Analysis of costs associated with the mandatory deployment ...ec.europa.eu/environment/air/pdf/cowi_report_stage2_feb08.pdf · • The central case: introducing requirements for Stage

European Commission

Directorate-General Environment

Analysis of costs associated with the mandatory deployment of Stage 2 Petrol Vapour Recovery Equipment Final Report

February 2007

European Commission

Directorate-General Environment

Analysis of costs associated with the mandatory deployment of Stage 2 Petrol Vapour Recovery Equipment Final Report

February 2007

COWI A/S Parallelvej 2 DK-2800 Kongens Lyngby Denmark Tel +45 45 97 22 11 Fax +45 45 97 22 12 www.cowi.com

Report no. 01

Issue no. 02

Date of issue 21 dec 2007

Prepared MSJ, MPN, JEE

Checked JJD, JAKS

Approved MSJ

Analysis of costs associated with the mandatory deployment of Stage 2 Petrol Vapour Recovery Equipment

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Table of Contents

Executive summary 3 Background, scope and delineation 3 Options for compliance 4 Results 4 Data sources 7

1 Introduction 8 1.1 Background 8 1.2 Aims and objectives 9 1.3 Content and structure of this report 9

2 Study background and scope 10 2.1 Background and purpose of the study 10 2.2 Scope and delineation 11 2.3 Previous studies in the area 12

3 Policy options, methodology and assumptions 15 3.1 Policy options 15 3.2 Technical options and effects 15 3.3 Study approach 18 3.4 Scenarios and key assumptions 19 3.5 Data grouping 20

4 Petrol throghput and emission projections 22 4.1 Petrol throughput and number of petrol stations 22 4.2 Emissions 24

5 Costs of technology 30 5.1 Efficiency and value of recovered petrol 30 5.2 Costs of technology 31 5.3 The value of recovered petrol 35


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6 The spreadsheet model 38 6.1 Introduction 38 6.2 Input data 40 6.3 Background calculations 42 6.4 Outputs 42 6.5 User instructions 44

7 Results 46 7.1 The central policy option 47 7.2 The alternative policy option 50 7.3 Comparisons with other measures 52


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Executive summary This report provides the results of a study undertaken to assess the costs of in-troducing mandatory introduction of Stage 2 PVR (Petrol Vapour Recovery). The deliverables of the study consist of this report together with a ready-to-use spreadsheet for further possible analysis. The study has been prepared by COWI A/S1 for the European Commission DG Environment. The study com-menced in late June 2007 and was completed in January 2007.

Study outputs The study has produced two essential, mutually supportive, outputs: this report and an excel based ready-to-use calculation tool.

Background, scope and delineation In 2005, in its Thematic Strategy on Air Pollution, the Commission committed itself to examine further the scope of reducing VOC emissions at petrol filling stations2. In 2007, the Commission adopted a new legislative proposal on petrol and diesel quality3. In summing up the proposed action, the proposal states:

"To enable a higher volume of bio-fuels to be used in petrol, a separate petrol blend is established with higher permitted oxygenate content (including up to 10% bio-ethanol). For the same reason, the vapour pressure limit is increased for petrol blended with ethanol. All blends available on the market will be clearly labelled. These changes will facilitate development of the bio-fuel mar-ket while avoiding the possible risk of damage to existing vehicles. Higher emissions of volatile organic compounds will be controlled by collecting emis-sions in petrol stations for all fuels. The commission will bring forward a pro-posal for mandatory introduction of filling station vapour recovery in 2007".

The present study has been carried out to support the preparation of this pro-posal.

Policy options In doing this, the study has assessed the implications of two alternative policy options:

• The central case: introducing requirements for Stage 2 PVR to be com-plied with by 2013 applying to all newly built service stations and an an-

1 Core study team: Malene Sand Jespersen, Mads Paabøl Jensen and Jes Erik Jessen 2 COM (2005) 446 final, 4.2.1.2 3 COM (2007) 18 final

Background and purpose


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nual throughput of 500 m3 per year, and to service stations undergoing a major refurbishment.

• The alternative case: introducing requirements for all existing service sta-tions with a throughput in excess of 3,000 m3 per year to be fitted with Stage 2 PVR by 1st January 2020.

The assessments concentrate on the providing results with regard to the cost implications and the delivered VOC abatements. Based thereupon, the cost ef-fectiveness of the two options is assessed as well.

The study has drawn heavily on two important sources of information: A previ-ous study undertaken by ENTEC for the European Commission DG-Environment and a more recent study prepared by AEA for DEFRA. The for-mer of those provided assessments for all EU27 Member States (plus Croatia) and the latter provided assessments of the implications of introducing such re-quirements in the UK.

According to the ENTEC study, most Member States already have legislation along the lines outlined above in place. However, this does not apply to nine countries (Cyprus, Estonia, Finland, Greece, Ireland, Malta, Portugal, Spain and Romania). Further, another three countries, Latvia, Slovakia and Slovenia, would most likely need to introduce further requirements into their national leg-islation in order to fully comply. Last, Bulgaria has not any legislation in the field, but reported (according to ENTEC) to have Stage 2 PVR installed in most stations already.

Options for compliance Technology options Essentially, there are two technical options for complying with the above

possible policies, viz.:

• A "conventional" approach which involves capturing the vapour and re-turning it to the underground storage tank. This approach necessitates ap-propriate underground pipework, and it further implies that the captured petrol is returned to the underground storage tank. It ultimately goes back to the oil refinery when the service station accepts new petrol deliveries.

• The "at pump" approach whereby the captured vapour is cooled at the pump and recycled back to the dispenser nozzle and into the car fuel tank. This approach involves no modification to the underground pipe work at the station.

The recovered vapour will condense and form liquid petrol which can be re-sold.

Results This report provides results only at the EU level. For country specific results, the reader is referred to the model calculation tool, where such results can eas-ily be found and produced. Also, the spreadsheet model develops results for

Sources of informa-tion and data

Member States af-fected


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different size groups as shown below, whereas this report presents only the summary results. The size groups4, in terms of annual throughput, are:

• 0-500 m3/year • 500-1,000 m3/year • 1,000-2,000 m3/year • 2,000-3,000 m3/year • more than 3,000 m3/year

The below table illustrates the results that are delivered from these two policy options:

Conventional technology At pump technology Results in 2020

Central case Variant case Central case Variant case

Emissions (t/year) 46,847 41,219 46,847 41,219

Reduction relative to baseline, % 20 43 20 43

Total costs, 1000 € 209,470 388,976 179,376 317,335

Total annualised costs, 1000 €/year 26,377 47,537 23,686 41,178

Cost-effectiveness, €/ton (excluding value of petrol recovered)

2,173 2,675 1,951 2,317

Value of recovered petrol 1000 €/year 7,610 11,139 7,610 11,139

Net annualised costs including petrol value, 1000 €/year

18,767 36,398 16,075 30,039

Cost effectiveness, €/ton (including value of petrol recovered)

1,546 2,048 1,324 1,691

Interpretation of results The table shows the results in 2020. The table shows that for the central case:

• The annual VOC emissions from petrol refueling will have declined by 20% thus having reached a level of about 47,000 tons

• The total costs of delivering this reduction amounts to 209 million € corre-sponding to 26 million € per year (annualized costs)

• The value of the recovered petrol amounts on an annual basis, to about 19 million € per year. Thus, the costs to society of delivering the 20% VOC reduction corresponds to 1.5 € per kilo of VOC. The table also shows, that if this value is not included, the costs amount to 2.2 € per year. Both fig-

4 With regard to the large size bans, this categorization does not fully correspond to the formulation of the policy

options. However, the ENTEC study applies this categorization, and no other sources have been identified with

similar categorizations, but full alignment with the formulation of the policy scenarios. Also, much background

information and data have been found in the ENTEC study, which renders it almost impossible to change this

categorization.


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ures are included in the table, because in some cases, for example often in the case of the conventional technology, this value will accrue to the petrol distributor whereas the costs of installing the Stage 2 PVR equipment will be borne by the station owner.

The table also illustrates that the at pump technology is a more cost effective option for delivering the same amount of VOC reductions.

