Final Regulatory Impact Assessment on Petrol Vapour Recovery stage II controls (PVR II)

Transcription

1 Final Regulatory Impact Assessment on Petrol Vapour Recovery stage II controls (PVR II) Air and Environment Quality Division Department for Environment, Food and Rural Affairs November 2005

2 Table of Content 1. Purpose and intended effect of measure The objective Implementation measure Devolution Background Ozone VOC emissions International commitments National Emission Ceilings Directive (2001/81/EC) United Nations Economic Commission for Europe (UN/ECE), 1991 VOC Protocol What is PVR II? PVR II systems Active vapour recovery systems Passive vapour recovery systems Carbon canisters Risk Assessment Health effects of ozone Environmental effects of ozone Implementation options Option 1: No PVR II controls applied to service stations Option 2: Threshold for compliance; existing stations >3000m³ & all new stations >500m³ Option 3: (The preferred option) - Threshold for compliance; existing stations >3500m³ & all new stations >500m³ Market Benefits Assumptions Benefits assessed Option Option 2: Threshold for compliance; existing stations >3000m³ & all new stations >500m³ Option 3: (The preferred option) - Threshold for compliance; existing stations >3500m³ & all new stations >500m³ Costs to Petrol Retail Sector The value of recovered petrol vapour New PVR II technology Traditional PVR II systems Vapour returned to terminals Cost issues and assumptions New sites Scheduled and Unscheduled work Relevant Cost Cases Number of dispensers per site Cost of work (materials and labour) Stage II Petrol Vapour Recovery Equipment Costs Other one-off costs Recurring costs Quantified costs Option Option 2: Threshold for compliance; existing stations >3000m³ & all new stations >500m³ Option 3: (The preferred option) - Threshold for compliance; existing stations >3500m³ & all new stations >500m³ Equity and Fairness

3 9. Consultation with small business: the Small Firms Impact Test Competition Assessment Enforcement and Sanctions Monitoring and Review Consultation Within Government Public Summary and Recommendations Declaration Annex A: Countries included in the assessment of UNECE benefits Index of Tables Table 1 UK VOC emissions (kilotonnes) by UN/ECE category Table 2 Projected statistics for UK petrol retail sector (individually for England, Scotland, Wales and Northern Ireland): Number of sites; Annual petrol sales ( 000 m); Annual petrol sales (% of total) Table 3 Issues included in the benefit analysis Table 4 Benefits (Physical Impacts), Stage II controls applied at service stations with petrol throughput >3000m³ Table 5 Monetised Benefits, Stage II controls applied at service stations with petrol throughput >3000m³ Table 6 Benefits (Physical Impacts), Stage II controls applied at service stations with petrol throughput >3500m³ Table 7 Monetised Benefits, Stage II controls applied at service stations with petrol throughput >3500m³ Table 8 Estimated number of sites in 2010 assuming market trend Table 9 Costs per site of materials and labour installing Stage II equipment Table 10 Costs per nozzle of PVR Stage II equipment Table 11 Estimated loss of fuel sales earnings during installation of PVR equipment Table 12: Estimated costs [Stage II controls applied at service stations with petrol throughput >3000m³, by 2010] Table 13: Estimated costs [Stage II controls applied at service stations with petrol throughput >3500m³, by 2010] Table 14 Summary of costs & benefits Table 15 Countries included in assessment for UNECE benefits Table of figures Figure 1 Analysis of UK and European (UNECE) benefits in the Study

4 1. Purpose and intended effect of measure 1.1. The objective To reduce emissions of volatile organic compounds (VOCs) into the atmosphere from vehicle refuelling activities at service stations, in order to reduce the adverse impact on, and risks to, human health and the environment Implementation measure Service stations are already regulated under the Pollution, Prevention and Control (England and Wales) Regulations (PPC) and corresponding Regulations 2 in Scotland and Northern Ireland, for the purposes of controlling emissions of VOC emissions from the storage of petrol and its distribution to service stations Petrol Vapour Recovery stage I 3 controls (PVR I) PVR I was implemented by prescribing the requirements as Best Available Techniques (BAT) for the service station sector 4. BAT requires the utilisation of technology currently available, which is economically feasible, to prevent pollution. BAT is periodically reviewed to take account of developments in technology and is described in process guidance notes (PG note) issued by the Secretary of State, the Scottish Executive, the Welsh Assembly Government and the Department of the Environment in Northern Ireland BAT would be amended to include a requirement for service stations to install Petrol Vapour Recovery stage II (PVR II) controls to abate emissions of VOC during the refuelling of vehicles. BAT for service stations takes into account the economic feasibility of fitting the equipment to service stations of differing sizes. BAT (PVR II) would be required by 01 January 2010 in 100% of services stations with an annual petrol throughput greater than 3500m³ (cubic metres, 3,500,000 litres) and all new of services stations with an annual petrol throughput greater than 500m³ (cubic metres, 500,000 litres) Installation of PVR II by 01 January 2010 assists in meeting the UK s target for limiting emissions of VOCs under the National Emission Ceilings Directive (NECD) (2001/81/EC). PVR II also fulfils the UK s obligations under the UNECE 1991 VOC Protocol see section Using a Guidance Note approach, rather than directly defining performance requirements in regulations, allows a light regulatory touch offering additional flexibility for operators, and the close involvement of industry ensure practicalities are addressed. Using the same regulator - the local authority in England and Wales, SEPA in Scotland and the Department of the Environment in (NI) - for both PVR I & PVR II, would also reduce regulatory costs for operators We propose to implement the measure by listing refuelling activities at those service stations required to comply, as Part B processes under PPC. PPC would require service 1 Statutory Instrument number 1973 (2000) 2 The Pollution Prevention and Control (Scotland) Regulations 2000 SSI 323 and the Pollution Prevention and Control Regulations (Northern Ireland) 2003 SR Implements Directive 94/63/EC. 4 Detailed in Process Guidance note PG1/14, compliance threshold is an annual petrol throughput of 500m³ with the exception that; all service stations located under permanent living quarters or working areas must comply irrespective of annual petrol throughput. The threshold was set after consideration of the costs of the measure. 4

