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Review of the Rural Petrol Stations Grant Scheme Final Report

7 ENVIRONMENTAL BENEFITS

Introduction

There are a number of environmental impacts that may result if the rural petrol station grant scheme were to be removed. These relate to:

• the loss of funding for improvements such as tank replacement and vapour recovery systems that are essential for some petrol stations to meet regulatory requirements to keep trading;
• creation of additional vehicle mileage, as some customers would require to travel further to access an alternative petrol station; and
• a loss of funding for the introduction of LPG facilities at petrol stations. This would in turn have a negative impact on the uptake of this more environmentally friendly fuel in rural Scotland.

This chapter will assess these potential environmental impacts and the effects that could occur if the grant were no longer available.

Benefits of Infrastructure Improvements

From the survey of rural petrol stations, we received responses from 38 of the 55 RPSGS recipients. Expenditure had been used for a variety of different works. Table 28 shows that the most common uses for the funding were the provision of LPG facilities and new or reconditioned fuel pumps. A smaller proportion of recipients used the funding for the replacement of fuel tanks and 3 respondents (8%) stated having used the grant to help fund a complete new petrol station. None reported using RPSGS for the provision of vapour recovery equipment.

TABLE 28 IMPROVEMENTS FUNDED BY THE GRANT SCHEME

In the remainder of this section, we review the benefits of infrastructure enhancement for the sale of petrol and diesel fuel.

Potential Pollution Impacts

There is a substantial amount of legislation covering construction, operation and maintenance of petrol filling stations due to the high risks and high costs of any pollution or accident that may occur. Groundwater is a valuable resource and one that is difficult (and sometimes impossible) to clean if polluted and for this reason there are strict UK and EC laws in force to protect it.

Petroleum hydrocarbons are serious pollutants and risks can arise from either the above or below ground storage of hydrocarbons and through associated activities such as delivery and fuel dispensing. The release of petroleum hydrocarbons also creates the risk of fire or explosion, and if they are allowed to come into contact with water pipes, drinking water supplies can be contaminated. Pollution of groundwater or surface water resources is penalised under the Groundwater Regulation 1998 and the Water Resources Act 1991. In addition, significant remediation costs can also be enforced on those responsible (i.e. petrol station owners).

There are a number of pieces of guidance and legislation regarding the storage and dispensing of fuel at petrol filling stations, of which the key documents are detailed below.

PPG7: Construction and Operation of Fuelling Stations: This guidance is produced by the Scottish Environment Protection Agency (SEPA) and applies to all petrol filling stations. SEPA is responsible for protecting 'controlled waters' ²⁵ from pollution and preventing harm to human health by controlling the discharge of waste from sites such as petrol stations. Further and more comprehensive guidance on these issues is provided by the Institute of Petroleum in a publication entitled ' Guidance for the Design, Construction, Modification and Maintenance of Petrol Filling Stations' and commonly known as the 'Blue Book'.

PPG27: Installation, De-commissioning and Removal of Underground Storage Tanks: Also produced by SEPA, this guidance deals specifically with underground storage tanks, common in petrol filling stations. Petrol storage systems are regulated by the local Petroleum Enforcement Authority (usually the local authority), which applies strict controls over storage facilities. If underground storage tanks (USTs) are not maintained to the correct standard they pose a serious environmental risk. A number of serious pollution incidents have occurred in the past as a result of damage to USTs during installation, decommissioning or during the removal of systems that have not been decommissioned properly. In such cases, serious soil and groundwater contamination has occurred and in some cases surface water has also been contaminated.

Of the 38 respondents in receipt of the grant, four (11%) had used the money awarded in order to fund the replacement of fuel tanks. In addition, all those gaining replacement fuel tanks also installed new or reconditioned pumps at the same time.

Petrol Vapour Recovery: The UN / ECE Gothenburg Protocol and the EU National Emissions Ceilings Directive both aim to control the emission of pollutants such as Sulphur Dioxide, Nitrogen Oxide and Volatile Organic Compounds (VOCs), which act as precursors to the formation of ground level ozone. The Gothenburg protocol has set a ceiling for VOC emissions at 1,200 kilotonnes per year by 2010 and is derived from the 1979 United Nations convention on long-range transboudary air pollution.