The costs of the alternative scenarios are higher than the costs of the central scenarios. Also, this policy option delivers more VOC reductions. This is not surprising as this policy option introduces requirements that are additional to those involved in the central policy option. In particular, its requirement that all large stations should, by 2020, have stage 2 PVR installed has an impact. This requirement does namely imply that some stations would need to install this equipment despite of the fact that the station is not being constructed or under major refurbishment. Thus, the alternative scenario brings into play the concept of "unscheduled works". And such unscheduled works are more expensive than the scheduled works, i.e. when the Stage 2 PVR can be introduced as part of the normal investment cycle.

Thus, the life time of a station and of its underground and above ground instal-lations thus has an impact on the costs. Assumptions about lifetimes are among the many assumptions that underlie the above results:

• Vapour collection efficiency of 85% • Lifetime of above ground equipment of 10 years • Lifetime of below ground equipment of 15 years • Petrol vapour pressure of 70 kPa • Discount rate of 4%

The spreadsheet model can provide sensitivity analysis with regard to changes in all of the above parameter assumptions.

The below table illustrates the outcomes, if variants are introduced to some of the above assumptions:

Central case Cost effectiveness in 2020 (including petrol value)

Conventional At pump

With key assumptions 1,546 1,326

With collection efficiency of 80%

With collection efficiency of 90%

1,681

1,425

1,448

1,217

With life time of above ground equip-ment of

5 years

15 years

2,787

1,137

2,574

915

With high cost assumptions 2,282 1,974

Sensitivity analyses for the central case


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With low cost assumptions 809 677

The alternative case does, as mentioned above, introduce a requirement for un-scheduled works to be undertaken. This introduces other important dimensions into the sensitivity of the results.

For some stations, it may be an opportunity simply to retrofit the existing equipment, which is a much cheaper option for compliance. However, for other, in particular older, station, this may not be an option. Also, the assumed station life time has important implications. The longer the assumed lifetime, the more expensive will the policy option be, because the more stations will be forced to undertake investments in Stage 2 PVR despite of the fact that they had not scheduled refurbishments until after 2020. Last, some stations may al-ready have some existing pipework at hand which can render the costs of the Stage 2 PVR cheaper than if this is not the case.

The key assumptions made with regard to these parameters are:

• 40% of stations can retrofit • station life time is 15 years • Fraction with existing pipework at hand is 15%

The sensitivity of the results with regard to these assumptions is illustrated be-low:

Cost effectiveness in 2020 in terms of €/ton and in-cluding the value of the recovered petrol


Variant case result 2,048 1,691

Result if only 10% can retrofit 2,254 1,887

Result if 75% can retrofit 1,809 1,462

Result if station life time is 10 years 1,781 1,495


Result if fraction with existing pipework at hand is zero

2,099 1,691

Result if fraction with existing pipework at hand is 50%

1,930 1,691

Data sources We have largely relied on the data from the ENTEC study, but as regards the costs of Stage 2 PVR, we have relied on the data from DEFRA. This dataset is more up-to-date; more transparent and includes both the conventional and the at-pump options. Also, the DEFRA data allows for distinctions between ability to retrofit and the opposite.

Sensitivity analyses for the alternative case


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1 Introduction This report provides the results of a study undertaken to assess the costs of in-troducing mandatory introduction of Stage 2 PVR (Petrol Vapour Recovery). The deliverables of the study consist of this report together with a ready-to-use spreadsheet for further possible analysis.

The study has been prepared by COWI A/S5 for the European Commission DG Environment. The study commenced in late June 2007 and was completed in January 2007.

1.1 Background In 2005, in its Thematic Strategy on Air Pollution, the Commission committed itself to examine further the scope of reducing VOC emissions at petrol filling stations6. In 2007, the Commission adopted a new legislative proposal on petrol and diesel quality7. In summarising the proposed action, the proposal states:

"To enable a higher volume of bio-fuels to be used in petrol, a separate petrol blend is established with higher permitted oxygenate content (including up to 10% bio-ethanol). For the same reason, the vapour pressure limit is increased for petrol blended with ethanol. All blends available on the market will be clearly labelled. These changes will facilitate development of the bio-fuel mar-ket while avoiding the possible risk of damage to existing vehicles. Higher emissions of volatile organic compounds will be controlled by collecting emis-sions in petrol stations for all fuels. The commission will bring forward a pro-posal for mandatory introduction of filling station vapour recovery in 2007".

The present study has been carried out to support the preparation of this pro-posal.

5 Core study team: Malene Sand Jespersen, Mads Paabøl Jensen and Jes Erik Jessen 6 COM (2005) 446 final, 4.2.1.2 7 COM (2007) 18 final


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1.2 Aims and objectives The study is to investigate into the economic; environmental; and distributional implications of introducing mandatory Stage 2 petrol vapour recovery in the EU.

The study should review and update existing information on the costs of differ-ent options to implement Stage 2 PVR. A spreadsheet model, capable of calcu-lating total costs, annualised costs and cost-effectiveness associated with intro-duction of stage 2 PVR equipment - should be developed.

1.3 Content and structure of this report This report is structured as follows:

• Chapter 2 (Study scope and objectives) explains in more detail about the purpose of the study; its scope and delineation, and how it relates to the previous studies in this field.

• Chapter 3 (Methodology) explains about the methodology that has been put into use. This chapter explains how the purpose and scope of the study has been translated into operational cases and about the considerations that lie behind the assumptions made.

• Chapter 4 (Petrol throughput and emissions) presents the applied data on petrol throughput and explains how emissions are estimated.

• Chapter 5 (Costs of technology) presents the cost estimates and assump-tions that enter into the scenario analysis.

• Chapter 6 (The spreadsheet model) presents and describes the content of the developed spreadsheet model and provides user instructions on how to operate the model.

• Chapter 7 (Results) provides and overview of the results achieved. This chapter first explains the results for the central case (explained in chapter 2) and provides the results for the requested sensitivity analyses introduc-ing variant assumptions with regard to collection efficiency; equipment life time; and unit costs. Last, this chapter also explains the results of an alter-native case that assumes another legislative intervention that imposes the mandatory requirement onto all stations with a throughput in excess of 3,000 m3 per year.


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2 Study background and scope This section explains the background for the study; the problems that a possible intervention is to address, and the objectives that will thereby be sought achieved.

2.1 Background and purpose of the study Environmental issues Ground-level photochemical pollution - particularly ozone pollution - remains a

serious environmental problem in the European Union, having, for example, harmful influence on human health such as impaired lung functioning and other respiratory problems. Volatile organic compound (VOC) emissions contribute to this pollution, and refuelling operations at service stations are recognised as one of the sources of such emissions.

In consequence the Commission addressed the issue already in 1994 where requirements were introduced with regard to Stage 1 PVR. Stage 1 PVR deals with emissions from storage and loading/unloading at petrol terminals, mobile containers and loading into storage installations at service stations.8 Recent trends and policy developments point to use of higher and increasing volumes of biofuels in petrol. This in turn necessitates higher vapour pressure limits for petrol blended with ethanol which will, if no action is taken, lead to increased VOC emissions.

In 2005, the Commission, in its Thematic Strategy on Air Pollution9, addressed the need for action to control VOC emissions at petrol stations. In early 2007, the Commission put forward a proposal on new petrol and diesel qualities. This proposal is, among other things, motivated in the Strategy, and in the desire to enable the use of higher and increasing volumes of biofuels. The proposal rec-ognises that this can lead to increased VOC emissions, and therefore it calls for the Commission to bring forward a proposal for mandatory introduction of fil-ing station vapour recovery in 2007.

Purpose of this study The purpose of this study is to feed into the ongoing work in the Commission on the preparation of this proposal. Thus, the study analyses the economic, en-vironmental and distributional implications of introducing EU wide require-

8 Directive 94/63/EC 9 COM(2005) 446 & SEC(2005) 1132 & 1133

Policy framework


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ments for Stage II PVR. In this, the study focuses first and foremost on cost-effectiveness approaches.

Study outputs The study delivers this report on the costs of the defined policy options (cf. the following chapter) and a spreadsheet model that can be used for further analy-ses and sensitivity analysis.

Impacts The study provides assessments of the costs; the VOC reductions; and important distributional aspects of the above two cases.

