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Watch: What next for biofuels, as the UK mulls move to battery-power?

It is no coincidence that, as the UK gears up for Brexit negotiations, the issue of emissions is climbing back up the political agenda. But it isn’t all hot air, the country’s focus on cutting emissions by 80% by 2050 has seen it indulging in ambitious thinking –- not least in following France towards a future without the internal combustion engine. But where, in that environment, does ethanol and biodiesel fit? S&P Global Platts editorial director of agriculture pricing Tim Worledge reports.

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Video Transcript


Welcome to The Snapshot – our series examining the most significant news and market movements throughout the commodities world.


As the post-Brexit-referendum haze continues to settle over Europe, the UK is striding the international scene with all the confidence and grace of a rabbit trying to cross a fast-moving freeway.


Whatever internal wranglings are occupying the country's ministers, there are those who still stress the scope for opportunity that the change brings, and one of those places is in the world of emissions.


Over the last few weeks, it has become apparent that the UK is starting to perhaps worry about the crucial targets around cutting emissions and whether it is able to hit those targets.


A raft of headlines has hit the country's media calling for the tearing up of all speed bumps across the nation in order to meet emissions targets. The logic is that cars slow down for each speed bump, but then accelerate as soon as they're clear thus boosting emissions.


A similar concern was highlighted by industry consultancy Eunomia when it highlighted a boom in incinerators would like harm efforts to recycle and further add to the emissions headache.


But perhaps the greatest sign came at the end of July, when the UK announced it was following France in banning sales of new petrol or diesel-powered cars. In so doing, they signaled the end of over a century of the internal combustion engine.


Leaving aside the question of whether it's feasible to achieve in that time frame - Europe's dieselization took the best part of four decades to attain a critical mass - this is an ambitious effort at blue sky, green tinged thinking. That thinking chimes with the UK government's stated intent to establish the country as a center of excellence for all vehicular-things battery-powered.


But where does it leave the biofuels sector? According to data from the UK government, the industry has attained some very impressive credentials already, contributing 3% of the UK's road fuel mix and using 1.2 billion liters of renewable fuels - some 28% home grown, but with the rest drawn from an international array of partners including France, the USA, the Netherlands and Germany.


Brexit will be watched closely as that process unfurls, but what scope does the industry have in the post 2040-battery-and-hybrid-powered world?


Currently, there are some 37 million cars on the UK's roads and battery or hybrid vehicles occupy a small percentage. Although there trend towards battery is accelerating, and the performance of those vehicles is increasing, it is still early days. Average car lives can be around 15 years, so there is still ample scope for liquid fuels and the Department for Transport maintains that - even if all new cars would be electric by 2020 - liquid fuel demand would persist for decades.


There's no doubt the energy mix is changing and will continue to change, but the UK government has stressed that it retains expectations of liquid fuel demand well past 2040 and that biofuels are likely to remain a key part of that equation, particularly as the government champions the country's unwavering commitment to cutting emissions.