The main sources of VOC emissions in the UK are solvent use and road transport, however as regulations are now in place to tackle these sources, the control of smaller sources will become increasingly important. One of these small sources is through the distribution and storage of petrol (for which Stage I petrol vapour recovery controls are already being implemented in the UK and will be fully implemented by the end of 2004). Stage II petrol vapour recovery addresses the vehicle refuelling process which in 1998 accounted for 1.8% of total VOC emissions. ²⁶

Stage II petrol vapour recovery involves modification to petrol pumps in order to enable vapour to be collected, and also the installation of pipes to return any vapour to the petrol storage tanks underneath the petrol station forecourt. This form of control would also help to reduce concentrations of benzene in and around petrol station forecourts. However, such improvements can result in high costs to the petrol station owner mostly through the installation of pipes, which incurs the greatest costs as it involves costs for construction and for disruption to services resulting in a loss of revenue.

Proposals for Stage II are currently out for consultation and are unlikely to be in place before 2010. When they are implemented, however, this will result in significant additional costs to petrol station owners who will be required to comply with the new legislation. It should be noted that it is unlikely that these regulations will apply to every fuel dispensing facility immediately and it is most likely that the larger facilities will be required to comply first.

It is hoped that the 2010 timescale will allow stage II controls to be installed in line with forecourt reinvestment strategies. This aims to make it as cost effective as possible and offer the most protection to smaller petrol stations that often find it more difficult to bear such costs. Although the survey undertaken with petrol station owners revealed that no recipients had used the grant for this purpose, such improvements are covered by the grant scheme and the implementation of stage II controls may result in an uptake in the grant scheme for such improvements amongst rural petrol stations in Scotland in the future.

There are therefore a variety of regulatory requirements affecting petrol stations, each of which bring significant environmental and/or safety benefits. Under each of these regulations, there is potential for a petrol station that does not meet requirements to be forced to cease trading. However, the cost of meeting these requirements is high, and prohibitively so for some of the rural petrol stations, and especially where turnover and profit margins are low.

In addition to requirements for works resulting from changes to legislation, it is inevitable that replacement of fuel supply infrastructure is required from time to time simply in order to ensure that existing equipment remains able to meet regulations. During our previous work on rural petrol stations, we found that petrol stations would expect to replace underground tanks approximately every 30 years. Thus, even without regulatory changes, it could be expected that around 3% of petrol stations will require this work to be completed each year. If it were assumed that no rural petrol stations were able to afford to complete these works (commentary on the deadweight within the current grant expenditure is provided in section 4 of this report), it could therefore be expected that 3% of small rural petrol stations are vulnerable to closure from this issue alone each year.

Our business survey found that there were almost no cases of rural petrol stations receiving RPSGS funds for works that could have been significantly delayed and so has not been utilised to provide environmental benefits over and above the minimum required by legislation.

Our conclusion is, therefore, that RPSGS is not generating significant environmental benefits in terms of reduced groundwater pollution or vapour escape beyond those that are required by legislation. However, the RPSGS does enable at least some petrol stations to continue trading that would not otherwise have been able to, whilst meeting environmental regulations.

Additional Mileage Created by a Petrol Station Closure

Using the results from both the business and customer surveys, an estimated additional mileage has been calculated that would be accrued if a petrol station site were to close. It should be noted that this analysis provides an estimate of the mileage effect of the closure of one rural petrol station and not that of a large-scale reduction in the fuel supply network in an area, the effects of which could be significantly different.

It is estimated that the closure of a single petrol station would result in the creation of an estimated 280,000 additional miles per year, as many current customers would need to drive further in order to access an alternative site. The methodology used to calculate this is explained in detail in Appendix B and is summarised below. From discussions with petrol station owners it was identified that, on average, over the course of a year, approximately two thirds of petrol station customers are residents and approximately one third are visitors to the area. The results from the customer survey were therefore analysed according to these two groupings and are dealt with in turn.

Residents

Of all resident respondents of the customer survey, 88% stated that they would have to drive further to purchase fuel if the survey site were to close. Residents were also asked how much they had spent on fuel at the time of the survey. This information, along with a total volume of fuel sold by petrol stations a year was then used to calculate the estimated additional mileage that would be accrued if a single petrol station site were to close. The results of this analysis are shown in Table 29 below.