The assessments include sensitivity analyses (the contents of which are further described below) and involve analysis of the two technology options that are available (further elaborated in the coming chapter).

Information sources The study relies largely on the outcomes and the contents of two previous studies in the area: A study carried out for DEFRA to analyse the implications of similar regulations in UK and a study carried out by ENTEC for DG-ENV on the same issue.

2.2 Scope and delineation The study analyses the implications of introducing EU wide mandatory re-quirements for Stage 2 PVR for service stations. The study looks at the above central case and supplements this with calculations regarding the alternative case.

Study basis The study's scope is explained above. It does, as previously mentioned, rely largely on data and background information provided in the above ENTEC and AEA studies. The last section of this chapter explains more about these studies.

Geographical coverage The report concentrates solely on the implications for EU-27, though the spreadsheet model includes EU27 and Croatia. A full overview of Stage II PVR implementation by country for EU27 and Croatia is thus provided in the model. All aggregates are, however, for the EU27 alone and this report will focus solely on EU27. But one can see country specific details for Croatia in the model.

Of the EU27 countries only some countries will be affected by a possible EU intervention, as some already have national legislation that complies with the requirements under consideration. The ENTEC study thus pointed to the fol-lowing Member States as having no legislation regarding requirements for Stage 2 PVR:

• Cyprus • Estonia • Finland • Greece • Ireland • Malta

Technology options and sensitivity analy-ses


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• Portugal • Spain • Romania

Thus, a total of 9 Member States will for sure be affected by a possible EU leg-islation. However, some Member States' existing legislation may not fully comply with a possible EU legislation and therefore more than 9 countries may be affected - the size of the impact depending on the exact framing of the EU initiative and the extent to which this necessitates changes in the national legis-lation. According to the ENTEC study the unabated VOC emissions of the 9 countries is only slightly more than 15% of the total EU27 petrol throughput.

Countries in question that have some legislation, but most likely not sufficient to comply with expected requirements for Stage II PVR will be affected by leg-islation as aforementioned are:

• Latvia • Slovakia • Slovenia

Also, Bulgaria has no legislation but it is indicated that the majority of stations in Bulgaria has Stage 2 PVR controls in place.

At the time of preparing the ENTEC report, the UK was considering to imple-ment legislation to require Stage II controls at service stations. However, as the initiative was at that time still pending in the UK, no regulation was assumed in ENTECs analysis for the business-as-usual scenario. Since then however, the legislation requiring Stage II control at service stations has been passed. There-fore, in this analysis, the UK is not included in the list of Member States having no legislation regarding requirements for Stage 2 PVR.

2.3 Previous studies in the area As mentioned, this study builds largely on two past studies, viz. the study un-dertaken by ENTEC for DG-ENV on Stage II PVR in the whole of EU and the study undertaken by AEA by DEFRA on the implications of Stage II PVR in the UK. Henceforth, they will be referred to as "the ENTEC study" and the "DEFRA study" respectively.

The ENTEC study The overall objective of the ENTEC study was to evaluate the potential scope for and costs of further reductions of emissions of volatile organic compounds (VOCs) from refuelling operations at service stations (Stage 2 PVR) on a Euro-pean level. Amongst other things, the study estimates emissions for a range of scenarios on the expected uptake of Stage 2 controls in each Member State fo-cusing on the period 2010 to 2020. Also the study calculates the associated costs and the derived cost-effectiveness of Stage 2 measures.

Among the study's main conclusions are:


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• With the currently foreseen uptake of Stage 1 B and Stage 2 control, exist-ing controls on emissions at service stations have a significant impact upon emissions.

• Reductions in emissions through the introduction of Stage 2 controls could be achieved in the most cost-effective manner for (a) service stations with a relatively large annual throughput of petrol; and (b) for new and substan-tially rebuilt service stations.

• There are diminished returns for requiring Stage 2 controls at existing ser-vice stations with a relatively low throughput.

Thus, the study paid particular attention to the potentials involved in introduc-ing minimal requirements on Stage 2 controls at the Community level - given the existing level of implementation in Member States and the observed differ-ences in technical and other requirements. Such a model considers introducing requirements for Stage 2 controls only at service stations that are newly built or that are substantially rebuilt.

In regard to selected key parameters, the study makes essential assumptions about:

• vapour collection efficiency10

• the assumed economic lifetime of the various equipment associated with Stage 2 controls

• key factors affecting the levels of emissions during refuelling of vehicles, e.g. the Reid Vapour Pressure of the petrol and the temperature.

It is worth mentioning though, that the ENTEC study only focuses on the so called conventional (active and passive) approaches/technologies of capturing the vapour and returning it to underground storage tanks.

The DEFRA study The aforementioned RIA prepared by DEFRA11 on the other hand considers both the conventional (active) approaches, and the "newer" so called "at pump" (active) approaches of capturing the vapour and cooling and recycling it back to the dispenser nozzle. The RIA also, among other things, develops a scenario of a preferred option for requiring Stage 2 PVR compliance at existing stations with a relatively large annual throughput (greater than 3000m3) as well as all new stations (with an annual throughput greater than 500m3 though).

10 However there are indications that in future, vapour collection efficiency could be im-proved if vehicle fill necks and stage 2 nozzles are optimised. 11 The UK Department for Environment, Food and Rural Affairs (Defra) has completed a public consultation and Regulatory Impact Assessment (RIA) of the costs and benefits as-sociated with the introduction of Stage 2 PVR.


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None of the studies though, appears to take account of the greater evaporative emissions due to the newest legislative requirements leading to increased quan-tities of ethanol in petrol in the future.

As mentioned, these two reports have constituted the starting point of this analysis, and to a large extent for identifying the necessary input data. In this, we have however put a focus on identifying particularly critical parameters - and for those: the relevant alternative values for which to carry out sensitivity analysis. This study has concentrated on reviewing input data, methods and as-sumptions made in these two studies with a view to establishing the best possi-ble methods, assumptions and data-sets to carry out the analyses required. The calculations consider the use of both the "conventional" technology and of the newer "at pump" technology of capturing the vapour and circulating it within the "system" (of each filling station) rather than back to the supplier. Last, the study puts a strong emphasis on developing a simple, transparent and ready-to-use calculation tool that can be put into use also after the completion of this study.

Contribution of pre-sent study


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3 Policy options, methodology and assumptions

This chapter first explains about the technology options that are available for complying with Stage II PVR - and their principal effects. This includes a brief overview of the health and environmental benefits that the intervention will aim to achieve. Thereafter, the chapter elaborates on the approach to the study and the methodology and assumptions applied to establish the scenarios and analyse the cost effectiveness. Finally, the last section presents the data dimensions with which the analysis has been carried out.

3.1 Policy options The study analyses the economic, environmental and distributional implications of introducing EU wide requirements with regard to Stage 2 PVR. More spe-cifically, the study analyses two policy options, viz.:

• The central case: introducing requirements for Stage 2 PVR to be com-plied with by 2013 applying to all newly built service stations and an an-nual throughput of 500 m3 per year, and to service stations undergoing a major refurbishment.

• The alternative case: introducing requirements for all existing service sta-tions with a throughput in excess of 3,000 m3 per year to be fitted with Stage 2 PVR by 1st January 2020.

3.2 Technical options and effects The essential problem that a possible EU intervention will deal with relates, as described above, to the reduction of VOC at petrol stations. Petrol contains VOC, which will 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 they are con-trolled, will escape into the atmosphere through the filler neck of the fuel tank.

The key issues are thus to look at the technical options that exist to reduce these emissions; what are their cost implications; what emissions reductions can they provide; and are there any (unintended) distributional effects.


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There are two basic types of PVR Stage 2: Active and passive systems or, as they are also called, conventional and at-pump systems. These two distinct ap-proaches can be characterised by:

• A "conventional" approach which involves capturing the vapour and re-turning it to the underground storage tank. This approach necessitates ap-propriate underground pipework, and it further implies that the captured petrol is returned to the underground storage tank. It ultimately goes back to the oil refinery when the service station accepts new petrol deliveries.

• The "at pump" approach whereby the captured vapour is cooled at the pump and recycled back to the dispenser nozzle and into the car fuel tank. This approach involves no modification to the underground pipe work at the station.

