09 Dec 2010

End of Road for E85 Fuel

As the duty derogation to encourage the sale of the environmentally friendly E85 motor fuel runs out at the end of this year, Maxol Limited has reluctantly decided to commence phasing out the marketing of this fuel from 1 January 2011. As a result of the Government incentive coming to an end this year, E85 will become significantly more expensive at the pump than normal unleaded petrol and the already extremely modest demand will inevitably disappear.

Maxol pioneered the use of this environmentally friendly (85% ethanol) fuel in 2005, supporting it with a national network of 28 service stations and was also in the vanguard of the introduction of E5 (5% Ethanol) unleaded petrol, which it will continue to market throughout Ireland.

Whilst the Government has retained a Vehicle Registration Tax relief of €1,500 on flexible fuel vehicles running on E85 + bio-fuels, we see the cost of the fuel being prohibitive to consumers as it will increase by approximately 53 cent per litre (44.27 +VAT) at the pump. This will result in the grade being some 25 cent per litre* more expensive than normal unleaded petrol, an unsustainable price for a litre of motor fuel. Out of approximately two million cars in the Republic of Ireland, less than seven and a half thousand are suitable to use E85. All of these flexi fuel cars can also run on normal unleaded petrol so, the car owners concerned will have an alternative option and can continue to use the vehicles without any mechanical adjustment. On top of this, Maxol is one of the companies that has 5% ethanol in its unleaded fuel and motorists can be assured that it will continue to sell this green fuel throughout its network in the Republic of Ireland.

Tom Noonan, Chief Executive of the Maxol Group said: “Maxol is proud to have pioneered the introduction of a novel, environmentally friendly fuel and appreciated the Government support it received to assist in its promotion. However, while bio fuels continue to be heavily marketed in the motor fuel business in such places as the US, Sweden and Brazil, it appears that a similar policy is no longer fashionable in Ireland. We just cannot justify making pumps and storage facilities available while delivering very modest quantities of this product. Regrettably, the end of the duty derogation marks the end of the road for this environmentally friendly fuel in Ireland. However, our commitment to E5 unleaded petrol is absolute.”

Ends

*Calculation based on post budget current prices inclusive of the duty tax change.

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