5 stations to obtain a permit to operate and comply with the conditions of the permit. Where the installation is already permitted under PPC, operators would need to apply for a variation of the conditions of the permit, to include the new requirements The general principles for setting the conditions of a permit require the permit holder to operate an installation in such a way that: all the appropriate preventative measures are taken against pollution, in particular through the application of the best available techniques; and that no significant pollution is caused The PPC Regulations 5 allow for the Secretary of State, Scottish Ministers and the Department of the Environment in Northern Ireland to issue guidance (PG note) to regulators and, regulators should have regard to this guidance when carrying out their functions under the Regulations. PVR II will be incorporated into this guidance. Operators are best advised also to have regard to the guidance note when making applications, and in the subsequent operation of their activity To inform this decision, the objective of this assessment is to quantify the costs and benefits of three alternative options: 1. A base case with no new controls. 2. Applying the controls to all existing service stations with an annual petrol throughput of greater than 3000m³ (>3000m³) and to all new service stations with an annual petrol throughput greater than 500m³. 3. (The preferred option) Applying the controls to all existing service stations with an annual petrol throughput of greater than 3500m³ (>3500m³) and to all new service stations with an annual petrol throughput greater than 500m³ Applying the compliance threshold of 500m³ to all new service stations, provides consistency with the derogation now implemented for small service stations from the requirements of Directive 94/63/EC (PVR I) Devolution Amendments to the PPC Regulations would need to be implemented separately for Scotland and Northern Ireland as there is separate legislation for these devolved administrations. 2. Background 2.1. Ozone In sunny, still conditions and in the presence of nitrogen oxides, volatile organic compound emissions react to form ground level ozone. Ozone is one of the components of summer smog and can have adverse effects upon human health, vegetation and building materials. The Air Quality Strategy for England, Scotland, Wales and Northern Ireland sets a health-based air quality objective for ozone of 100 microgrammes per cubic metre (50 parts per billion) as the maximum of a running 8-hour mean, not to be exceeded by more 5 Regulation 37 of the Pollution, Prevention and Control (England and Wales) Regulations 2000 and regulation 24 of the Pollution, Prevention and Control (Scotland) Regulations 2000 and regulation 38 of the Pollution Prevention and Control Regulations (Northern Ireland)

6 than 10 times a year by the end of It is a stringent objective that is unlikely to be met under existing measures alone. In addition the Third Air Quality Daughter Directive (2002/03/EC) sets target values and long term objectives for ozone, with regard to both the protection of human health and the protection of ecosystems. The target value for human health is less stringent than current United Kingdom air quality objectives at 120 microgrammes per cubic metre as the maximum of a running 8 - hour mean, not to be exceeded more than 25 days a year to be achieved by VOC emissions In 2002 the United Kingdom is estimated to have emitted 1,364 kilotonnes of volatile organic compounds into the atmosphere from a wide range of sources. The single largest of these sources, accounting for 16 6 per cent (211 kilotonnes) of the total is road transport (although Solvent use has the highest figure for emissions of volatile organic compounds, it includes emissions from a number of different subsets combined into this single category e.g. paints). Emissions from service stations fall within the category extraction and distribution of fossil fuels and contribute approximately 3% of total UK VOC emissions. Emissions in this sector are expected to decline to around 30 kilotonnes by 2010 due to the projected trend in UK petrol sales. However as the main sources of VOC emissions are controlled it will become more important to also control the minor sources where cost effective. The emissions of volatile organic compound for all industry sectors are summarised in Table 1. Table 1 UK VOC emissions 7 (kilotonnes) by UN/ECE category UNECE Category % Combustion in Energy Prod % Combustion_in_Comm/Res % Combustion_in_Industry % Production_Processes % Extr./Distrib._of_Fossil_Fuels % Solvent_Use % Road_Transport % Other_Trans/Machinery % Waste % Land_Use_Change % Nature % TOTAL % 2.3. International commitments National Emission Ceilings Directive (2001/81/EC) The National Emission Ceilings Directive (NECD) sets emissions ceilings for four pollutants, including volatile organic compounds. For VOCs, the UK has an obligation to limit emissions of VOCs to 1200 kilotonnes per year, to be achieved from PVR II measures will help to meet the UK s obligations under the NECD. Full information about the NECD is available via the following weblink: 6 National Atmospheric Emissions Inventory (NAEI) UK Emissions of Air Pollutants , National Atmospheric Emissions Inventory (NAEI) UK Emissions of Air Pollutants ,