Introducing such systems invoke investments and involve operating costs (the size of which depend on which of the above approaches is used), but at the same time they also provide an economic gain in terms of the value of the cap-tured vapour.

Open active systems (“assist” systems), as indicated above, uses a vacuum pump to draw the petrol vapours through a return line to the underground stor-age tank.

The key elements of active PVR Stage 2 systems include:

• A vapour flow control system which regulates the amount of vapour drawn into the storage tank in proportion to the amount of fuel dispensed. The volumetric return rate of vapour should generally be as close as possible to the volume of fuel dispensed12;

• A vapour pump that draws back vapour from the nozzle to the under-ground storage tank, with a coaxial hose and a coaxial adapter. The vapour pump is generally located in the dispenser13;

• The vapour return nozzle, which generally looks similar to a normal pump nozzle and which typically, has a vapour sleeve positioned away from the spout. Where there is more than one nozzle on each side of a dispenser, each nozzle is typically fitted with a valve that ensures only the nozzle in use will suck back vapours.

Whereas PVR Stage 2 controls generally require a separate vapour return pipe, in certain simple sites, it is possible to insert a plastic vapour return line down the original fuel pipe back to the underground storage tank (the ‘pipe-in-pipe’ system). This has the advantage that, when installing PVR Stage 2 controls at

12 A derivative of the open active system that is in place in some countries involves applica-tion of a greater pumping rate to increase the ratio of vapours recovered to petrol dispensed. 13 Central systems that work for several dispensers may be used in some cases.

The conventional system


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existing petrol stations, there is no need to dig up the station forecourt to insert a separate vapour return pipe14.

At pump system A relatively recent development in petrol vapour recovery during refuelling of vehicles is a system that recovers the displaced petrol vapours directly at the dispenser, rather than returning them to the underground storage tank.

This system uses standard PVR Stage 2 nozzles and hoses and also has a vac-uum pump. It has a heat exchanger which condenses the petrol vapours and a tank in which water is separated and the recovered petrol stored. The recovered petrol is then passed to the dispenser petrol lines during refilling.

The system is potentially promising as a new technique for petrol vapour re-covery as it does not require additional below-ground pipe work. However, some concerns have been expressed that the high vacuum pump suction re-quired might collect vapours that may not otherwise have been lost and could have remained in the vehicle’s petrol tank (according to ENTEC)15.

There are the following essential dimensions of the costs and benefits of intro-ducing the system:

• The environmental benefit (saved VOC emissions); • The economic gain from the captured vapour which can be resold; • The costs in terms of investment costs and operation costs and in regard to

the former; the life time of the equipment

The outcome of analysing these dimensions is further determined by existing Stage II implementation, the contents of the eventual legislation; the approach that is used; and the national tax systems (energy tax levels and VAT systems).

The below table provides an overview of the effects that an introduction of stage II PVR can have in terms of reducing VOC emissions:

Measured effect leading to Impacts

VOC emissions formation of ground level of ozone (VOC are ozone precursors)

Impaired lung function and other respiratory problems leading to deaths and hospital admissions

Additional deaths in cases of extreme ozone levels (ozone accidents)

Detrimental effects on plants (crop produc-tion)

Changes in ecosystem functioning in natu-

14 This system though may not be suitable at sites where the fuel pipe is not smooth inside or where it has several bends because this makes it more difficult to insert the vapour return pipe all the way between the dispenser and the underground storage tank. 15 According to Defra though, the environmental benefits arising from implementation of PVR Stage 2 will be the same whichever PVR Stage 2 system a retailer may choose to in-stall.

Effects from Stage II PVR

The environmental and health effect


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ral vegetation communities

Damaging effects on man-made materials (rubber, surface coatings, textiles)

Odour Annoyance

The study from DEFRA contains fairly elaborate quantifications and valuations in regard to the above impacts. The current study however has been framed to focus only on the achieved VOC reductions and the Stage II equipment costs (and immediate benefits from recovered petrol).

Thus, this study relies on a cost-effectiveness approach rather than a full cost benefit approach where all costs and benefits (also the external benefits men-tioned above) are taking into account. Calculating the cost-effectiveness of mandatory deployment of Stage II PVR equipment in terms of costs per unit of VOC reduction achieved will allow for comparison to other measures to reduce VOC emissions.

Last, it should be noted that the environmental issue is a cross-border issue. Thus, VOC reductions delivered in one country can provide some ozone ground level reductions in one country and some reductions in other countries - and vice versa.

3.3 Study approach This study heavily relies on the data collected and presented in the ENTEC and the DEFRA studies of the costs associated with Stage 2 PVR. The ENTEC study involved a survey of the 25 Member States and three Candidate Countries to obtain available information on implementation of vapour recovery controls. Further, information about the technically achievable effectiveness of Stage II controls was collected and estimated. Finally, the study collected and reported on the costs of introducing Stage II controls, broken down into the various ele-ments associated with costs, including capital and operating costs.

The UK has recently introduced Stage 2 PVR - among other things - on the ba-sis of a RIA managed by DEFRA and carried out by AEA Technology UK. This study has been used for the costs of Stage II controls.

This study aims mainly to supplement and synthesise the information of the above mentioned studies. However, it has investigated further into essential assumptions and data used in these studies. Also this study has applied other estimates of key assumptions including abatement/collection efficiencies; life time of above ground equipment; and unit costs.

The study has also involved development of a spreadsheet model through which emissions, costs and cost effectiveness can be calculated for a range of scenarios related to the specific regulation of Stage II controls and technical and economic assumptions.


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3.4 Scenarios and key assumptions The results that derive from the analyses provide information on:

• The total cost implications • The annualised cost implications • The amount of VOC abated • The cost-effectiveness in 2020 (using the annualised costs) • The total costs including and excluding the value of the petrol recovered

The central case The central case assumes that mandatory requirements are introduced so that:

• They apply to all newly built service stations with an annual throughput of more than 500 m3 per year

• They apply to all service stations that undergo major refurbishments

It is assumed that these requirements are fully implemented by 2013.

The key assumptions that frame the central case are:

• Vapour collection efficiency of 85% • Lifetime of above ground equipment of 10 years • Lifetime of below ground equipment of 15 years • Petrol vapour pressure of 70 kPa • Discount rate of 4%

In order to take proper account of the uncertainty related to some of the above assumptions and to test the robustness of the results against changes to key pa-rameters, alternative calculations (sensitivity analyse) are done for the central case that:

• Illustrates the cost ranges that would result for the conventional and for the at-pump systems if collection efficiencies are set first at 80% and then at 90%. This serves to illustrate how sensitive the cost estimates are with re-gard to the assumptions made for collection efficiency

• Illustrates the cost ranges that would result if life times for above ground equipment are set to be shorter (5 years) respectively longer (15 years) than first assumed

Alternative case Also, the study will provide the same types of results for a case that assumes that the requirements:

• Will apply as outlined above as well as to all existing service stations with a throughput in excess of 3,000 m3 per year. Whereas the central case as-sumes that the legislation comes into force and takes its full effect from 1 January 2013, this case, which, for the large stations, relates stronger to ex-isting stations, assumes that the national legislation comes into effect on 1 January 2013 at the latest, and requires that all existing larger stations

Variants to the cen-tral case


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should comply with the requirements by 1 January 2020 at the latest. Thereby, the stations are provided with time to adjust (lead time) and to take the new requirements into considerations when planning for new in-vestments, repair and maintenance.

Abatement efficiency ENTEC use a hydrocarbon abatement efficiency rate of 80% for Stage II controls. ENTEC points out that this is considered to be an achievable value on average, provided that the equipment is functioning to its design intent with appropriate maintenance and that the customer uses the nozzle correctly. How-ever, some countries where Stage II equipment has already been implemented have higher requirements for efficiency. Therefore in the central case in this analysis an abatement efficiency rate of 85% for Stage II controls is applied. In variants to the central case the effects of lower and higher efficiency has been explored quantitatively.

The reader is referred to chapter 3 of the ENTEC report for a thorough discus-sion on the efficiency.

