By Alexander Vatazhishin, CEO of “Ukravtogaz”, division “Naftogaz Nafta”
The balance of automobile fuels in any country is a strategic issue. It directly affects the energy, environmental and economic security of any state, and Ukraine is no exception. Today, the country is discussing the prospects for the fuel basket in the triangle: gasoline – liquefied gas (LPG) – diesel fuel. We are talking about tax (excise) rates, the correction of which should change the ratio of these fuels in the future.
In this discussion, I am surprised by several points. First of all, it is speculation on the concept of gas motor fuel, which is supported and developed in Europe. LPG suppliers and their lobbyists endow LPG with some fabulous and fantastic properties. They explain the fourfold gap in excise taxes on propane-butane and gasoline (52 euros and 213.5 euros per 1000 liters, respectively) by increased environmental friendliness and, again, by European practice. At the very least, this is an exaggeration, but at the most, it is not true. Let’s see what’s really going on.
None of the long-term strategies of the European Union, as well as in such documents as the Paris Climate Agreement and the Green Deal, under which Ukraine has also assumed obligations, does it simply not develop the use of such an oil refining product as propane-butane (LPG). In Europe today, gas motor fuel means exclusively CNG and LNG – compressed and liquefied natural gas, also biomethane.
When renewing vehicle fleets in the EU, there is a clear segmentation of vehicles by fuel type:
Buses – CNG, LNG, biomethane, electricity, biodiesel;
Light duty trucks – CNG, biomethane, biodiesel;
Large-capacity trucks – CNG, LNG, biomethane, biodiesel;
Cars – CNG, biomethane, electricity, hydrogen;
Railway transport – LNG, electricity, hydrogen;
Sea and river transport – LNG.
Do you see LPG on this list? Me not.
The last mention of LPG is found in the directive 2014/94 of the European Parliament and the Council of the EU of October 22, 2014, which provides for the deployment of infrastructure for alternative fuels in the European Union. As part of its implementation in 2014-2019. 425 CNG stations and 274 LNG stations were built, projects were implemented by Shell, Gasum, Ham, PGNIC and others. In total, more than 4500 biomethane and CNG, LNG stations are already operating in the EU countries, and this number is constantly increasing. Investments are estimated at billions of euros.
I have not heard anything like this happening in the development of LPG infrastructure.
More than clearly demonstrates the priorities of the auto industry. Scania, Volvo, IVECO, Audi, MAN, Solbus, Daimler Trucks, Skoda, Mercedes, Volkswagen, Opel, Ford, Fiat, Renault, Seat, Solaris and many others have for many years been engaged in the serial production of cars using CNG, LNG, biomethane and actively renew the vehicle fleets of the EU countries. What about LPG? Several passenger cars with LPG are offered by Fiat and Hyundai. Based on the posting of information about these models in the bowels of car sales websites, they are not very popular.
Indeed, excise taxes on liquefied auto gas in Europe are generally very low, several times lower than on gasoline. But the consumption of this resource in comparison with others is minimal; by and large, no one pays attention to it. In Belgium there is zero excise duty on LPG, but its consumption is the same – practically zero. This is a completely different situation than in Ukraine, where liquefied gas occupies about 25% of the motor fuel basket. This weight dictates a completely different attitude to the taxation of this excisable product.
The main obstacle on the way of real gas motor fuel in the European sense is the high price of cars using CNG, LNG and biomethane – it is 20-40% higher than the price of “gasoline” or “diesel” classmates. In the EU countries, various preferences are created at the legislative level – tax benefits, compensation for the cost of a car, free parking, etc. etc.
For example, in Italy, the buyer receives compensation of 20,000 euros when buying a truck for LNG or 10,000 euros for CNG, pays three times less transport tax, and maintenance of gas equipment is carried out at the expense of a special State Fund; the construction of filling stations without a CNG filling station is prohibited; the operation of diesel vehicles is prohibited within settlements and environmental zones.
Germany compensates part of the costs and provides soft loans for the conversion of the car to work on CNG; 15% insurance benefit applies; transport is exempt from tax for 1-2 years. In the Netherlands, “methane” transport gets the right to free parking in airport parking lots and shopping centers. In France, municipal buses and garbage trucks can only be CNG; the time limit (day, time of day, season) for city traffic does not apply to methane-fueled vehicles.
As you can see, the Ukrainian agenda is fundamentally different from the European one. While we are arguing about liquefied gas and diesel fuel, which are forced to import in huge quantities from Russia, in Europe they simply leave these products, switching to natural gas and biomethane, electricity and are actively thinking about hydrogen. This is also important for us: if the import of propane-butane and diesel fuel reaches 80%, then natural gas – 30%. But most importantly, there is the prospect of increasing domestic gas production. In addition, Ukraine has a powerful gas infrastructure, we have everything ready.