7 United Nations Economic Commission for Europe (UN/ECE), 1991 VOC Protocol The UNECE 1991 VOC Protocol aims to reduce emissions of VOCs and ground level ozone concentrations resulting from VOC emissions. Under the Protocol the UK has an obligation to apply measures to control emissions of VOCs from motor vehicle refuelling operations. PVR II will meet this obligation. Information and text of the 1991 VOC Protocol is available via the following weblink: What is PVR II? 2.5. Petrol contains volatile organic compounds (VOCs), which evaporate inside the fuel tank of a vehicle and fill the air space above the liquid fuel. When a vehicle is refuelled, these vapours are forced out from the fuel tank by the incoming fuel and, unless controlled, escape into the atmosphere through the filler neck of the fuel tank. Stage II controls will capture the majority of the emissions from vehicle refuelling at service stations, required to implement the controls PVR II systems Active vapour recovery systems Traditional active vapour recovery systems consist of a modified nozzle, coaxial hose and dispenser for all petrol sales. Petrol vapour in the vehicle fuel tank headspace is drawn under negative pressure back into the site fuel storage tanks at the same time as petrol is dispensed. However, systems using new technology condense the petrol vapour and instead of returning it to the fuel storage tanks, recirculates the vapour as liquid fuel back to the pump dispenser for resale (see Section 7) Passive vapour recovery systems The passive system is essentially the same as the active system (but with no vacuum pump in the vapour return pipe). This technique requires a good seal around the filler nozzle and the filler neck and requires a more cumbersome nozzle than in active systems and adds considerably to the weight of the nozzle. This disadvantage makes the process of refilling vehicles less acceptable to the motorist and introduces a significant human error into effective performance of the system. Another disadvantage is the reported lower filling rate of fuel. The lower efficiency of these systems is not likely to make them the preferred choice. They are unlikely to achieve the necessary performance requirements. Active systems are more efficient than passive systems and are the only systems considered in this assessment Carbon canisters Large carbon canisters can be fitted to each vehicle and absorb vapour during refuelling with no adaptation to the dispensers. This would require modifications to vehicles when manufactured and emission reductions would only be achieved from these new vehicles. It would also require agreement and legislation at European level. Such legislation is unlikely and, even if adopted, this option could not achieve emissions reductions comparable to active systems. 7

8 3. Risk Assessment 3.1. Emissions of volatile organic compounds have adverse effects on human health and the environment mainly through their role in the formation of ground level ozone Health effects of ozone Ozone exposure to concentrations commonly encountered in the United Kingdom has been shown to produce impaired lung functioning and other respiratory problems. Asthmatics are not clearly more responsive to ozone than the general population. However, the same degree of response can matter more in asthmatics whose baseline lung function is already low and whose baseline rate of symptoms is already high. Hospital admissions data suggests that the elderly with respiratory disease are more susceptible The Department of Health Committee on the Medical Effects of Air Pollutants (COMEAP) has estimated that between 700 and 12,500 deaths and between 500 and 9,900 hospital admissions arise from ozone 8 exposure each year (based on ozone exposure during the summer of 1995). There is a range of estimates because there is some uncertainty over whether or not there is a threshold for adverse effects on health from ozone. The calculations of the Department of Health Committee on the Medical Effects of Air Pollutants (COMEAP) were performed assuming either that there was a threshold (giving the smaller numbers for adverse effects) and that there was no threshold, giving the larger numbers There is also a risk from extreme ozone levels as seen in the UK between 1 August 2003 and 14 August A report 9 estimated that there were between 225 and 593 additional deaths brought forward due to this ozone episode. Extreme ozone episodes may become more frequent as the effects of global warming take hold Although the main purpose of the proposed measure is to reduce volatile organic compounds as ozone precursors, some volatile organic compounds in petrol fumes may have direct effects on health Environmental effects of ozone In addition to its effects on human health, ozone is known to have detrimental effects on plants. These can be visible leaf injury, growth and yield reductions, altered sensitivity to other stresses such as frost tolerance and damage from pests. There may also be changes in ecosystem functioning in natural vegetation communities. The critical level for forests (defined in terms of cumulative exposure over a six month period) is exceeded in 23 per cent of the United Kingdom land area while the critical level for crops (defined in terms of cumulative exposure over a three-month period) is exceeded in 91 per cent of the United Kingdom arable crop area and in 76 per cent of the United Kingdom semi natural vegetation area. 8 Quantification of the Effects of Air Pollution on Health in the United Kingdom, the Department of Health Committee on the Medical Effects of Air Pollutants (COMEAP), Department of Health, Her Majesty s Stationery Office, An estimate of the health impact of the August 2003 photochemical episode, Netcen, 01 October 2003 available via the following weblink: 8