3.5 Data grouping ENTEC uses countries, size bands and years as primary data dimensions. Emis-sions are illustrated by ENTEC for refuelling, tank breathage, spillage, fuel tanking and thus the total VOC emissions.

This study relies largely on previous studies and its purpose is to shed light on refuelling emissions. As the study models stage II abatement, which is on refu-elling, the output will only be on refuelling as all other emissions are assumed unaffected by the emission abatements.

Data dimensions in the spreadsheet model supplied are the same for all scenar-ios and primary dimensions are:

• Countries. The study models EU 25+3 countries and as in the ENTEC the primary emissions changes due to stage II will mainly happen in the member states having no legislation on the area. Furthermore some countries have some legislation, but this might not fully comply with possible EU legislation and these countries will thus also be affected albeit to a smaller extent.

• Size of petrol stations, according to their throughput. Legislation is most likely to happen on size bands, as cost effectiveness of VOC emissions reductions varies between these. All emissions and costs have been estimated based on a range of sizes of petrol stations, ac-cording to their throughput. Separate information is provided for petrol stations with annual throughput in the following ranges:

o Size 1: 0-500 m3/yr;

o Size 2: 500-1,000 m3/yr;


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o Size 3: 1,000-2,000 m3/yr;

o Size 4: 2,000-3,000 m3/yr; and

o Size 5: >3,000 m3/yr

• Year. Modelled for four years 2005, 2010, 2015 and 2020, but results are only illustrated for 2010, 2015 and 2020, as data prior to this is as-sumed uninteresting. Data are modelled for five year periods, accord-ing to the periods in ENTEC.

• Cases, as described in scenario outline above. Cases vary according to assumptions on legislation, costs, abatement efficiency rate, life time of equipment, petrol vapour pressure, temperatures etc. Outcome will be shown in result sheets of the model and illustrates the effects of sce-nario assumptions.

Furthermore the model includes the possibility of specifying own key assump-tions in one scenario. The model also includes various possibilities for running sensitivity analysis on e.g. lifetime of service stations or equipment, discount rate, collection efficiency or costs of PVR equipment.


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4 Petrol throghput and emission projections This chapter first present the data on petrol throughput and the number of ser-vice stations in size bands that have been applied earlier in the analysis. This is followed by a section on how the emissions are estimated by basis on Reid Va-pour Pressure (RVP) and uncontrolled emissions from refuelling.

4.1 Petrol throughput and number of petrol stations To estimate the VOC emissions, information on the petrol throughput in each country by size of petrol stations is required. In addition, in order to estimate the costs of Stage II controls, information on the numbers of petrol stations in each of these size categories is required.

In this study the information about petrol throughput and number of petrol sta-tions is based directly on ENTEC data.

Petrol throughput Data on petrol throughput has been based on information from the PRIMES model about expected petrol sales up to 2020 for the countries of interest.

The data are associated with some uncertainty. However, the data derives from the same source are can thus easily be traced, and comparability across coun-tries is eased. Still, if other information on projected petrol sales by country, size band and year become available and is considered applicable for the pur-poses of this country, such information could be entered into the model either directly as throughput in m3 or as energy consumption by petrol stations.

The table below presents a summary of the projected petrol throughput at ser-vice stations by country and size band for the years 2005, 2010, 2015 and 2020.


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Table 1 Estimated petrol throughput at service stations

Country 2005 2010 2015 2020Austria 2.536 2.469 2.408 2.504 Belgium 2.933 2.849 2.813 2.934 Cyprus 303 344 356 366

Czech Republic 2.639 2.863 3.020 3.122 Denmark 2.576 2.473 2.305 2.248 Estonia 444 504 536 544 Finland 2.337 2.244 2.103 2.088 France 18.943 18.820 18.357 18.670

Germany 37.830 38.205 37.435 38.653 Greece 4.356 4.363 4.390 4.527 Hungary 2.070 2.417 2.578 2.640 Ireland 2.139 2.230 2.243 2.330

Italy 22.371 21.967 21.182 21.051 Latvia 409 465 517 544

Lithuania 552 697 811 919 Luxembourg 765 732 685 690

Malta 102 117 125 130 Netherlands 5.388 5.458 5.582 6.001

Poland 6.865 7.893 9.289 10.815 Portugal 2.916 2.989 3.088 3.263 Slovakia 934 1.124 1.324 1.529 Slovenia 1.171 1.219 1.180 1.178

Spain 11.206 11.562 11.618 11.839 Sweden 5.338 4.993 4.695 4.726

UK 28.688 28.686 27.803 28.391 Bulgaria 928 1.110 1.282 1.432 Romania 2.261 3.115 3.770 4.307

Total* 168.999 171.905 171.496 177.440

Throughput (000m3)

Source: ENTEC based on PRIMES data as provided in the Rains model. Note: In the model petrol throughput has been broken down on petrol station size using an estimated distribution on size band by country.

The table shows a mixed trend for the countries projected petrol throughput. However, at the overall level, a small increase in petrol consumption is pro-jected in EU25+3 from 2005 to 2020.

Petrol stations The ENTEC study includes a full data set for all 28 countries. However, the data is associated with considerable uncertainty as it was not possible for ENTEC to obtain information for a number of the countries. Instead the num-bers of petrol stations within each of the size bands were estimated based in available information. The throughput by size band has been estimated by the total national throughput and the estimated share of petrol stations within each size band.

The assumed economic lifetime of the service station affects the costs in this analysis as it determines the rates in which Stage II controls can be imple-mented during scheduled rebuild. The shorter the lifetime of service stations,


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the sooner will stage II implementation due to scheduled rebuild take place. This factor also determines the share of petrol stations that might undergo un-scheduled implementation of stage II, which is significantly more expensive than scheduled implementation. For the purposes of this study, it has been as-sumed that the economic lifetime of the service station is 15 years (time be-tween major refurbishments). Thus, it has been assumed that the rate of new-built or significantly rebuilt petrol stations within each size band is 1 out of 15 petrol stations per year (equals 6.7 per cent).

The estimated number of petrol stations by size for each country is presented in Appendix B.

4.2 Emissions There are several sources for volatile organic compounds (VOCs) emissions from petrol distribution. These include storage and loading/unloading at petrol terminals (and of mobile containers), loading into storage installations at ser-vice stations, tank breathing (Stage I) and finally refuelling of vehicles (Stage II). Requirements for controls on emissions of VOCs in the petrol distribution chain were introduced in the European Union in 1994 under Directive 94/63/EC (Stage I petrol vapour recovery).

In addition to Stage I petrol vapour recovery (PVR) a number of legislative and non-legislative measures have already been introduced in the Member States to ensure a further reduction in VOC emissions. This includes introduction of re-quirements for recovery of vapours during refuelling of vehicles at petrol ser-vice stations. This is referred to as Stage II petrol vapour recovery (PVR).

In this report, emissions have only been estimated for refuelling (the only source affected by Stage II controls), thus not including emissions related to fuel unloading, spillage and tank breathing as these are assumed to remain con-stant for all scenarios. It should be noted that ENTEC report on emissions from the other sources as well (e.g. they provide estimates of reduction in total VOC emissions from petrol distribution due to Stage II), but also stress that these emissions are assumed to remain constant in all scenarios.

4.2.1 Reid Vapour Pressure The vapour pressure of petrol and the temperature are important factors affect-ing emissions of VOCs during vehicle refuelling.

Reid Vapour Pressure (RVP) is the absolute pressure exerted by the gas pro-duced by evaporation from the liquid, as measured by Reid apparatus under the specific conditions of test temperature, vapour/liquid ratio and air saturation. RVP is adjusted with the temperature and therefore RVP is reported for both summer and non-summer days in the model.

In this analysis an assumed maximum petrol vapour pressure of 70 kPa has been applied. However, a fixed maximum does not entail a fixed operating


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pressure across the countries because fuel quality legislation and its implemen-tation specifies the actual Reid Vapour Pressure of petrol sold within each country.

Therefore ENTEC data (based on measured data from the authorities or petro-leum associations) about the actual RVP in each country assuming a maximum of 70 kPa has been applied.

