The Saab Biofuel Budget Report 2007 contains Saab Great Britain’s recommendations for how the UK Government can support its emerging biofuels industry, with the primary aim of reducing road transport emissions. Other advantages include ensuring security of energy supply and diversifying the rural economy.

Saab understands that policy-makers are grappling with a range of tough environmental and social challenges, but the fact remains that emissions from road transport are increasing. There are currently few readily available – and affordable – renewable alternatives to the conventionally-powered internal combustion engine. One of the few solutions that is available today at affordable cost is that of high-blend biofuels, such as bioethanol E85. Considering that today’s vehicles can run on bioethanol E85 without major engineering alterations, Saab believes that this fuel can make an immediate and substantial contribution to reducing CO₂ output from road transport.

Fossil fuels are a finite resource, and there is growing pressure on security of supply. The promotion of bioethanol E85 in the road transport sector can help to reduce our economic reliance on fossil fuels by diversifying the supply of energy.

Finally, considering the current challenges facing our agricultural sector, developing demand for bioethanol E85 for use in road transport will create new and lucrative markets for UK farm production.

Chapter 1: Overview: Saab BioPower

• Over the life-cycle of the fuel, Saab BioPower typically emits 50-70% less CO₂ when running on E85 compared to petrol

• BioPower engines are now available across the whole Saab range.

• CO₂ savings need to be measured on a ‘Well-to-Wheel’ basis rather than ‘tank-to-wheel’.

Saab is currently the only car company in the UK to offer an alternative fuel engine choice in every single model in its line-up. Saab’s innovative BioPower flex-fuel technology allows its cars to run on either bioethanol E85, standard unleaded petrol or any mix of the two, without any adjustment required by the driver.

When running on bioethanol E85, these cars typically emit 50 – 70 per cent less fossil carbon dioxide (CO₂) than their petrol equivalents. The benefit of bioethanol is that, unlike fossil fuels, it does not add to global CO₂ levels because it is actually recycling CO₂ already present in the atmosphere. CO₂ is removed from the atmosphere through photosynthesis when crops for conversion are grown. It is then returned to the atmosphere during combustion when driving the car. In technical terminology, this means that the CO₂ savings are calculated on a ‘well-to-wheel’ rather than a ‘tank-to-wheel’ basis. Bioethanol fuel is currently produced from agricultural crops, such as wheat, corn, grain, sugar beet and sugar cane.

Saab now has three BioPower engines on sale in the UK. The new 1.8t BioPower engine is available in the 9-3 Sport Saloon, 9-3 SportWagon and 9-3 Convertible. The 2.0t BioPower engine, available on the Saab 9-5 Saloon and Estate cars, is also on sale, along with the 2.3t BioPower engine, also available in the Saab 9-5 Saloon and Estate models.

Model	Engine	Power (PS)		Percent increase	Torque (Nm)		Percent increase	Accel 0-60 (mph)		Accel 40-60 (mph) 4th gear		Top speed (mph)
		Petrol	E85	%	Petrol	E85	%	Petrol	E85	Petrol	E85	Petrol	E85
Saab 9-5	2.0t	150	180	20	240	280	17	7.9	7.6	8.4	7	134	140
	2.3t	185	210	14	280	310	12	9	8.1	6.4	5.9	143	146
Saab 9-3	1.8t	150	175	17	240	265	10	9	7.9	8	7.4	131	137

Chapter 2: The Swedish example

• To promote flex fuel vehicles the Swedish government has:

• implemented a fuel duty rebate of around 30p per litre – the maximum discount allowed by EU law

• implemented a 20% discount from company car tax

• offered discounts from the Stockholm congestion charge and free city parking

• introduced a law requiring 50% of refuelling stations to be equipped with a renewable fuel pump by 2009

Saab launched the first BioPower car less than two years ago in its domestic market of Sweden. Since that time, the Saab 9-5 BioPower has flown to the top of the country’s environmentally-friendly sales charts, with some 11,000 9-5 BioPowers sold in Sweden in 2006.

Saab’s experience in other countries such as Sweden tells us that national and local government have a crucial role to play in establishing the necessary incentives to motivate people to make the greener choice when buying their next car.

In Sweden, discounts from the Stockholm congestion charge and free city-centre parking have helped to boost consumer interest in flex-fuel vehicles. Meanwhile, a 20 per cent discount from company car tax has given business fleet customers the incentive to choose the greener option.