TABLE 29 ADDITIONAL MILEAGE FOR LOCAL RESIDENTS

This additional 700 miles per person per year is equivalent to approximately 5% of the 15,000 average annual mileage of local residents.

Visitors

The impact of additional miles created by visitors due to the closure of a single petrol station is less than that for residents. Visitors account for approximately 11,000 fuel purchases per station per year, which would result in an estimated 90,000 additional miles per year if a single petrol station were to close. This is as would be expected as visitors, in general, would be on longer journeys and therefore more likely to be passing alternative sites. Table 30 below shows the key figures used in this analysis (the methodology of which is explained in Appendix B).

TABLE 30 ADDITIONAL MILEAGE FOR VISITORS

Additional Emissions Levels

The Tyndall Centre for Climate Change Research provides information on carbon and other emissions from transport and the differences between hybrid vehicles and petrol and diesel vehicles. Table 31 shows the approximate volumes of carbon dioxide, carbon, nitrogen oxide and particulate emissions per passenger mile of car travel for each type of vehicle.

TABLE 31 EMISSIONS PER PASSENGER MILE OF CAR TRAVEL (GRAMS)

Using the data in the table above and the current average annual mileage along with the estimated additional average mileage for residents (as shown above), it can be estimated that the additional mileage created by the closure of a petrol station site, would result in an estimated increase of approximately 5% of current emission levels for each emission type per vehicle per year. Additional emissions and proportional change in emission levels are shown in Table 32 below.

TABLE 32 ESTIMATED INCREASES IN AVERAGE EMISSION LEVELS RESULTING FROM ADDITIONAL MILEAGE (KILOGRAMS PER YEAR)²⁹

If the use of LPG vehicles were to increase in rural Scotland, replacing petrol and diesel fuelled vehicles, the above estimated levels of additional emissions would be reduced. The environmental benefits of LPG fuel are discussed in the next section.

All of the above assumes no deadweight in grant applications. Those enhancements that could partly or entirely be funded by other means would generate the same average level of mileage saving, albeit at lower or zero cost to the RPSGS.

Calculation of Environmental Value

Using the figures developed from " INFRAS/WWW External Costs of Transport, Accident, Environmental and Congestion Costs of Transport in Western Europe" (March 2000), the cost of the additional mileage has been monetised at approximately 30,000 per station per year. This has been calculated assuming an additional mileage of approximately 280,000 miles a year. This value represents the environmental costs to noise, air pollution, climate change, accidents and nature and landscape.

Estimated Increase in Uptake of LPG

Of the 68 business surveys that were conducted, 18 (26%) sold LPG fuel. All but one of these petrol stations had received funding from the grant scheme in order to do so. This suggests that introduction of LPG facilities at petrol stations in rural Scotland is highly dependent on the availability of funding for such improvements and if the grant scheme were to be removed, it would significantly slow the expansion of LPG facilities in rural Scotland.

Of those businesses that do sell LPG, on average it accounts for 3% of all fuel sales (approximately 13,000 litres). Although this is only a small proportion of total fuel sales, if the provision of LPG dispensing petrol stations were increased, this proportion could also be increased, as LPG becomes more accessible across rural Scotland.

An increase in the uptake of LPG fuel could potentially provide environmental benefits as LPG vehicles have much lower emissions than petrol or diesel vehicles. The environmental benefits of using LPG fuel compared to petrol or diesel fuel are listed below ³¹:

• approximately 12% less emissions of CO_ than petrol cars;
• approximately 30% less emissions of NOx , hydrocarbons and carbon monoxide than petrol cars;
• approximately 90% less NOx than diesel fuels;
• approximately 1/50 ^th of the particulates emitted by diesel fuels;
• approximately 1/500 ^th of the ultra fine particles emitted by diesel fuels; and
• approximately 50% quieter than diesel engines.

Because of its environmental benefits, the government is promoting increased use of this fuel and in the March 2001 Budget the duty on LPG was reduced by 40% and frozen in real terms until 2004. This means that the retail price of LPG is now approximately half that of petrol or diesel.