Table 2 Estimated Reid Vapour Pressure at service stations, 70kPa

Reid Vapour Pressure - kPaCountry Summer Non-summerAustria 57,5 75 Belgium 57,5 80 Cyprus 57,5 60 Czech Republic 57,5 75 Denmark 60,0 80 Estonia 57,5 85 Finland 57,5 85 France 57,5 69 Germany 57,5 75 Greece 57,5 60 Hungary 57,5 72 Ireland 62,4 90 Italy 57,5 69 Latvia 57,5 85 Lithuania 57,5 85 Luxembourg 60,0 87 Malta 57,5 69 Netherlands 57,5 80 Poland 57,5 75 Portugal 57,5 75 Slovakia 57,5 72 Slovenia 57,5 69 Spain 57,5 60 Sweden 64,7 80 UK 57,5 85 Bulgaria 57,5 65 Romania 57,5 72

Source: ENTEC data.

The two key factors affecting the levels of emissions during refuelling of vehi-cles are the Reid Vapour Pressure of the petrol and the temperature. These two factors combine to give the True Vapour Pressure, which has a linear relation-ship with unabated VOC emissions during refuelling.

Variability in temperature and RVP can have a significant impact upon uncon-trolled emissions during refuelling of vehicles. Therefore in order to model emissions with and without Stage II controls in place, the emissions equations require calculation of the True Vapour Pressure (in bar) from the Reid Vapour


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Pressure (RVP) in kPa and temperature. True Vapour Pressure is the absolute pressure exerted by the gas produced by evaporation from a liquid when the gas and liquid are in equilibrium at the prevailing temperature. TVP is calculated as16:

TVP = 0.01 x RVP x (10^(((0.000007047 x RVP) + 0.01392) x TEMP + ((0.0002311 x RVP) - 0.5236)))

where

TVP = True Vapour Pressure (bar) RVP = Reid Vapour Pressure (kPa) TEMP = Product temperature (ºC)

4.2.2 Uncontrolled emissions from Refuelling Uncontrolled emissions from refuelling in BaU are estimated by country, size band and year. Uncontrolled emissions from refuelling at petrol stations for each country have been calculated using this formula17:

Emissions from Refuelling (tonnes/year) = 3.67 * Volume of gasoline dis-pensed per year (‘000s of m³) * True Vapour Pressure (bar)

The table below provides a summary of the projected emissions from refuelling over time.

16 Formula provided by Institute of Petroleum as quoted in ENTEC. 17 Formula provided by Institute of Petroleum as quoted in ENTEC.


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Table 3 Uncontrolled VOC emissions from Refuelling 2005 to 2020

2005 2010 2015 2020Austria 2498 2433 2373 2467Belgium 3009 2922 2886 3010Cyprus 346 393 407 418Czech Republic 2458 2668 2814 2909Denmark 2598 2495 2326 2268Estonia 400 454 483 490Finland 1976 1897 1778 1765France 19631 19504 19024 19349Germany 35591 35943 35219 36365Greece 4976 4985 5015 5172Hungary 2057 2402 2562 2624Ireland 2563 2673 2688 2793Italy 26203 25730 24811 24657Latvia 377 430 478 503Lithuania 546 689 801 908Luxembourg 828 791 740 746Malta 125 143 153 159Netherlands 5528 5599 5727 6156Poland 6329 7277 8563 9971Portugal 3743 3836 3964 4188Slovakia 864 1040 1225 1415Slovenia 1099 1143 1107 1106Spain 12046 12429 12490 12728Sweden 5002 4679 4400 4428UK 32195 32192 31202 31862Bulgaria 869 1039 1200 1341Romania 2234 3078 3726 4257Total 176094 178864 178162 184051

Uncontrolled emissions (Refuelling) - Total (t/a)

Source: ENTEC data.

The table shows that emissions from refuelling of vehicles are estimated to re-maining relatively constant throughout the period. The increase in potential emissions through increased fuel throughput is partially offset by continuing implementation of Stage II in some countries.

4.2.3 VOC emissions in Business As Usual (BAU) VOC emissions are calculated by country, size band and year in the model us-ing the formula:

BaU VOC emissions (t/a) = Uncontrolled emissions (t/a) - (Uncontrolled emis-sions (t/a) * Collection efficiency (%) * Current uptake, BaU (%))


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Table 4 VOC emissions from Refuelling in BaU 2005 to 2020


VOC emissions from Refuelling in BAU

4.2.4 VOC emissions in the policy scenarios VOC emissions in the scenarios are calculated using the formula:

Scenarios VOC emissions (t/a) = Uncontrolled emissions (t/a) - (Uncontrolled emissions (t/a) * Collection efficiency (%) * Total uptake, scenario (%))

VOC emissions in the alternative scenario are shown in the figure below. The level of emissions will off course change according to assumptions made, i.e. which scenario variation is observed. VOC emissions do however not change by choice of system (conventional or at pump) or if the value of petrol is in-cluded or not, as these factors merely affect the distributional effects of abated emissions value.


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Table 5 VOC emissions from Refuelling in Central case 2005 to 2020


VOC emissions from Refuelling in BAU

To estimate the abated VOC emissions due to refueling in scenarios, the sce-nario emissions are simply withdrawn from the BaU VOC emissions to esti-mate the gap. In order to evaluate scenarios one can view the abated emissions, but cost-effectiveness of the abated emissions should also be taken into ac-count.


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5 Costs of technology This presents the cost assumptions that are applied in the scenario analyses un-dertaken to assess the implications (focusing on cost-effectiveness) of the pol-icy options under consideration.

5.1 Efficiency and value of recovered petrol Efficiency There are various factors that affect the efficiency and the functioning of PVR

Stage 2 equipment. In this analysis the efficiency rate applied is not differenti-ated for conventional system and "at pump" systems. As explained in section 3.4 an abatement efficiency rate of 85% is applied for the central case.

Conventional systems may 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 resold18. However, remaining vapour within the under-ground storage tanks will be returned to the terminal at the next tanker fuel de-livery with no direct benefit to the retailer.

New - at pump - PVR Stage 2 systems 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 environmental benefits arising from implementation of PVR Stage 2 will basically be the same for society whichever system a retailer may choose to install. This is because the vapour is collected and retained within a sealed sys-tem. However, using the conventional systems the benefit (in terms of the value of the retained petrol) will accrue to oil refinery to which the vapour will be returned. Using the "at pump" systems the service station will benefit as the vapour is captured and cooled at the pump and recycled back to the dispenser nozzle.

Accordingly, there are potential direct benefits to the retailer/service station from new PVR Stage 2 technology. Any petrol recovered by a retailer can be sold and assist in recouping the costs of installing PVR Stage 2 technologies.

18 This benefit has not been assessed and quantified due to the difficulties in establishing how much liquid petrol may derive from the petrol vapour.

Conventional sys-tems

New systems - at pump

Value of recovered petrol


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5.2 Costs of technology This chapter first explains the cost elements that must be quantified in order to provide sufficient input data into the actual assessment. Thereafter, the specific unit costs and necessary assumptions are commented on.

5.2.1 Cost elements and cost cases Relevant cost elements in this analysis are the necessary additional or incre-mental (annualised) costs of introducing PVR Stage 2 controls (as compared to the business as usual scenario), rather than the total costs of PVR Stage equip-ment. For example, in the case of a new or (scheduled) substantially rebuilt ser-vice station, there will be a need to purchase new dispensers and associated equipment, regardless of whether PVR Stage 2 controls are applied. Only the differences between the non-Stage 2 equipment and that required for petrol va-pour recovery should be included in the analysis.

The key cost elements of introducing Stage 2 controls thus include the follow-ing:

• Capital costs for above-ground equipment, including appropriately equipped dispensers containing vapour return pumps, as well as vapour re-covery nozzles, coaxial hoses and other equipment;

• Capital costs for installing the required below-ground pipework, including a vapour return line to the underground storage tank (in case of using con-ventional technology);

• Additional costs of digging up petrol station forecourts at existing petrol stations where installation is not undertaken as part of a planned knock-down and rebuild programme (in case of using conventional technology);

• Additional ongoing maintenance and testing costs of PVR Stage 2 equip-ment as compared to standard equipment. In particular, the requirement for a regular check on the volumetric ratio - with associated adjustments if re-quired - is considered to be essential to ensuring that a reasonable hydro-carbon efficiency is maintained;

• Costs of powering the additional Stage 2 equipment; and

• Savings due to the value of fuel recovered.

