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Why fuel prices are not 'pump fiction'
5 July 2022
Rising fuel costs reveal a complicated truth about value
Over the last two weeks we have seen ‘Go Slow’ protests on motorways against the rising fuel prices and an article in the Mirror quoting Edmund V King OBE, President of the AA, that prices are ‘pump fiction’.
The subtext is that pump prices don’t reflect the wholesale market, and the article quoted a pump price for diesel of 198.96ppl. Phrases like ‘heinous’ and ‘regressive’ were used.
While I don’t for a minute dispute the massive impact wholesale energy price rises are having on people, especially the lowest paid, it is truly shocking to see the rate of inflation and consequent disconnect to wages.
But the solution to that problem is not to reduce the tax on a commodity which generates 40% of the UK’s carbon emission (when upstream refining is taken into account). Below I will discuss the reasoning for this, but I won’t go into the details of the broader issues as this post is about fuel and energy, not social value.
The fuel crisis isn't the result of taxation and pump price
There are a range of issues with the premise that fuel price challenges stem from unfair taxation and pump price profiteering. I’ll just call out the main two:
- Pump prices lag wholesale prices: this has always been the case as the RAC Foundation’s data shows. Wholesale prices have only just started falling so one would expect the pump price to follow shortly—it always has in the past as the data shows. This is exactly what you’d expect from a traded commodity which is stored in large quantities at the retail location (note – this also depends on $:GBP FX rate).
- ‘Regressive’ and similar statements are simply wrong. Fuel duty is a fixed figure per litre, so as the retail price goes up fuel duty actually becomes a smaller % of the cost. The very opposite of regressive.
The only solution that doesn't cost the earth
The real indicator should be the 'value' of fuel, because there are so many hidden costs. And the only viable solution is the transition to electric vehicles (EV). To make the case, I have done some calculations that compare the costs and efficiencies of diesel/petrol vs electric.
Diesel (and petrol) are massively inefficient fuels when well-to-wheels is considered. Typically below 20%: four times as much energy is used extracting, refining, transporting and burning the fuel as it actually converted into motion.
In contrast, an electric car is around 76% efficient end-to-end. A third of the energy converted into motion is lost in generation, distribution and motor processes. 400% process losses for ICE, 33% for BEV
Taxation on diesel at 198.96ppl is 33.16ppl VAT and 52.95ppl duty, a total of 86.11ppl or 43% of the retail price.
The average diesel car does 43mpg = 9.5 miles per litre. A cost of 20.9 pence per mile whilst using 0.105 litres of fuel and emitting 0.2645kg CO2e (based on 2021 conversion factor of 2.51233 kgCO2e/litre)
An electric car gives ~4miles/kWh (I average 4.3 in my Kia eNiro). The current price cap at home is 28.34p/kWh, a cost of 7.1ppm using 0.25 kWh of electricity and emitting 0.0531kg CO2e per mile, 20% that of diesel.
Tax on electricity at home is 13% environmental tax + 5% VAT = 18% tax. 42% that of diesel.
For business it is 13% environmental tax + 17% VAT = 28% tax. 65% that of diesel
Hence driving a BEV rather than in a diesel car you are paying between 2 and 3 times the tax per kgCO2e emitted.
Five miles in an EV car buys you a bag a sugar
What does all this show? It certainly isn’t that tax on diesel is too high. What it shows is that you can save 13.8 pence per mile and 0.2114 kgCO2e by driving a battery electric car—hence the AA and every other motoring, energy and campaigning organisation, as well as every business, should be focusing on how we can switch to electric vehicles as soon as possible.
A 1kg bag of sugar at Tesco costs £0.65. You can save enough money to buy one, and the equivalent weight of CO2e, by driving just 4.7 miles in an electric car.
Switching to electric vehicles now makes sense for people, planet and pocket. Contact me or edenseven for help in making these savings a reality for you and your business.
It won't be easy, but the rewards are huge
Simon King built the largest fleet of EV vehicles in the UK. He has a deep knowledge of the industry and a passion for electric vehicles, particularly the opportunity they offer to positively impact the environment while also saving you money.
If you would like to talk to the edenseven team about effective steps to invest in electric cars and change your fleet, please get in contact with us.
A review of Britain's electricity generation over the past four years, including the contributing energy sources, carbon intensity, proportion of zero-carbon sources and further insights.
