Take the Green road

For the fleet manager, going green might seem like a complex cost-versus-benefit exercise. But there are positive tweaks to be made, such as curbing fuel consumption.

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Last Updated: 31 Aug 2010

In the tree-lined splendour of suburban south-west London, residents anxious to maintain the area's Georgian and Victorian character are taking part in a green transport revolution. They might not realise it, because it's a very quiet revolution. It has got nothing to do with tearing up the genteel streets of Chiswick and Wandsworth to lay new tramlines, either.

When these home owners ask Refurb-A-Sash to come and measure up for authentic wooden replacement windows, the company's craftspeople will soon be arriving in electric Smart cars. The two battery-powered Smart Fortwos shortly to join the Refurb-A-Sash fleet can reach 30mph in 6.5 seconds and can travel noiselessly for up to 72 miles before they need recharging. With window expert, tape measure and appointment book on board, they're ideally suited to the company's key catchment areas of west and central London and north Surrey - most of which is within 10 miles of the firm's Twickenham joinery factory.

The only infrastructure that company owner Adrian Thompson has needed to install is an exterior 13-amp socket with rubber waterproofing. 'Running a zero-emission vehicle means we won't have to pay the congestion charge when it arrives in Kensington and Chelsea,' he says. 'But I don't think we'll save very much overall - it's not a pure cost-saving venture.

'It's more a part of our policy to be carbon-free "from well to wheel". We want to contribute to taking global warming seriously, and running these cars is a move towards that; we have also installed a wood burner to recycle our wood waste and heat our building.'

Getting noticed is important, and here the Fortwo is invaluable. 'Smarts are enormously eye-catching,' says Thompson. 'People bang on the window and ask for a business card.'

But trimming running costs and behaving responsibly towards the nvironment builds an irresistible momentum. Refurb-A-Sash mostly runs vans on its vehicle fleet, and is now seriously considering replacing these with new British-built Modec electric vans to round out its eco-vehicle ethos.

All of which is fine and dandy. But this is a small niche firm operating within a highly specific set of circumstances where using electric vehicles makes sense. How can other fleet users embrace the green agenda and make it work for them?

The Department for Transport and research company Mori found that 83% of drivers say they are 'concerned' about the environment, with 34% 'very concerned'. The problem is, perhaps unsurprisingly, that purchase price is still by far the biggest determining factor when choosing a new car, followed by fuel economy.

In the DfT survey, a mere 3% said emissions significantly influenced their choice of car. Yet reducing emissions, especially of carbon dioxide (CO2), the principal contribution that car use makes to the process of global warming, is central to the Government's fiscal regime on taxing motorists (transport accounts for 21.3% of the UK's CO2 emissions). Indeed, company car drivers pay tax on the benefit, based on the number of grams of CO2 per kilometre the car spits out, with the base level starting at 15% of the car's purchase price and adding another percentage point for every extra 5g-per-km, to a maximum level of 35% of the car's purchase price. The thinking is that drivers wanting to pay the least tax - the base rate of 15% - must choose the cleanest cars.

Vehicle Excise Duty (VED) - road tax - is run along similar lines, although no petrol-powered car on sale today (and only one in the past, the obsolete Honda Insight hybrid) falls into the sub-100g-per-km rating, where VED is zero-rated.

It's a stark choice for the fleet manager who aims to keep whole-life costs as low as possible. 'What it means is that something like the Citroen C1 or Toyota Aygo has become the car to put people in,' says Bob Blackman, a leading independent consultant on fleet management. 'It has the lowest tax, the lowest emissions and the best fuel economy. You'd get a few Brownie points for your green credentials, but not everyone would like it. A few motivated executives might be happy to go for that, but most would want a bigger car.'

For a trade-off between acceptable comfort and prestige on the one hand and greener motoring and lower running costs on the other, the immediate panacea is the hybrid. Cars like the Toyota Prius and Honda Civic IMA have a conventional petrol engine for long distances and an electric engine for urban and low-speed driving; their batteries are automatically recharged on the move, using energy captured during braking.