These costs are included in the modelling undertaken in this analysis19.

19 In addition, there would be other costs associated with the implementation of PVR Stage 2 controls, including a) Costs of undertaking any additional type approval tests (if re-quired), and b) Costs of developing, implementing and enforcing the legislation. Such costs will not be included in this analysis.

Cost elements


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This basically leads to the following more or less distinct cases/scenarios for calculating the additional or incremental costs of installing PVR Stage 2 equipment:

• Scheduled work at an existing site, where - the incremental costs are due to PVR Stage 2 equipment only within

new dispensers (since work is scheduled, and the costs of new dis-pensers therefore are not incremental), or where

- there are incremental costs, additional to the aforementioned costs, due to scheduled installation of underground pipework20

• Unscheduled work at an existing site, where - the incremental costs are due to retrofitting PVR Stage 2 equipment

(to existing dispensers) only, or where - there are incremental costs, additional to the aforementioned costs,

due to unscheduled installation of underground pipework

• Unscheduled work at an existing site, where - the incremental costs are due to new PVR Stage 2 equipment and new

dispensers, or where - there are incremental costs, additional to the aforementioned costs,

due to unscheduled installation of underground pipework

For the practical purpose of this study however, we distinguish between:

• Scheduled work (at a new or existing site), where - the incremental costs are due to PVR Stage 2 equipment only within

new dispensers (since work is scheduled, and the costs of new dis-pensers therefore are not incremental), and where (in case of conven-tional technology) there are additional incremental costs due to scheduled installation of underground pipework, although some frac-tion of existing sites however are assumed to have existing pipework already installed in this case.

• Unscheduled work (at an existing site), where - the incremental costs are due to retrofitting PVR Stage 2 equipment

(to existing dispensers) only in some fraction of existing sites, or the the incremental costs are due to new PVR Stage 2 equipment and new dispensers in the other fraction of existing sites, as well as (in case of conventional technology) there are additional incremental costs due to unscheduled installation of underground pipework, although some fraction of existing sites however are assumed to have existing pipe-work already installed in this case.

Actual values assumed and used as basis in this study are that 15 % of sites do have existing pipework already installed, and that 40 % of existing sites would be able to retrofit dispensers in the case of unscheduled refurbishments.

20 This case/scenario essentially includes that of a new site.

Cost cases


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5.2.2 Investment cycles and life times According to DEFRA (based on discussions with professional organisations) it can be assumed that the investment cycle in the fuel retail sector is 15 years21. 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 for the retailer to carry out any additional necessary work (such as placement of underground pipe work) at the end of the investment cycle22.

According to ENTEC there will be different economic lifetimes for above-ground and below-ground equipment respectively; the specific values assumed to be 14 years for all below-ground equipment (equalling the assumed replace-ment rate of petrol stations), and 5 years for all above-ground equipment.

This analysis assumes, in accordance with the ToR for the study, central esti-mates of lifetimes of 15 years for below-ground equipment and lifetimes of 10 years for above-ground equipment, with variants on the assumed lifetimes of above-ground equipment of 5 years and 15 years respectively.

All sites undergoing refurbishments, no matter throughput, should according to ToR apply PVR Stage 2. As we assume a constant rate of refurbishments, the lifetime of equipment is essential. The lower the lifetime, the bigger a share of existing sites will undergo refurbishments every year.

Assuming a lifetime of equipment of 15 years implies that one fifteenth (6,7%) of existing sites will undergo scheduled refurbishment at any given year during this period. Thus in a five year period up to 33,3% of existing sites will undergo scheduled refurbishments.

As legislation is assumed to enter into force in 2013, it could be expected that 47% of existing sites by 2020 could install PVR Stage 2 controls as a scheduled part of their investment cycle.. Any unscheduled also work depend on legisla-tion. If assuming that existing sites with an annual throughput >3000 m3 should install PVR Stage 2 by 2020, there will be 53% of existing sites with this throughput due for unscheduled work by 202023 (as 47% are expected to have implied the technology under scheduled refurbishments).

5.2.3 Actual cost data used We have carefully scrutinized the cost data of the DEFRA report and of the ENTEC study. However, the ENTEC study applies average estimates and the underlying assumptions are not easily transparent. Therefore, in order to pro-vide for the maximum level of transparency (and hence also to ease the execu-tion of possible sensitivity analyses and alternative assumptions) we propose to use the DEFRA estimates as basis cost data.

21 At least for sites with annual throughput >3000 m3 22 By as much as 50 % it is reported by Defra 23 In the case of no prior provision requirements.

Scheduled and un-scheduled work

Economic lifetime of equipment

Constant rate of re-furbishment


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The cost data presented in this chapter are thus derived from the DEFRA re-port. These data are chosen after evaluation of costs from more studies and considered the best estimate. DEFRA cost data thus seems more comprehen-sive. Furthermore DEFRA supply more detailed cost information as it considers the at pump scenario as well as distinguishing between the costs of retrofitting and replacing dispensers under non-scheduled refurbishments.

DEFRA estimates are UK costs estimates, which mean that these might differ from ENTECs estimates. DEFRA estimates might also differ from overall European costs. These estimates are, however, considered more suitable than ENTECs estimates in the following.

One major difference is that for above ground works ENTEC does not differen-tiate explicitly between scheduled and unscheduled work but appar-ently/indirectly assumes that retrofitting is always an option (in the case of un-scheduled refurbishments of existing sites). This, in particular, has implications for the costs of unscheduled works, as in the DEFRA study it is assumed that there are a significant fraction of stations where dispensers could not be retro-fitted, but would need to be replaced (in the case of unscheduled refurbish-ments of existing sites), whereas the ENTEC study does not include this as-sumption.

The cost difference between being able to retrofit a dispenser and having to re-place the dispenser in the case of non-scheduled refurbishment is significant. Retrofitting dispensers are significantly cheaper than replacing the dispenser due to non scheduled refurbishment. Thus it is important to consider which per-centage share of dispensers that is due for retrofitting in the model. The differ-ence between the best guess of ENTEC and DEFRA cost estimates are in the order of a factor two, as DEFRA estimates are about twice as high as ENTEC estimates. This is for a major part due to the assumption of the percentage share of retrofitting under non-scheduled refurbishments.

The table below provides a brief summary of actual values of the cost data used in this study. For an overview of more detailed cost data we refer to the tables in Annex B, C and D as well as additional detailed tables in the spreadsheet model.

Table 6: Costs of Stage II, Central case

DEFRA cost data

Difference between DEFRA and ENTEC cost data


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2004-prices Unit < 500 500-1000 1000-2000 2000-3000 > 3000Assumed number of dispensers no. 1 2 3 4 6Number of petrol nozzles per dispenser no. 4 4 4 4 4

Operating costs Maintenance and testing costs €/a 249 338 427 516 693 Power cost €/a 7 15 22 30 44Total operating costs €/a 257 353 449 545 738

Capital costs - conventional of above-ground equipment (schedueled) € 5.257 10.514 15.771 21.028 31.542 of above-ground equipment (non-schedueled) € 11.976 23.952 35.928 47.905 71.857 of below-ground pipework (scheduled) € 2.358 3.545 4.755 6.201 8.942 of below-ground pipework (non-scheduled) € 10.613 12.964 16.012 19.748 27.884Total capital costs (schedueled) € 7.615 14.059 20.526 27.229 40.484Total capital costs (non-schedueled) 22.589 36.916 51.940 67.652 99.741

Capital costs - at pump of above-ground equipment (schedueled) € 5.287 10.573 15.860 21.146 31.719 of above-ground equipment (non-schedueled) € 12.176 24.353 36.529 48.705 73.058 of below-ground pipework (scheduled) € 486 972 1.458 1.944 2.916 of below-ground pipework (non-scheduled) € 486 972 1.458 1.944 2.916Total capital costs (schedueled) € 5.773 11.545 17.318 23.090 34.635Total capital costs (non-schedueled) 12.662 25.325 37.987 50.649 75.974

Annual throughput (m3)

It should be mentioned that, although difficult to compare due to differences in structure and size of petrol stations, cost data used in an Australian study seem to be in the same order of magnitude as the DEFRA cost data.