9 Ozone also has a damaging effect on man-made materials including natural and synthetic rubber, surface coatings (such as paints and varnishes) and textiles. In combination with other pollutants it has been shown to worsen damage to metals and stone. Many of these effects cannot be monetised such as the impact on non-agricultural plants. However, estimates have been made of the damage from ozone to agricultural crops this was estimated at 530 million each year (based on concentrations). The damage to materials from ozone is estimated at 90 million. 4. Implementation options 4.1. The UK Government and devolved administrations considered the following options with regard to applying PVR II controls to service stations Option 1: No PVR II controls applied to service stations Emissions of volatile organic compounds from service stations are already regulated in part under Directive 94/63/EC which aims to control emissions of volatile organic compounds resulting from the storage of petrol and its distribution from terminals to service stations. However the emissions of volatile organic compounds resulting from vehicle refuelling at service stations are not presently controlled. Not applying PVR II controls to refuelling operations would lead to no reductions of emissions of volatile organic compounds from these sources Option 2: Threshold for compliance; existing stations >3000m³ & all new stations >500m³ Existing service stations with an annual petrol throughput greater than 3000m³ (3000 cubic metres) would be required to install PVR II controls by 01 January All new petrol stations with annual petrol throughput exceeding 500m³, for which planning control was granted after 31 December 2009, would be required to install PVR II controls from 01 January Option 3: (The preferred option) - Threshold for compliance; existing stations >3500m³ & all new stations >500m³ Existing service stations with an annual petrol throughput greater than 3500m³ would be required to install PVR II controls by 01 January All new petrol stations with annual petrol throughput exceeding 500m³, for which planning control was granted after 31 December 2009, would be required to install PVR II controls from 01 January This is the UK Government and devolved administrations preferred option for implementation of PVR II controls. 5. Market 5.1. Investigation of the UK market yielded cost information on the following active systems: 10 An Economic Analysis of the National Air Quality Strategy, Interim report of the Interdepartmental Group on Costs and Benefits, Her Majesty s Stationery Office,

10 5.2. Generic active systems considered in a previous study of Stage II controls 11 The Tokheim Open-Loop system. The Gilbarco Veeder-Root VapourVac system. The CleanAIR system The Elaflex vapour recovery nozzle system Tokheim and Gilbarco are dominant in the UK dispenser manufacture and supply market and the systems mentioned are those that are currently available in the UK. Elaflex is dominant in the supply of nozzles, hoses and associated equipment to the UK forecourt market The CleanAIR system can be retrofitted directly to dispensers without the need for underground works and saving these costs. This system is the only one found in this analysis to recover petrol vapour as saleable liquid petrol rather than just returned as vapour to the site storage tanks. Sale of this vapour means that the overall cost of fitting the system can be recovered. This new technology is discussed further in paragraph Costs would be incurred by the service station retailer fitting the PVR II equipment. However, there will also be benefits resulting from this market (see paragraph 6.2.7). Cost estimates are therefore likely to be over estimated rather than the contrary. 6. Benefits 6.1. Assumptions There are clear trends in the data on the number of service stations. The total number of fuel stations has been in rapid decline while around 85% of all new fuel stations built since 1990 have annual petrol throughputs exceeding 3500m³. Benefits have been calculated using the predicted number of service stations in For 2005 onwards, the predicted number of service stations and their market share of sales have been calculated by projecting linearly, assuming the average annual change during period continues. Table 2 illustrates this trend The numbers of service stations affected has been calculated on the basis that 45% 12 of total fuel throughput is diesel sales in 2010 (55% petrol). Estimated number of sites, annual throughput >3000m 3, but <3500m³ in 2010 = 804 Estimated number of sites, annual throughput >3500m 3, but <5000m 3 in 2010 = 607 Estimated number of sites, annual throughput >5000m 3,in 2010 = 1, Design of a scheme to control evaporative emissions for petrol vehicle refuelling, Final Report for DETR, Entec, Pieda and Catalist Source: 2010 baseline projection, UEP12, Netcen, January

11 Table 2 Projected statistics for UK petrol retail sector (individually for England, Scotland, Wales and Northern Ireland): Number of sites; Annual petrol sales ( 000 m); Annual petrol sales (% of total) Number of sites Annual petrol sales ( 000m 3 ) Annual petrol sales (% of total) England Scotland Wales N Ireland UK Total Xxx Year Site petrol throughput <100m³ >100m³-500m³ 1, ,418 1, >500m³-3000m³ 5,632 4,228 3, ,071 5,332 4,158 >3000m³- 3500m³ >3500m³ 2,006 1,718 1, ,339 1,974 1,767 Total 13,043 10,002 7,901 <100m³ >100m³-500m³ >500m³-3000m³ 9,311 7,536 6, ,408 9,233 7,719 >3000m³- 3500m³ 2,127 2,532 2, ,447 2,912 2,811 >3500m³ 12,740 10,293 9,858 1, ,589 11,787 11,289 Total 29,121 24,395 22,134 <100m³ >100m³-500m³ >500m³-3000m³ >3000m³- 3500m³ >3500m³ Total

