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Well-to-wheel CO2 tax is future, says Ford md

Date: 26 July 2006

Ford UK boss Roelant de Waard has made a plea to Government to change company car-related taxes to reflect total 'well-to-wheel' (WTW) rather than partial 'tailpipe-only' CO2 impact.

After the announcement made at last week's British Motor Show of a £1bn cash investment in eco

technologies for the Ford Group, de Waard said the firm was in talks with the Government to secure a series of tax breaks based on total CO2 emissions that could potentially cover everything from BIK company car tax, VED, fuel duty reductions and even congestion charge discounts.

In the short term this would benefit the proliferation of bioethanol fuelled cars because the fuel is made from crops that absorb CO2 as they are grown. But in the long term any technology that has a smaller total CO2 impact would prosper. Ford's bioethanol Focus Flex Fuel Vehicle (FFV) - already on sale - has a 99g/km CO2 rating on a WTW basis. WTW CO2 figures for a conventional petrol or diesel car are typically 17% higher.

Talking exclusively to Fleet Week de Waard said: "We don't want to prescribe the solution, we want to offer the benefits of the technology. Whether it comes from lower congestion charges, fuel duties or VED, what we want to ensure is customers find the price for the solution acceptable. What is clear is that there is major environmental benefit to bioethanol that is not reflected in the current tax regimes."

The existing CO2 tax system only takes into account 'tailpipe' exhaust (or 'tank-to-wheel') emissions for the lifetime of the car's use - not the CO2 emissions created in production and delivery of the car and fuel (or 'well-to-tank'). The WTW method combines the two.

Ford is bullish about bioethanol's prospects, on the back of success in several other overseas markets, including Sweden, where - after government incentives including a 20% reduction in company car tax to reflect the fuel's WTW impact - 80% of all Ford Focuses sold are FFVs, able to run on bioethanol or conventional petrol.

However, 25% more bioethanol is needed to travel the same distance as a normal petrol unit. Bioethanol currently has a 20 pence per litre duty rebate, making it a similar price to petrol and diesel, so without an additional fuel duty rebate it will cost fleet managers more to run.

Ford has made the price of its Focus FFV the same as a conventional Focus and Norwich Union has pledged to offer a 15% discount in insurance premiums for FFV Focus drivers, but Ford believes the success of the technology is still dependent on a change of Government thinking on CO2 measurement for taxation.

The Government, however, remains for now, unmoved. A Treasury spokesman told Fleet Week: "Incentives for bioethanol are already in place and sufficient, although all taxes are subject to review. The reason for not incentivising the fuel further is that there is no way of knowing which fuel is being used [with a dual-fuel vehicle] and there are difficulties in measuring lifetime bioethanol emissions."

The latter point is certainly true - there are many factors to consider from tractor diesel miles in harvesting to how much fertiliser is used - but a system of measurement of all the variables already exists at the European Consortium for Automotive Research (EUCAR).

Saab is also a bioethanol believer and made similar calls last week for well-to-wheel to be the new CO2 playing field.