Petrol and diesel prices ‘must rise to pay for net zero’

World’s first ‘green refinery’ boss says industry margins aren’t big enough to fund transition

Forecourt petrol and diesel prices will have to go up if the UK is to hit its net zero targets, the owner of the UK’s largest refinery has warned.
Tony Fountain, the director of EET Fuels, said advancements in green fuels and climate-friend technology would require significant investment that would need to be passed on to customers.
EET Fuels, which owns Stanlow Refinery in Cheshire, is planning to spend £2bn on making its plant run on hydrogen and capture most of its CO2 emissions, thereby creating the world’s first “green refinery”.
The aim is to help cut greenhouse gas emissions in line with government targets for the UK to become net zero by 2050.
However, it will mean adding “a few pence” to every litre of petrol or diesel made by the refinery, according to Mr Fountain.
“We as an industry don’t have big margins so we have to pass through the costs. We’re talking about a few pence per litre.
“For us a few extra pence a litre is a big deal but in the context of the overall price of diesel, it’s not so much. It’s single-digit pence per litre.”
Stanlow is based close to Ellesmere Port, Cheshire, and serves Liverpool, Manchester and other major urban centres in the North West and southern Scotland. It supplies 16pc of the UK’s road fuels, making it strategically vital to the UK.
An extra pence added to fuel would generate a big dividend for EET, which processes about 9m tonnes of crude oil per year and produces 4.8bn litres of diesel, 3bn litres of petrol and 2bn litres of jet fuel, plus a range of other materials.
Deepak Maheshwari, EET’s UK chief executive, said the extra income would help cover the capital costs of building the hydrogen production and carbon capture technologies.
He said: “Whenever a new industry is created, it costs. As we move into producing hydrogen there are going to be costs associated with the scaling up of those businesses. In the long run, they could follow the same path of cost competitiveness, as has happened in offshore wind [where costs have come down].
“And maybe we’ll see the same thing taking place in hydrogen as well. But the transition is likely to be more expensive.”
Claims of creating a “green refinery” are likely to anger environmentalists who argue that all oil refineries are inherently polluting and the bulk of the emissions generated come from using their fuels, rather than making them.
However, Stanlow’s operations alone generate about 2m tonnes of CO2 a year, making it one of the UK’s largest single sources of greenhouse gas emissions.
Mr Fountain argued that Britain currently depends on oil for 38pc of its total energy – mostly for transport – and that demand is predicted to diminish only slowly in coming years. Limiting the refinery’s carbon footprint today is therefore the best thing to do for the environment without sacrificing fuel security.  
EET Fuels was known as Essar Oil until last week. Its new full name is Essar Energy Transition (EET) group.
Stanlow is among the UK’s last few refineries. Back in the 1970s the UK had about 18 such plants, collectively meeting most of the country’s needs for fuels.
Just six remain today and one, Grangemouth in Scotland, is already slated for closure. BP and Shell, Britain’s largest oil companies, no longer own any refineries in the UK.