12 6.2. Benefits assessed The prime human health and environmental benefits from this reduction in emissions of volatile organic compounds are expected to arise due to reductions in ground level concentrations of ozone, for which volatile organic compounds are a key precursor. To calculate the benefits, the predicted effect of changes in VOC emissions on ozone concentrations have been modelled 13 using the OSRM model. The version of the model used takes into account ozone deposition or ozone depletion by interaction with NOx emissions, in urban areas (not rural areas). For this reason, ozone concentrations in rural areas may be overstated. Where possible benefits of UK action to reduce emissions of volatile organic compounds have been quantified and valued in monetary terms for the whole of the UK and for the area covered by the United Nations Economic Commission for Europe (UNECE) (see Figure 1 and Annex A: Countries included in the assessment of UNECE benefits). This is important given the trans-boundary nature of ozone formation. Table 3 lists the benefits that were considered in the analysis. Quantified benefits were assessed for the point at which the proposal would be fully implemented in Table 3 Issues included in the benefit analysis Issue Quantified analysis Effect otherwise Acute health effects to population due! to ozone exposure (COMEAP deaths brought forward and respiratory hospital admissions) Effects to materials due to ozone! exposure Effects to crop production due to ozone exposure! Effects to forest and natural ecosystems due to ozone exposure Physical injury to crops from ozone exposure (affecting value) Change in exposure to odour likely to cause annoyance Chronic health effects to population due to ozone exposure! (based on reduced area of habitat under risk of damage) X X X Likely to be low benefits relative to effects on crop yield Positive benefits but likely to be small overall Quantification not currently possible. Evidence is not currently strong, though potentially important For the acute health effects, the valuation of deaths brought forward have been valued using the recommendations from EAHEAP 14 (after inflation), i.e. 3,100 to 110,000 and 1,400,000). Recent evidence from new studies in the UK indicates that the value is more likely to be between the low and medium value. The analysis has assessed health impacts without a threshold (i.e. a level below which no impacts to health are assumed to 13 Source: Regulatory Impact Assessment Stage II Petrol Vapour Recovery, Final Report Netcen, Metroeconomica, IOM and EMRC. 14 Department of Health (1999). Economic Appraisal of the Health Effects of Air Pollution. 12

13 occur). The use of no threshold for health impacts is consistent with previous COMEAP analysis and with studies recently undertaken by the European Commission The quantification undertaken here and valuation of materials is consistent with the Interdepartmental Group on Costs and Benefits (IGCB) 15 quantification analysis. The quantification and valuation of crops is based on a recent update of the methodology (i.e. an update to the IGCB analysis) undertaken for Defra Quantification does not consider the impact of deaths bought forward resulting from extreme ozone incidents (see paragraph 3.2.3) Odour impacts were also considered with a view to quantifying benefits. However, the uncertainties involved are large and a scoping analysis suggests that the benefits although overall positive, are probably small. Odour benefits to some individuals are potentially large but the site-specific and subjective nature of odour perception means that it is beyond the scope of this report to attempt to quantify these benefits. We have therefore not considered odour effects in more detail It is stressed that the benefits do not include a number of potential effects for which quantification and valuation is not possible. This includes the potential effects of ozone on forests and other natural ecosystems and the effects of ozone damaging the physical appearance of crops, which is important for fruit and vegetables. The analysis also excludes the potential longer-term (chronic) effects of ozone on health on both morbidity and mortality. The evidence for these longer-term effects is not strong currently, though they could be potentially important. The effect of short term exposure to ozone on respiratory symptoms has not been included. The proposed measures may also potentially reduce health effects resulting from exposure to individual volatile organic compounds, such as benzene, present in petrol fumes Finally, the benefit assessment has not considered the benefits to industries that supply the PVR II equipment to be installed at service stations, or the testing equipment and employees that will be required to maintain PVR II systems. Most of what are recorded below as costs to the service station sector are benefits to those sectors providing the services, or alternatively the costs seen only as those incurred by the retail sector and reduced accordingly in relation to the UK as a whole. Because of the potential additional categories mentioned here and in paragraphs & 6.2.6, the numbers here should therefore be seen as a sub-total of overall benefits and an upper estimate of the costs to the UK economy Where possible, the benefits at both a UK and European level have been considered. This is important given the trans-boundary nature of ozone formation. The following have been identified (see Figure 1): (i) Domestic (UK) benefits (the reduction in ozone) from UK reductions in emissions of volatile organic compounds only; (ii) Total benefits (the reduction in ozone) in both the UK and also in other UNECE member states from UK reductions in emissions of volatile organic compounds, i.e. irrespective of where the benefits occur. 15 DETR Interim Report of the Interdepartmental Group on Costs and Benefits (IGCB), (1998). An Economic Analysis of the National Air Quality Strategy Objectives. 13

14 The UK, of course, benefits from measures already taken elsewhere in Europe but some benefits are beyond the scope of this assessment. Figure 1 Analysis of UK and European (UNECE) benefits in the Study. Benefits in UK from UK reductions Benefits in UK + Europe from UK reduction 6.3. Option 1 Since this option would not implement PVR II controls, there would be no benefits as a result Option 2: Threshold for compliance; existing stations >3000m³ & all new stations >500m³ The benefits (physical benefits) of Stage II controls at 100% of sites, are shown in Table 4, below These would be the benefits due to a reduction of 15.5 kilotonnes (15,464 tonnne) of emissions of volatile organic compounds in the UK. There would also be a reduction in benzene emissions of 26 tonnes Table 5 shows the benefits in terms of monetary values The benefits are split into two columns in the tables below, the first column shows the benefits in the UK. The second column shows the total benefits in all UNECE countries as a result of emission reductions by the UK. Table 4 Benefits (Physical Impacts), Stage II controls applied at service stations with petrol throughput >3000m³. Main Benefits Health effects to population due to ozone exposure (COMEAP) Effects to crop production due to ozone exposure Effects of ozone on materials Units Benefits in the UK in 2010 from UK VOC reductions Benefits across all UNECE in 2010 (from UK VOC reductions) Acute mortality (cases) Respiratory hospital admissions (cases) Improved yield, (tonnes spread across all sensitive crops) Quantification proceeds straight to monetisation Quantification proceeds straight to monetisation Quantification proceeds straight to monetisation 14