In December 2024, wind energy accounted for the highest proportion of Britain’s electricity mix among all energy types, contributing 39%. Gas contributed 29%, which was a 3% increase from December 2023. Although wind's contribution was higher than in December 2021 and 2022, it was 2% below the 41% recorded in December 2023. Imports reached their highest level for December in the past four years, supplying 10% of Britain’s electricity mix, which is 3% more than in December 2023. Contributions from biomass, hydro, solar and storage remained stable compared to December 2023, providing 6%, 3%, 1% and 1%, respectively. Nuclear energy saw a 2% decrease in its contributions, delivering 12% of the mix in December 2024, the lowest level for December in the past four years. Coal contributed 0% after its phaseout from Britain's electricity generation in September of the previous year. Zero-carbon sources comprised 56% of Britain's electricity generation, marking the second highest level for December in the last four years; however, 4% lower than for December in the previous year. Despite this decline, the rolling 12-month average for zero-carbon sources was 51%, the highest of the last four years. The carbon intensity of electricity generation in December 2024 was 126 gCO₂/kWh, representing a 3% increase compared to December of the previous year. However, the rolling 12-month average was 125 gCO₂/kWh, indicating a 17% reduction compared to the previous 12-months and the lowest level in four years, reflecting ongoing decarbonisation efforts. Increasing electricity generation from renewable sources is essential for achieving our net-zero goals, ensuring energy security, and reducing reliance on imports.
In November 2024, gas was Britain's primary electricity source, accounting for 38% of the mix, a 7% increase from November 2023. Wind energy contributed 27%, 4% lower than the previous year, marking its lowest November share in four years. Nuclear, biomass, solar, and hydro maintained their contributions from 2023 at 12%, 7%, 2%, and 2%, respectively. Nuclear's share was 4% below November 2021, the lowest in four years. Coal contributed 0% after the closure of the last coal-fired power plant, Ratcliffe, in September, while imports provided 11%, the second-highest November level in four years. Zero-carbon sources made up 42% of Britain's electricity generation, the lowest for November in four years and 5% lower than last year. However, the rolling 12-month average for zero-carbon sources is 51%, the highest in the same period. The carbon intensity of electricity generation in November 2024 was 171 gCO₂/kWh, an increase of 6% from November in the previous year. The rolling 12-month average dropped to 124 gCO₂/kWh, marking a 21% reduction and the lowest level in four years, reflecting ongoing decarbonization efforts. Increasing the electricity generation from renewable sources can help achieve our net-zero ambitions, ensure energy security, and decrease reliance on imports.
Mawdsleys signs a long-term agreement to use edenseven’s market-leading carbon reporting and management platform, cero.earth, to monitor all emissions and programmes of work to reach net zero . Mawdsleys is the UK’s largest independent pharmaceutical distributor. Established nearly 200 years ago, they have a fast-growing international network supplying medicines to meet patient needs and providing a route to market for manufacturers. Mawdsleys has signed a long term agreement with edenseven to use their carbon accounting and management platform, cero.earth. Built by edenseven, cero.earth is a cloud-based carbon accounting and management platform that provides businesses with a complete view of their emissions and decarbonisation plan. Using a dynamic view of all three emissions scopes, cero.earth provides a clear understanding of the current position against net zero targets and allows for the proactive monitoring of both current and planned projects. With a need to monitor and decarbonise operations at pace, Mawdsleys will leverage cero.earth to assess their current sustainability targets and produce a dynamic delivery plan to eradicate emissions permanently from their supply chain. Pete Nisbet, Managing Partner of edenseven, said: “We continue to evolve cero.earth to make sure we are providing our customers with the tools to dynamically monitor their decarbonisation programmes in a clear and practical manner. We are very excited to be working with Mawdsleys and are certain that, by embedding cero.earth into their net zero deliver plan, we can collectively make significant quantifiable environmental and financial gains.” William Sanders, CEO of Mawdsleys, commented; “Mawdsleys are leading the way in our sector, working towards net zero. Investment into thousands of solar panels and cutting edge battery storage technology, as well as operating electric vehicles, up to and including an HGV, makes edenseven the perfect partner to assist monitoring our decarbonisation plans. Mawdsleys are a key part of the healthcare system, delivering critical medicines to hospitals every day, so utilising cero.earth will help us maintain and enhance our position in the NHS Evergreen benchmarking assessment.”
Thames Freeport is a unique initiative designed to stimulate trade and innovation and transform the lives of people in its region, leveraging global connectivity to over 130 ports in 65 countries. Occupying a strategic position with intermodal capabilities across river, rail, and road, Thames Freeport has recognised its opportunity to achieve social good, and has demonstrated an active commitment to advancing decarbonisation and fostering a circular economy. Thames Freeport is emerging as a hub for clean energy technologies, advanced logistics, and value-added manufacturing. Special Economic Zones (SEZs) such as the Thames Freeport are uniquely positioned to drive decarbonisation. By clustering industries and research institutions, SEZs enable collaboration on sustainable practices and green technology development. This concentration accelerates the adoption of renewable energy sources, smart grids, and circular economy practices.