Fuel consumption of the Saab 9-5 BioPower when running on E85 is roughly 25 per cent higher than for corresponding petrol engines tested according to the EU cycle. But Sweden has put in place a fuel duty rebate of around 30 pence per litre at the pump, which keeps running costs on E85 roughly the same as the cost of running the car on petrol. What’s more this rebate is currently fixed until 2011. By comparison, in the UK, a rebate of 20 pence per litre is place only until the end of 2009. The Swedish government has also introduced a law which requires 50% of refuelling stations to be equipped with a renewable fuel pump by 2009.



Chapter 3: The current UK position

• To promote biofuels, the British government has:

• implemented a £10 discount from Vehicle Excise Duty for flex fuel vehicles

• introduced a fuel duty rebate on bioethanol and biodiesel of 20 pence per litre

• implemented a Renewable Transport Fuels Obligation for 5% of all road transport fuels supplied in the UK to come from renewable sources by 2010

Late in 2005, the government announced a Renewable Transport Fuels Obligation (RTFO), which set an objective for five per cent of all road transport fuels supplied to the UK market to come from renewable sources by 2010. As a step forward in boosting the biofuels industry, this policy goal is welcome. However, the RTFO target will largely be met by blending 5% biofuel with conventional fossil fuels for use in conventionally-fuelled vehicles. The RTFO will therefore not in itself have any effect in stimulating the market for vehicles capable of running on much higher biofuel blends such as the Saab 9-3 and 9-5 BioPower cars.

In recent years, the UK’s company car tax scheme has been reformed to encourage company car drivers to opt for cars which emit less CO₂ from the tailpipe. In this context, the major challenge, and current disincentive to promoting cars powered by bioethanol E85 in the UK is that fiscal incentives based on tailpipe CO₂ emissions fail to reflect the substantial ‘well-to-wheel’ carbon savings associated with running a car on this fuel.

The same challenge applies to the current system of vehicle excise duty which is also based on tailpipe emissions. As an alternatively fuelled vehicle, the Saab 9-5 BioPower is currently eligible for a VED (Vehicle Excise Duty) discount of just £10 annually. If the vehicle’s VED rate were to be calculated on the basis of ‘well-to-wheel’ rather than tailpipe CO₂ emissions, the payable rate should actually be reduced by between £150 and £180 per year.

Turning to infrastructure, the supermarket chain Morrisons has taken an enlightened and innovative decision to install E85 pumps at certain stores across the UK. These are currently the only publicly-accessible pumps in the UK. Morrisons has taken advantage of a grant scheme administered by the Energy Saving Trust (EST) and funded by the Department for Transport, which provides 30% government funding towards the cost of alternative refuelling infrastructure.

London is yet to follow Stockholm’s lead in encouraging take-up of flex fuel cars. Whilst some other alternatively fuelled and hybrid vehicles currently qualify for a 100% discount from the London Congestion Charge, at present there is no such exemption for flex fuel cars, such as Saab’s BioPower models.

Chapter 4: Saab’s Proposal

• Saab calls on the UK government to:

• Increase and prolong the current fuel duty rebate for biofuels

• increase the RTFO target above 5%

• lintroduce a meaningful discount from Vehicle Excise Duty for flex-fuel cars

• introduce a specific discount from company car tax for flex-fuel cars

• maintain and expand incentives to encourage the installation of biofuel refuelling infrastructure

Cars like the Saab 9-3 and 9-5 BioPower can deliver immediate benefits to the environment, to farmers, and to a richer energy mix. But this will only happen if Government takes action now to establish the comprehensive framework of long-term incentives needed to boost consumer confidence and allow this exciting technology to flourish. Saab would like to see the Government take the following measures:

1. Revise vehicle excise duty to reflect fully the well-to-wheel CO2 benefits of buying a flex-fuel car
2. Maintain and expand incentives to encourage the installation of bioethanol E85 refuelling infrastructure
3. Introduce a specific discount from company car tax for company car drivers opting to drive a flex-fuel car
4. Increase the RTFO target to more than 5% as an additional stimulus to the market for bioethanol E85
5. Increase and prolong the fuel duty rebate applied to bioethanol E85 in accordance with the Swedish example; in the UK the rebate is currently fixed at 20 pence per litre until the end of 2009 – in Sweden, the discount for bioethanol is around 30 pence per litre and fixed until 2011.

Saab also calls on local Governments to do the following:

1. Ensure that the well-to-wheel CO2 benefits of driving a flex-fuel car are fully integrated into any future revision of the London Congestion Charging Scheme
2. Similarly integrate those benefits into other local road pricing projects which differentiate vehicle charges according to emissions
3. Introduce additional local incentives to encourage drivers to opt for flex-fuel cars, such as discounts from city parking.