15 Main Benefits Units Benefits in the UK in 2010 from UK VOC reductions Benefits across all UNECE in 2010 (from UK VOC reductions) Change in area subject to critical levels exceedence Other ozone effects (e.g., long-term health) Forests (km 2 ) Not quantified Not quantified Semi-natural vegetation (km 2 ) Not quantified Not quantified Not quantified Not quantified Table 5 Monetised Benefits, Stage II controls applied at service stations with petrol throughput >3000m³. Benefits in the UK in 2010 ( 000s) from UK VOC reductions Benefits across all UNECE in 2010 ( 000s) (from UK VOC reductions) Main Benefits Reduction in incidence of health effects to Acute mortality Low ( 3,100/case) population due to ozone Med. ( 110,000/c) 1,089 2,138 exposure High ( 1,400,000/c) 13,860 27,213 Change in RHAs Increase in crop yield 387 1,706 Effects to materials due to ozone exposure Impacts on forests and other ecosystems Other ozone effects (e.g. long-term health) TOTAL Physical impact quantified but not monetised Not quantified Not quantified Not quantified All categories Low 464 1,895 Medium 1,522 3,973 High 14,293 29, Option 3: (The preferred option) - Threshold for compliance; existing stations >3500m³ & all new stations >500m³ The benefits (physical benefits) of Stage II controls at 100% of sites, are shown in Table 6 below These would be the benefits due to a reduction of 12.4 kilotonnes (12,380 tonnes) of emissions of volatile organic compounds in the UK. There will also be a reduction in benzene emissions of 21 tonnes Table 7 shows the benefits in terms of monetary values. The benefits are split into two columns in the tables below, the first column shows the benefits in the UK. The second column shows the total benefits in all UNECE countries as a result of emission reductions by the UK. 15

16 Table 6 Benefits (Physical Impacts), Stage II controls applied at service stations with petrol throughput >3500m³. Main Benefits Health effects to population due to ozone exposure (COMEAP) Effects to crop production due to ozone exposure Effects of ozone on materials Change in area subject to critical levels exceedence Other ozone effects (e.g., long-term health) Units Benefits in the UK in 2010 from UK VOC reductions Benefits across all UNECE in 2010 (from UK VOC reductions) Acute mortality (cases) 8 16 Respiratory hospital admissions (RHAs) (cases) Improved yield, (tonnes spread across all sensitive crops) ,207 Quantification proceeds straight to monetisation Quantification proceeds straight to monetisation Quantification proceeds straight to monetisation Forests (km 2 ) Not quantified Not quantified Semi-natural vegetation (km 2 ) Not quantified Not quantified Not quantified Not quantified Table 7 Monetised Benefits, Stage II controls applied at service stations with petrol throughput >3500m³. Benefits in the UK in 2010 ( 000s) from UK VOC reductions Benefits across all UNECE in 2010 ( 000s) (from UK VOC reductions) Main Benefits Reduction in incidence of health effects to Acute mortality Low ( 3,100/case) population due to ozone Med. ( 110,000/c) 880 1,720 exposure High ( 1,400,000/c) 11,200 21,893 Change in RHAs Increase in crop yield 308 1,364 Effects to materials due to ozone exposure Impacts on forests and other ecosystems Other ozone effects (e.g. long-term health) TOTAL Physical impact quantified but not monetised Not quantified Not quantified Not quantified All categories Low 370 1,515 Medium 1,225 3,187 High 11,545 23, Costs to Petrol Retail Sector 7.1. The value of recovered petrol vapour The environmental benefits arising from implementation of PVR II will be the same whichever PVR II system a retailer may choose to install. This is because the vapour is 16

