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Be a 'true' green in 2007

Date: 10 January 2007

Mike Waters is senior insight & consultancy manager at Arval, the leading vehicle leasing and fleet management company.

With hybrids and biofuels coming under intense scrutiny, Mike Waters, head of market analysis at Arval, offers some advice for both business and the Government

Last year saw the debate on road charging, fuel prices, duty of care and vehicle choice rumble on - the question is: what issue will dominate our agendas in 2007?

In my opinion, there is only one answer. All of the 2006 issues will remain core but whereas, up until now, they have tended to stand alone, in 2007 they will become intrinsically linked under the banner of environment and for some more broadly linked as Corporate Social Responsibility.

The signals became clear last year as the environment continued its inexorable rise up the political agenda. Strong Governmental support for The Stern Report, followed by new measures in the Budget and Pre-Budget Report underlined that steps to tackle climate change have become possibly the prime political objective. The stakes are raised further due to the fact that 2007 is also expected to see the current Chancellor's final Budget ahead of an anticipated move to No. 10. Many are predicting that his 'last' Budget will further up the green ante with announcements expected on a number of key issues affecting the fleet sector, all designed to make environmental impact a key determinant in vehicle choice and integral to day-to-day fleet operations.

However, business still faces many challenges when trying to make sustainable environmental decisions; the main one often being the contradictory nature of available information.

For example, a recent report in the US called into question the true green potential of hybrids. The Dust to Dust report calculated how much energy cars use in their lifetime, the authors claiming that thinking only in terms of fuel efficiency was short-sighted. The report suggested that batteries and other parts of hybrid cars are very complicated to manufacture and recycle and, in fact, the energy required to drive a hybrid is small in comparison to the energy required to build and recycle it.

Biofuels are also coming under scrutiny with environmental groups warning that, rather than alleviate climate change, intensive biofuel use may actually worsen global warming, while also causing environmental degradation and poverty, particularly in developing countries. The Global Forest Coalition has said that plantations being developed for biofuels are driving deforestation and pushing hundreds of thousands of farmers off their land. There are also concerns that the grain required to fill the tank of a single vehicle with biofuel would feed one person for a whole year and that in 2006 a worldwide increase in the use of grain for conversion to biofuels led to a 60% increase in grain prices.

All of this leaves the potential for companies to feel caught in a vice, with pressure to 'go green' on one side and conflicting information on the other. In this situation, clear, unbiased professional advice is vital, if expensive mistakes are to be avoided. These concerns are inevitably fuelled by memories of challenges posed by LPG.

The key for the Government in 2007 must be to continue to develop the tax system to encourage and reward appropriate environmental choices, based on an integrated approach that is technology neutral.

For business, the target in 2007 is to deal with some of the key employee driving issues that fall under the environmental or CSR banner. By this I am not necessarily advocating any immediate restructuring of fleet policy to embrace alternative fuel vehicles, although for some these may have a place. Great environmental strides can be made by training high mpg drivers, taking back control of the 'grey fleet' of opt-out and cash for car drivers, and grasping the nettle of vehicle choice to rid fleets of high CO2 emission vehicles.

The key to implementing many of these changes will be good quality information, and to understand what the current profile and performance of the fleet actually is. Effective fuel management allows a carbon footprint to be defined, which provides a baseline for actions to improve vehicle selection and driver performance. Implemented effectively, these actions will not only improve environmental and safety performance but also reduce cost.

The virtuous circle for 2007.