude oil. Traditionally alcohol fuels have suffered from cold-start problems. This issue has now been substantially addressed and the use of alcohol fuels is technically viable.

Alcohol fuels have nevertheless had limited success in Australia, where they have been unable to compete economically with conventional liquid fuels.

ELECTRIC VEHICLES

As a result of increasing concern about air pollution, there has been a resurgence of interest in Electric Vehicles (EV’s). In the course of any comparison between conventional Internal Combustion technology and EV’s, it is essential to judge emissions that are produced in the entire energy chain.

HYBRID VEHICLES

Hybrid vehicles are now attracting significant interest. These electric vehicles use a small internal combustion engine/generator configuration as a range extender.

For example:

The Honda Insight is a hybrid-power vehicle combining a 1.0L I-3 engine with an electric motor.  The electric motor acts as a booster when greater acceleration is needed and offers greatly reduced fuel consumption.

The Toyota Prius is a hybrid-power vehicle with a 1.5L gasoline engine and a 30kw electric motor where each or both power units simultaneously supply power as needed.  In stop-and-go traffic it moves mainly under electric power, while at freeway speeds the combustion engine supplies the power and charges the battery.

Seen by some as stopgap technology, until the practical development of hydrogen powered vehicles, there is usually a price penalty associated with the purchase cost and a somewhat unknown element on the residual value.

Once the organisation has satisfied itself that an alternative fuel is a viable option for its operations and the decision is made to go for an alternative fuel, there should be an active Contingency and Scenario Planning regime in place to ensure the proposed change continues to be an advantage.

The organisation should conduct “what if” scenario’s to ensure it understands the consequences of any change that might occur and what contingency plans the organisation should have if the picture changes?

For instance where replacement policy is based on a very high residual value market, what will the organisation do if residual values fall, what policy changes will be made to counter the negative effects of the change?

As examples:

A European based organisation made the decision to use diesel for its long distance journeys based on a price differential between diesel and petrol. It reversed the decision one year later, as the cost benefit disappeared due to changes in taxation.

There are proposals by the Australian Taxation Office to change the effective life of passenger vehicles to eight years.

Under an active Contingency and Scenario Planning regime the organisation should already have determined what consequence the adoption of this will have, and what policy change(s) it will introduce to negate any problems the taxation change would have.