17 collected and retained within a sealed system. However, there are potential direct benefits to the retailer from new PVR II technology which condenses petrol vapour at the petrol pump and converts it to saleable liquid at the petrol station. One further advantage of recovery of vapour by the retailer is due to the current VAT/duty system. Our understanding is that VAT and duty are paid on the quantity of petrol delivered to a petrol station. Any petrol recovered by a retailer can therefore be sold with the full sale value going to the retailer and, assist in recouping the costs of PVR II The following example demonstrates the benefits of new PVR II technology New PVR II technology New PVR II systems, 16 one of which is commercially available, are designed to recover vapour back into liquid form at the dispenser, which enables it to be re-dispensed and sold by the retailer. The technology is used here as an illustration of the benefits which may arise to a retailer using such a system The system condenses vapour to liquid petrol at the dispenser with a conversion ratio of one litre of petrol for each one thousand litres of vapour. This liquid can be re-sold by the retailer approaching a 100% profit margin (duty and supply costs having previously been paid). The profit to the retailer from the re-sale of condensed petrol vapour will then cover the costs of PVR equipment and installation over time. The total value of recovered petrol from the system even amounts to a small overall benefit for the sector which is reflected in the negative cost of the system and shown in Table 12 and Table 13. This is a very positive indication of the overall cost-effectiveness of the measure, although recovery of overall costs is linked to the amount of fuel sold by a petrol station and is not so costeffective for petrol stations with annual throughputs below 3500 m Traditional PVR II systems Traditional systems may also have a benefit to the retailer as the vapour collected will saturate the headspace within the underground storage tanks and prevent further evaporation of petrol. Some vapour may also condense to form liquid petrol which can be resold as described in the example given for new PVR II technology. However this benefit has not been assessed and quantified due to the difficulties in establishing how much liquid petrol may derive from the petrol vapour. Remaining vapour within the underground storage tanks will be returned to the terminal at the next tanker fuel delivery with no direct benefit to the retailer. Overall the benefits of traditional PVR II systems may be understated, but the upper limit of any benefit is represented by the example given for new PVR II technology Vapour returned to terminals Some vapour will be returned to terminals, as described in This vapour can be condensed and reinjected into the gasoline pool. The petrol can then be resold. However due to the VAT/duty system this resold petrol will be subject to VAT and duty (see paragraph 7.1.1). As a result any benefit arising from this vapour will be much less in terms of value to the terminal. Again no attempt has been made to quantify any benefit due to the difficulties involved in establishing what quantity of vapour may be recovered Cost issues and assumptions 16 For the purposes of this example, the CleanAIR system has been used. 17

18 New sites For the purpose of the cost analysis only we have split service station sites between those where annual throughput is greater than 3500 m 3 but less than 5000m 3 and, those where throughput is greater than 5000m 3. The opinion of the Petrol Retailers Association (PRA), and evidence in market trends, suggests that new sites in the foreseeable future will have an annual throughput greater than 5000m 3 and this assumption has been adopted. Table 8 Estimated number of sites in 2010 assuming market trend Site annual petrol throughput Estimated number of sites 2010 >3000m 3, but <3500m >3500m 3, but <5000m >5000 m 3 1, Scheduled and Unscheduled work From discussion with the PRA we have assumed that the investment cycle in the fuel retail sector for sites with annual throughput >3000 m 3 is 15 years. At the end of the cycle it is usual for a site to undergo necessary refurbishment including any replacement of or changes to dispensers. It is more cost effective (by as much as 50%) for the retailer to carry out any additional necessary work (such as placement of underground pipe work) at the end of the investment cycle From the beginning of 2005 there are a possible 5 years available until the compliance date of 01 January 2010 and in this time, at an assumed constant rate of refurbishment, up to 33% of existing sites with annual throughput >3000 m 3 could install Stage II controls as a scheduled part of their investment cycle. It also follows that in any given year during this period around 20% of these sites will carry out scheduled work. We have assumed that, in order to maximise returns on existing investment, all unscheduled work (67% of all sites) would be done during Relevant Cost Cases From the discussion above, the following significant cost cases have been defined and used in this analysis. 1. Scheduled work at an existing site where the incremental cost is due to Stage II equipment only within new dispensers (i.e. cost of new dispenser is NOT incremental since work is scheduled). 2. Same as Case 1 but with incremental costs due to scheduled installation of underground pipe work. This case includes all new sites. 3. Unscheduled work at an existing site where the incremental cost is due to retrofitting Stage II equipment only (i.e. to existing dispensers). 4. Same as Case 3 but with incremental costs due to unscheduled installation of underground pipe work. 5. Unscheduled work at an existing site where the incremental cost is due to new Stage II equipment and new dispensers. 18

19 6. Same as Case 5 but with incremental costs due to unscheduled installation of underground pipe work. Following discussion with the PRA, this analysis assumes that: (i) 5% of sites with annual throughput >3500 m 3 already have Stage II equipment installed, and; (ii) 10% of existing sites with annual throughput >3000 m 3 - <5000 m 3 have underground pipe work already installed, and; (iii) 33% of existing sites with annual throughput >5000 m 3 have underground pipe work already installed (i.e. 429 sites in the UK) Furthermore, it has been assumed that 20% of existing sites with annual throughput >3000 m 3 and 80% of sites with annual throughput >5000 m 3 would choose to retrofit Stage II equipment (rather than purchase new dispensers given the option and on the balance of costs) where unscheduled work is concerned Number of dispensers per site Some of the costs of compliance with the proposed scenarios are directly related to the number of dispensers at a given site. Based on information in the Catalist database we have assumed that: (i) sites with annual throughput >3000 m 3, but less than 3500 m 3 have an average of 4 dispensers, and; (ii) sites with annual throughput >3500 m 3, but less than 5000 m 3 have an average of 6 dispensers, and; (iii) sites with annual throughput >5000 m 3 have an average of 10 dispensers. Each dispenser is assumed to have 4 nozzles for dispensing petrol (diesel emissions are not significant and, hence, are not considered in this analysis) Cost of work (materials and labour) Table 9 Costs per site of materials and labour installing Stage II equipment Unscheduled installation of underground pipe work Scheduled installation of underground pipe work Installation where pipe work already exists no. of dispensers Supplementary materials and equipment ( ) Underground pipe work 17 4,500 5,500 6, ,194 1,966 Surround to pipework 7 1,000 1,500 2, ,200 1,600 Tank connection and 7 shear valves 1,230 1,835 3,075 1,230 1,835 3,075 1,230 1,835 3,075 Sub-Total (constant 18 prices) 7,382 9,694 13,136 3,282 4,639 7,285 1,349 2,013 3,373 Labour ( ) Trench excavation for vapour recovery 5,000 7,500 9, From Design of a scheme to control evaporative emissions for petrol vehicle refuelling. Final Report for DETR. Entec, Pieda and Catalist, Treasury data indicate inflation in the UK economy for the period was 9.6% 19