edenseven are following trends in the renewable energy sector closely, as decarbonising the energy sector is vital for ensuring a sustainable future and achieving Net Zero. Considering the recent DESNZ quarterly update of the renewable energy planning database, we have produced a consolidated summary of projects in the United Kingdom that have received planning permission. We will continue to release updates each quarter. INSIGHT In the past 12 months, the UK granted planning permission for 668 solar PV projects, which will deliver over 3,800 MW of energy capacity. This represents the second-highest number of solar projects approved in a year on a quarterly rolling basis. Additionally, these projects will provide the third-highest energy capacity for Solar PV granted planning permission in the UK in the last 15 years. However, this capacity is 20% lower than that of the 994 projects approved in the preceding year. During the same period, the number of onshore wind projects granted planning permission in the UK increased by 50%, while the number of approved offshore wind projects remained stable compared to the prior 12 months. When considering all solar PV, onshore, and offshore wind projects, granted planning permission in the UK over the past 12 months, the total energy capacity declined by 36% compared to the prior 12 months. Offshore wind saw the sharpest decline, with energy capacity from approved projects falling by 62%, while onshore wind also decreased significantly. Despite the total decline, the average energy capacity of approved solar PV projects rose by 20% year-on-year, highlighting an increase in the size of solar PV projects receiving planning permission in the UK. In contrast, both onshore and offshore wind projects experienced declines in average project capacity—down 51% and 62%, respectively.
In October 2024, wind was the leading source of electricity generation in Britain, accounting for 31% of the electricity mix. Despite this, wind’s contribution was the lowest for any October in the past four years, down 3% from October 2023 and 5% from October 2022. Gas followed closely, contributing 30% to the electricity mix, which, while its second-lowest for October in the past four years, was still 3% higher than in October 2023. Biomass contributions increased by 2%, reaching 8% of the mix, the highest for October in the past four years. Solar energy provided 4% of the mix, up 1% from October 2023. Nuclear and hydro both saw a 1% decrease in their contributions, delivering 13% and 2% of the electricity mix, respectively. Imports remained steady, contributing 11%, the same as in October 2023. October 2024 was notable for having zero coal in Britain’s electricity generation, following the closure of the Ratcliffe power plant, the UK’s last coal-fired station. This is a significant achievement, considering coal has provided electricity in the UK for over 140 years and accounted for nearly 40% of the UK’s electricity generation in 2012. Zero-carbon sources made up 51% of Britain’s electricity generation in October 2024, the lowest for any October in the past four years, but only 1% below the rolling 12-month average of 52%. The carbon intensity of electricity generation in October 2024 was 138gCO₂/kWh, consistent with October 2023. The rolling 12-month average carbon intensity of 123gCO₂/kWh is 22% lower than the previous 12-month period, marking the lowest level in the past four years as the grid continues to decarbonise. Increasing the electricity generation from renewable sources can help achieve our net-zero ambitions, ensure energy security, and decrease reliance on imports.
PRESS RELEASE FOR IMMEDIATE RELEASE 3 November 2024 New Report Highlights “Alarmingly Poor” Response of FTSE250 Companies to Climate Crisis 7% rise in carbon emissions as business growth outpaced effective environmental action 41% of businesses do not have a net zero target date 20% of businesses failing to report Scope 3 emissions Average net zero target date extended by 13 months
In September 2024, wind energy was the primary source of Britain’s electricity generation, accounting for 26% of the energy mix, which was its highest contribution for September in the past four years. Gas was the second most prominent source, making up a quarter of the mix, marking its lowest contribution in the past four years and an 8% decrease compared to its contribution in September of the previous year. Nuclear power supplied 16% of Britain’s electricity, which was 1% lower than its contribution in September of the previous year. Both biomass and imports saw a 4% increase in their proportions in Britain’s electricity mix, with biomass contributing 8% and imports delivering 15%, marking the highest contributions of their respective fuel types in the past four years. Coal made its lowest contribution for September in the past four years, accounting for less than 1% of Britain’s electricity mix. Hydro and storage maintained consistent contributions compared to September of the previous year, making up 2% and 1% of the mix, respectively. Zero carbon sources contributed to half of Britain’s electricity in September 2024, marking its highest contribution for September in the past four years and a 1% increase compared to its contribution in September of the previous year. This led to the lowest carbon intensity for September in the past four years, with a 23% decrease compared to the carbon intensity for September 2023. Furthermore, the rolling 12-month average carbon intensity of 123 CO₂/kWh is currently 22% lower than the previous 12-month period, remaining the lowest of the past four years as the grid continues to decarbonise. Increasing the electricity generation from renewable sources can help achieve our net-zero ambitions, ensure energy security, and decrease reliance on imports.
edenseven are following trends in the renewable energy sector closely, as decarbonising the energy sector is vital for ensuring a sustainable future and achieving Net Zero. Considering the recent DESNZ quarterly update of the renewable energy planning database, we have produced a consolidated summary of projects in the United Kingdom that have received planning permission. We will continue to release updates each quarter. INSIGHT In the last 12 months, the UK approved the second-highest number of Solar PV projects in the past 14 years, with over 3,500 MW of energy capacity to be delivered. This marks the second-highest capacity in 14 years. The UK has granted permission for over 9,000 MW of energy capacity from solar, onshore, and offshore wind projects in the past 12 months, marking the third-highest capacity for any 12-month period in the last 14 years. While the average energy capacity (MW) of the solar PV projects granted planning permission in the UK remained the same as the previous 12 months and onshore wind decreased by 6%, the average energy capacity of offshore wind projects granted planning permission has significantly increased compared to the last 12-month period but remains considerably below its peak.
