home | news | site index

CUSTOMS AND EXCISE	FINANCE BILL 2000
	CLAUSE 5

CLAUSE 5: ULTRA LOW SULPHUR PETROL

SUMMARY

1. This clause provides for a rate of duty for ultra low sulphur petrol and defines the product. The clause will take effect from a day to be appointed by statutory instrument.

DETAILS OF THE CLAUSE

2. Subsection (1) provides that new subsections (3A), (3B) and (3C) shall be inserted into section 1 of the Hydrocarbon Oil Duties Act 1979. The new subsection (3A) contains the definition of ultra low sulphur petrol. Subsections (3B) and (3C) move the definitions of unleaded petrol, leaded petrol and higher octane unleaded petrol to section 1 of that Act. These definitions are currently set out in sections 13A(1B) and 13A(2) of that Act.

3. Subsection (2) inserts a new subsection (1A) into section 2 of that Act. The new subsection provides that the Commissioners may use their existing power set out in section 2(1) of the Act to direct which method of testing is used to ascertain the research octane number or motor octane number of unleaded petrol . The Commissioners’ power to direct which method of testing is used to ascertain the research octane number or motor octane number of unleaded petrol is currently contained at section 13A(1C) of that Act.

4. Subsection (3) substitutes a new subsection 6(1A) for the existing subsection 6(1A) (rates of duty) in the Act. The new subsection (1A) includes a duty rate for ultra low sulphur petrol.

5. Subsection (4) amends section 13A (rebate on unleaded petrol) of the Act to ensure that the rebates in that section do not apply to ultra low sulphur petrol, and to omit sections (1B), (1C) and (2) which are now covered in section 1 of that Act. It also provides some continuity for directions given under the current (1C) when it is omitted.

6. Subsection (5) inserts the definitions of ultra low sulphur petrol, unleaded petrol, leaded petrol and higher octane unleaded petrol into section 27(1) of the 1979 Act (interpretation), by referring to the definitions put in place by subsection (1) above.

7. Subsection (6) provides that the section shall come into force on a day appointed by order made by statutory instrument.

BACKGROUND

8. Ultra low sulphur petrol offers environmental benefits over conventional unleaded petrol. Research carried out by the Department of the Environment, Transport and the Regions shows that the use of ultra low sulphur petrol can lead to reductions in emissions of nitrogen oxides of up to 6 per cent, carbon monoxide of between 6 and 18 per cent and reductions in hydrocarbon emissions of up to 15 per cent. There are also substantial reductions in emissions of non regulated pollutants such as benzene, 1,3 butadiene, acetaldehyde and formaldehyde.

9. In addition the availability of ultra low sulphur petrol allows the introduction of GDI (gasoline direct injection) technology which improves fuel efficiency by up to 20 per cent. This is beneficial for carbon dioxide emissions.

10. European Commission legislation reduced the sulphur content of unleaded petrol from 500 parts per million to 150 parts per million from 1 January this year. All UK refiners have met this requirement. A further reduction in sulphur content, to 50 parts per million, will be required by 1 January 2005.

11. This clause provides a duty incentive for ultra low sulphur petrol of 1 pence per litre, over conventional unleaded petrol. This incentive should encourage production and use of ultra low sulphur petrol in advance of the 2005 deadline. This will build upon the substantial success of the duty incentive for ultra low sulphur diesel which has meant that this cleaner fuel is now 100 per cent of the UK diesel market, more than 5 years ahead of the EC deadline.

12. The specification for ultra low sulphur petrol follows the current 2005 specification in EC Directive 98/70. This specification may change before 2005 and, therefore, clause 7 gives the Treasury the power to change, by Order, the specification of ultra low sulphur petrol, ultra low sulphur diesel, and unleaded, super unleaded and leaded petrols. This means that the trade can be consulted over the correct

specification for ultra low sulphur petrol, and changes to the published specification can be made subject to the approval of the House.

13. This clause will come into force from a day to be appointed following Royal Assent, and the trade will be consulted about the appropriate timing, although there is a target date of 1 October 2000.

14. The revenue effect of this change is negligible in 2000/01.

© Crown Copyright | home