20 Unscheduled installation of underground pipe work Scheduled installation of underground pipe work Installation where pipe work already exists pipework 7 Remove pumps for connections and 1,000 1,500 2,500 1,000 1,500 2,500 1,000 1,500 2,500 replace 7 Installation of vapour 7 recovery equipment 1,200 1,800 3,000 1,200 1,800 3,000 1,200 1,800 3,000 Sub-Total (constant 5 prices) 7,898 11,847 15,906 2,413 3,620 6,033 2,413 3,620 6,033 Sub-total 19 (contemporary quote) 7,000 11,000 19,000 Total ( ) High Low PVR II system 20 using new technology 15,280 21,538 32,136 5,695 8,259 13,318 3,763 5,633 9,406 14,382 20,691 29,042 3,282 4,639 7,285 1,349 2,013 3,373 1,316 1,974 3,291 1,316 1,974 3,291 1, , Stage II Petrol Vapour Recovery Equipment Costs Table 10 Costs per nozzle of PVR Stage II equipment Retrofit to an existing New dispenser New dispenser dispenser 21 (unscheduled) 11 (scheduled) 11 Dispenser 0 1, Vapour recovery equipment Generic system Tokheim System Gilbarco system PVR II system using new technology Elaflex nozzle Total High 1,158 2, Low 1,005 2, PVR II system 24 using new technology 1,143 2, Information from PRA member, CleanAIR system has been assumed to incur only the installation of vapour recovery equipment costs (2004 prices). 21 In the case of unscheduled work, the requirement for PVR Stage II controls is considered to lead to an incremental cost associated with replacing the dispensers with new ones. The cost of PVR equipment is lower when a new dispenser is purchased since it is prefitted in the factory. In this table it is assumed that the ratio between retrofit and new cost for the Gilbarco system is applicable to all other systems. 22 Based on data from Gilbarco 23 From Design of a scheme to control evaporative emissions for petrol vehicle refuelling. Final Report for DETR. Entec, Pieda and Catalist, Treasury data indicate costs have inflated by an average of 12.69% since CleanAIR system has been assumed to incur only the installation of vapour recovery equipment costs (2004 prices). 20

21 7.5. Other one-off costs Costs may arise due to type approval, licensing authority, environmental regulator or other fees associated with upgrading sites to include PVR stage II equipment. The regulatory fee will be 84 per site (substantial change, see 7.6.3). Other fees have not been quantified. The installation of petrol vapour recovery equipment is likely to necessitate the closure of a fuel station forecourt for around one week particularly if underground pipe work is to be installed. The following table estimates the loss of earnings from fuel sales. Table 11 Estimated loss of fuel sales earnings during installation of PVR equipment 25 Annual throughput (m 3 ) >3,000m³ - <3500m³ >3,500m³ Loss of fuel sales (L) 26 67, ,850 Loss of earnings 27 1,345 2, Other on-site services (such as a shop) would be able to continue operating but would suffer from the reduction in consumers willing to visit the site during the installation period. We have no data to estimate the loss of earnings of these associated services Recurring costs In the absence of additional information this analysis has assumed that incremental annual maintenance and power consumption costs for the PVR Stage II equipment are the same as that used in previous investigations 17. These costs were 60 maintenance and 5 power consumption per dispenser It is likely that the regulatory regime for PVR Stage II controls would require a certified compliance test. These tests are now undertaken by companies who are approved for the purposes of verifying that equipment conforms with the required industry standards. These companies may also supply and/or install equipment. Industry state that they would charge 325/site for a compliance check every 3 years, and that this cost could be significantly lower for a retailer group agreement Regulatory costs for stage II will be increased to reflect the additional work to local authorities and the Scottish Environment Protection Agency (SEPA) over and above the requirements for PVR stage I. The fees quoted below are considered appropriate, but are provisional, subject to the consultation being undertaken separately on the implementation of PVR II measures. They are relevant to England and Wales only as costs for Scotland are still being looked at. Sites not required to fit PVR II, but with PVR I, will remain under the existing charging levels. Changes to the current charges for England and Wales are currently being consulted on separately with a proposed increase of 5%. For a site fitting PVR II only; 84 (regarded as a substantial change) For a site fitting PVR stages I and II, together at the same time: 210 (equivalent to the initial application fee substantial change fee 84) 25 Only includes sites where underground pipe work must be installed. 26 Assuming site closure for one week 27 Assuming a profit of 2p per litre 21