supported by acknowledgement by UKPIA members of a role for
these fuels outside of the transport sector
This also assumes the availability of sufficient biofuels’ production
capacity (circa 500,000 mt/year, initially) and successful integration into
the established heating oil supply chain with the obvious source being
the existing refinery network, which currently produces around 2 million
mt/year of heating kerosene. Total, La Mede biorefinery in southern
France (a former oil refinery) provides a feasible ‘template’. Retaining
the same 1% pa reduction in consumption as in the 2016 projection
results in a 2025 market of circa 1.78 million mt (2.22 billion litres) –
down 100,000 mt (125 billion litres) from current level.
The ‘worst case’ assumes the
‘nuclear’ outcome
In the event the case for sustainable low carbon liquid fuels in heating
is not accepted and UKPIA members discontinue supplying heating
kerosene ‘during the 2020s’, as per the ‘Future Vision’, the heating
oil market is projected to decline to zero by 2030, with a progressive
acceleration in the rate of decrease after 2025 as attrition of existing
heating oil outlets gathers pace. On this basis, the market in 2025 could
fall somewhere in the 1-1.2 million mt (1.25-1.5 billion litres) range,
followed by a further quickening in the pace of decline.
The ‘average case’ is a compromise
Pitched between the two extreme cases this assumes government
acceptance of the role of low carbon liquid fuels as an ‘interim’ solution
towards decarbonisation, mindful of the issues around cost,timing,
etc, combined with the adoption of alternative, low carbon heating
technologies by oil users.
This scenario foresees progressive phasing out of liquid fuels over
the next 15 years, supported by, as in the above case, or aligned to
UKPIA supply policy. On a straight-line reduction basis, this would take
the market down to 1.25 million mt (1.56 billion litres) in 2025. In reality,
the early years’ decline might be more gradual, so a more realistic
outlook may see a market nearer to 1.5 million mt (1.88 billion litres).
The above exercise is first and foremost, an attempt to formulate a
range of possible ‘outcomes’, endeavouring to define the ‘extremes’
in the spectrum. The current government position does not give cause
for optimism for the role of liquid heating fuel in helping to address
the decarbonisation challenge, so a lot will hinge on the power and
effectiveness of advocacy of those (UKIFDA & OFTEC in particular)
promoting the case for sustainable low carbon liquid fuels in heating.
The outcome of the consultation and ensuing decision (legislative)
process may not be known for a year or more. So for now, it’s a case
of watch and wait!
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A subsidiary of TANKER CONSULTING SERVICES LIMITED
Doug Watts 07770 837 829
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Brian Edwards 07831 617 616
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Richard Bulmer 07584 239 297
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Fuel Oil News | May 2020 21