Currently in the UK there are approximately 100,000 vehicles running on LPG. However it is thought that with appropriate incentives from the government, this could be increased to around 250,000 by the end of 2005 ³¹.

Alternatives to Conventional Fuel Stations

Un-staffed petrol stations account for a small proportion of petrol stations in Scotland ³². In general, however, those that are in this category operate a staffed facility during peak hours of operation and a self-service, un-staffed facility during off-peak hours (e.g. over night). There are a number of regulations that apply to the operation of un-staffed facilities and published by the Health and Safety Executive for Petroleum Licensing Authorities.

This guidance, entitled 'Petrol Filling Stations - Dispensing Control Measures', highlights that the decision to operate an unattended self-service petrol station must be preceded by a detailed risk assessment. The details of this are provided in the guidance note, which also outlines a number of regulations for the operation of unattended or self service stations. The key points of which are:

• to control the number and position of dispensers (this should not exceed two, allowing four vehicles to re-fuel at the same time);
• provide limiting devices on each pump set to prevent the continuous operation for more than three minutes or an outflow of more than 75 litres (or the equivalent monetary value);
• restrict the sale of petrol to credit / debit card transactions (to prevent access to children and prevent misuse); and
• provide adequate illumination of the dispensing area and emergency equipment.

The issues of safety and maintenance are of particular importance to un-staffed and self-service facilities, due to the highly flammable and dangerous nature of the substances involved. The guidance specifies a number of regulations specifically relating to emergency equipment and procedures and states that unattended facilities must include the following:

• petrol pumps isolation switch;
• a means of communicating quickly and directly with site personnel and emergency services;
• notices displaying actions that should be taken in event of an emergency; and
• an appropriate number of dry powder fire extinguishers and dry sand containers to deal with small spillages.

Provision for the checking and maintenance of the facilities must also be made and a trained member of staff must be on call at all times whilst the site is open. It is also stressed that the management of such facilities should give consideration to the provision of a second telephone for non-emergency enquiries or the notification of any problems to a relevant member of staff.

In addition, the provision of remote CCTV monitoring with direct two-way communication with the forecourt would provide immediate advice in the case of an incident. However, such a system of remote supervision does not dispense with the need for a trained member of staff to attend the site, within a predetermined time period, if an emergency occurs. It appears that the allocation of this member of staff and the response time varies from site to site. It is assumed that, given the limited (if any) unstaffed rural petrol stations, they are not seen as a cost-effective option. This may be due to the high proportion of profit obtained from the sale of other goods, and the lack of ability to retail these goods whilst the station is unstaffed.

Summary

Information obtained in both the business and customer surveys has enabled the calculation of the estimated additional mileage that would be accrued if a single petrol station site were to close. From these calculations, it can be concluded that each site that remains open saves an estimated 280,000 miles per annum. This is split into approximately 190,000 miles for residents and approximately 90,000 miles for visitors. It has also been shown that this increase in mileage would have an impact on vehicle emission levels in the affected area.

With regard to the environmental issues relating to the operation and maintenance of petrol stations, the key pieces of legislation have been studied. In addition, the impacts on petrol stations owners in relation to the costs of complying with this legislation have been discussed. Together with the information obtained in the business surveys detailing projects funded by the grant, there is no evidence to suggest that, for petrol or diesel retailing, the RPSGS produces any environmental benefits over and above the minimum standards required by legislation.

New legislation on petrol vapour recovery systems is currently being implemented with Stage I to be complete by the end of 2004. Proposals for stage II, however, are currently being consulted on and will not be in place until approximately 2010. This legislation will, bring about stronger controls for petrol stations, which will then be required to update equipment in order to comply with the new requirements. It is however highlighted that it is most likely that not all fuel suppliers will be required to comply immediately and that the bigger petrol stations will most likely have to comply first.

Alternative methods of fuel supply, in particular un-staffed petrol stations, have been considered. However, the perceived benefits of this appear to be outweighed by safety regulations that require a trained member of staff to be on call at all times and within easy access of the petrol station site. Coupled with a lack of income from other facilities, such as a shop, un-staffed facilities do not appear to be cost effective.

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