Sales of this class of car are tiny, owing to their considerable price premium. In 2005, they represented 0.24% of all new cars sold - that's roughly one hybrid car in 400. Interestingly, however, UK sales so far this year of the Toyota Prius show an even split between private retail sales at 1,219 units and fleet/business sales at 1,164, mirroring the roughly half-and-half divide between private and business sales in the total car market.

A car like a Prius, though, rather like an electric Smart, is a horse for a specific course. 'The environment for a Prius is definitely not belting up and down motorways,' says Stewart Whyte of the Association of Car Fleet Operators (Acfo). 'That sort of tokenism would be misplaced and wasteful.'

Whyte urges, instead, a relentless pressure on reducing fleet fuel costs. 'Look, it's not a part of my job to increase cost. Hybrids and alternative fuels are fine. But 1% better fuel economy across the whole of the market would be much more significant than a 15% improvement in 2% of the market. A manager should be able to calculate the average fuel consumption across a fleet, and then work on what more can be achieved by better driving.

'Get a grip on your fuel use. If you know the cars should be managing a 42mpg average and you're getting 36mpg, then there must be a problem somewhere and you can address that problem; if you're getting 47mpg on average then something is going more than right - you're saving money and being environmentally kind.

'If 10% of business set out on this route to identify the "credibility band" where their cars were operating most efficiently, there'd be no need for hybrids,' adds Whyte. 'It's another one of those issues behind the fact that running a fleet is grossly under-considered.'

If you're wondering how you can better analyse the fuel efficiency and green-ness of your fleet, Lex Vehicle Leasing's Momentum fleet management consultancy team has developed an analysis program called Healthcheck. Applying the programme to one customer's fleet of 95 cars with an annual fuel spend of £322,000 turned up £16,000-worth of instant fuel-cost cuts.

Hydrogen-powered vehicles using fuel cells to make fossil fuel redundant are on the distant horizon. Despite the fact that experimental hydrogen-powered buses are plying the streets of London, the immense problems of producing hydrogen-powered private cars and a refuelling infrastructure to support them mean their introduction is a long way off, and pretty irrelevant to running a fleet today.

But infrastructure issues have been at the heart of difficulties surrounding more immediately available alternative fuels. Liquid Petroleum Gas (LPG) is a good example. 'Powershift' grants were initially available to promote sales of cars running on this much less polluting alternative to petrol but were then withdrawn by the Government. The Society of Motor Manufacturers & Traders slammed the move, because it 'created uncertainty for manufacturers and consumers'. UK sales in 2005 collapsed to 489 LPG cars - it had been 3,185 in 2003, when the economics of the nascent technology made it appear a winner. Consequently, investment in infrastructure - sites where LPG fuel was sold - dwindled.

'I think you'll find that nearly all taxis are still diesels,' comments Blackman wryly. 'If there was a really solid incentive, like the fuel was half the price of diesel or petrol, then all well and good. But the Government tinkers at the edges and then the Chancellor moves the goalposts. All you end up with is uncertainty.'

It's a similar story for so-called biofuels. These are fuels where petrol or diesel is mixed with a small proportion of fuel derived from crops. The government wants 5% of all fuel sold to be from such renewable sources by 2010. But, according to Acfo's Whyte, it initially got its priorities wrong. 'The Government is now promoting the infrastructure for biofuels and has given tax incentives - which is good - but it began by promoting the acquisition of the technology. You can only benefit from biofuels if you're near a biofuel filling station, and until recently there haven't been any.'

Car manufacturers themselves have now begun to promote model schemes that would have obvious fuel duty savings (there's a 20p duty rebate on every litre of biofuel) and environmental benefits for fleets.

Citroen, for example, has just installed a facility at its Slough HQ that dispenses a biodiesel, made by Total, containing 30% rapeseed oil content. All its cars can run quite normally on this juice, and users of the 60 cars in the fleet are obliged to fill up on the fuel whenever possible.

It's expected that similar duty rebates will stimulate production and sales of bioethanol (a blend of petrol with fuel derived from crops like sugar beet) and compatible vehicles. But for the fleet manager, 'going green' seems certain to be a complex cost-versus-benefit exercise for the foreseeable future.

'The tax system has, at last, shifted to low-emission cars,' says Blackman, 'but for fleet managers, the main issue is always "how can people get about for less?" If the green agenda creeps into that, then it's a good thing too.'

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