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UK government launches consultation on 10% ethanol blend in gasoline

London — The UK Department for Transport launched a public consultation Friday seeking feedback on the introduction of E10, a gasoline blend with 10% of ethanol, to run until September 16.

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This includes a call for evidence on whether and how to best introduce E10.

Current gasoline blends sold in the UK contain no more than 5% of ethanol, but the DfT said that blending up to 10% could help deliver the Renewable Transport Fuel Obligation targets in a more cost effective way, providing greater carbon savings, while supporting UK ethanol producers.

However, taking into consideration fuel compatibility with older vehicles, the consultation also sets out proposals to ensure the continued supply of E5 for those motorists who need it. According to industry figures, there could be around 1 million cars within the UK that are unsuitable for use with E10.

To that end the DfT proposed a "protection grade" that will guarantee the supply of E5, should E10 be introduced.

The consultation also sets out proposals to implement new standardized fuel labelling, as required by the Alternative Fuels Infrastructure Directive.

These labels must clearly indicate the maximum renewable fuel content, therefore helping motorists select the correct fuel for their vehicle.

There are also plans to revise the consumer message associated with E10 in light of improvements to vehicle compatibility since its introduction.

Since the rise of the RTFO to 7.25% from 4.75% on a volume basis in April, the discussion around an E10 roll-out in the UK has been at the center of attention. In a time when the European ethanol market is under considerable pressure, with prices and margins being crushed under the weight of excess production capacity and supply, greater adoption of E10 across Europe is seen as crucial factor in sustaining the industry.

Several market participants said they think an E10 roll-out even just in the UK could be enough to give T2 prices and European producers a much needed boost, as many have been sustaining losses for the best part of the year.

In an environment of rising feedstock prices, the likelihood of production shutdowns has been increasingly discussed.

Currently in the UK, most of the increase to the RTFO would need to be met through increased biodiesel blending, due to blending limitations for ethanol, while double-counting for waste-based biofuels also encourages high consumption of UCOME biodiesel made from used cooking oil.

As a result, UK ethanol producers are counting on the introduction of E10 and are hoping for swift implementation because the market environment is challenging.

"I think it will go through in the end but for me it is all about timing -- the industry needs the increase in demand sooner rather than later," a producer said.

--Chrysa Glystra, chrysa.glystra@spglobal.com

--Edited by Jonathan Dart, jonathan.dart@spglobal.com