5.3 The value of recovered petrol Naturally, the recovered petrol has an economic value. The value of the recov-ered petrol can be derived based on the quantities of petrol abated and returned to the storage tank and the value of that recovered petrol. The value of recov-ered petrol reduces the costs associated with Stage II controls for the society's point of view.

However, the financial benefit of the recovered petrol varies according to where and to whom the recovered petrol is returned.

The petrol vapour that is captured by the "At pump" Stage II controls is re-turned to the service station where it is then re-sold. In the case the service sta-tion it self will benefit from the recovered petrol. However, when the vapour is captured using a conventional system the vapour is returned to the refinery, where it is then re-sold in which case they benefit. Thus the two systems are associated with differing distributional consequences.

VAT and excise duties In addition to the economic value of the petrol recovered either the service station or the refinery will further benefit from VAT and excise duties as the petrol can be sold at a price that includes VAT and excise duties. This repre-sents additional income for either the service station or the refinery (depending and the system) as no incoming VAT has to be paid. On the other hand though, the additional income is a loss for the state as they would have otherwise re-ceived excise duties and VAT from the petrol sold.


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The petrol price has been estimated based on the International Energy Agency's projected price of crude oil and the costs of converting crude oil to petrol.

The conversion costs have been estimated from observed product prices of pet-rol (excluding VAT and other duties) and matching crude oil prices. This means that the conversion costs cover all costs in the chain from crude oil to petrol purchased at the service station including transport, refining, distribution, sales and profit. The conversion cost factor has been estimated at 1.6 (GJ crude oil to GJ petrol). The table below provide an overview of the applied projected petrol prices.

Table 7 Projected Petrol Prices

2006-prices Unit 2005 2010 2015 2020

Average IEA Crude Oil Price Dollars per barrel 45 55 60 65

Crude oil price Euro per GJ 5,93 7,24 7,90 8,56

Petrol price Euro per GJ 9,71 11,86 12,94 14,02

Petrol price Euro per litre 0,32 0,39 0,43 0,46

Source: IEA, 2007: World Energy Outlook and estimated conversion costs Note: Using exchange rate (2006) of 1.3 Dollars per Euro. Energy content, crude oil 5.84 GJ/barrel crude oil and Energy content, petrol 32.85 MJ/litres.

To properly assess the cost savings that accrues to station owners and refiner-ies, the below table provides an overview of the most recent information from the EU on national VAT rates and energy tax levels.


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Table 8 VAT and other excise duties, petrol

2007-prices Excise duties VATEuro per litre % of price inc. uuties

Average, EU27 0,465 19%Austria 0,459 20%Belgium 0,592 21%Cyprus 0,303 15%Czech Republic 0,419 19%Denmark 0,538 25%Estonia 0,288 18%Finland 0,601 22%France 0,607 20%Germany 0,662 19%Greece 0,331 19%Hungary 0,391 20%Ireland 0,443 21%Italy 0,564 20%Latvia 0,293 18%Lithuania 0,287 18%Luxembourg 0,463 15%Malta 0,474 18%Netherlands 0,688 19%Poland 0,416 22%Portugal 0,583 21%Slovakia 0,415 19%Slovenia 0,400 20%Spain 0,396 16%Sweden 0,544 25%UK 0,737 18%Bulgaria 0,325 20%Romania 0,327 19%

Source: Source: EC - DG-TAXUD Excise duty tables, REF 1.025 July 2007


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6 The spreadsheet model This chapter provides a brief description of the content and structure of the model. This includes a description of key assumptions, input data and uncer-tainties. Furthermore, a brief description of the outputs is provided. Finally, general instructions on how to use the models are provided.

6.1 Introduction The model has been developed in an Excel spreadsheet. It has been given high priority to ensure that the model is user friendly so it can be readily used by the Commission for further analysis. The model has been developed to support that the user finds it easy to operate and great emphasise has been put on using a clear and logical structure and design.

Front page When the spreadsheet is opened it starts up on the front page shown above. From here the user can navigate to user an overview sheet or an introduction sheet using buttons.


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Overview sheet The overview sheet illustrates the model structure and design.

Figure 6.1 Overview

The model has been developed with four types of sheets:

• Introduction- and information sheets which introduce and explain the model structure and how to operate it.

• Input sheets which include key assumptions and input data used in the analysis.

• Background calculation sheets, which include calculations of costs and emission reductions.

• Output sheets with detailed and summarised results for the specified sce-narios.

From the overview the user can navigate to all sheets included in the model.

On top of each sheet in the model, there is a set of drop-down boxes where the user can choose scenario, PVR Stage II system (conventional or "at pump") and whether or not to include the value of petrol recovered. Furthermore, there is a drop-down box from where different partial sensitivity analyses can be chosen. The standard setting should be "Base assumptions".


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Introduction The introduction sheet introduces the user to the purpose of the spreadsheet and provides a description of the content of the model and how to operate it. Fur-thermore, it includes a description of the conventions used in the model.

COWIs standard colour conventions for text and numbers have been applied, which means that

• Blue figures are used for input data24 • Black figures are used for calculated figures and results • Gray figures are used for figures and formulas for comparison • Green figures are used for linked input data or results from other sheets • Italic is used for years The use of these colours makes it easy to get an overview of the calculations and to see what cells that consist of input data and which consist of pre-defined calculations.

The following colour conventions are used for the sheets:

• Turquoise indicates that the sheet primarily consists of input data • White is used for sheets that contain information about the model • Black sheets are used for results • Neutral colour is used for background calculation sheets

See sheet "Introduction" for a complete list of conventions used.

Below, the content of the input data and result sheets are further described.

6.2 Input data The key input data in the model are:

• Discount rate, Collection efficiency, lifetimes of above and below ground equipment, legislation (impact and implementation period)

• Costs of Stage 2 PVR equipment

• Information and projections of number of petrol stations and petrol throughput (energy consumption) by country

• Reid Vapour Pressure, temperature and days of summer

• Current uptake of PVR Stage II by country

• Petrol price projections (and VAT and other excise duties)

24 Input data that can not be changed has been marked with a light turquoise background.


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Key parameters The model has been developed with a number of key assumptions which are included on the "Key parameters" sheet. Most of them are easily changeable by the user:

• Discount rate (real): 4% (adjustable) • Collection efficiency: 85% (adjustable) • Price level: 2004 • Lifetime above ground equipment: 10 years (adjustable) • Lifetime below ground equipment: 15 years (adjustable) • Life time of service station: 15 years (adjustable) • Reid Vapour Pressure (max): 70 kPa25 Under the scenario "Own specification" it is possible for the user to specify key parameters that are different from base assumptions and then choose this sce-nario to review the results.

Figure 6.2 Table with scenarios, sheet Key parameters

In addition to scenario information the "Key parameters" sheet contains the general key input data such as price level, petrol prices and VAT and other du-ties etc.

The sheet also contains information for controlling the selections that the user can specify using the list boxes as well as VOC emissions calculation formulas.

25 Country specific values for the actual RVP based on a maximum of 70 kPa differentiated on summer and non-summer.


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This sheet contains the costs of petrol vapour recovery equipment by size band for both the conventional and "at pump" systems. The costs consist of capital costs, annualised (capital) costs, above and below ground (scheduled and non-scheduled) and operating costs. A set of best estimate prices as well as a low and high estimates have been developed. The best estimate of costs has primar-ily been based on DEFRA. Low and high estimates have been determined as ±50% of the best estimate.

Further, ENTECs costs are also presented and can be applied in a sensitivity analysis.

Current uptake This sheet contains information on the share of petrol stations which are also equipped with Stage II PVR controls. The share is differentiated by country, size band and year.

Petrol stations This sheet contains the total number of petrol stations by country, size band and year.

Energy consumption This sheet contains energy use (PJ) of gas stations by country.

This sheet contains reid vapour pressure (RVP) in kPa and the average tem-perature by country and summer/non-summer. The sheet also contains informa-tion on the number of summer/non-summer days by country.

6.3 Background calculations Based on the input data a number of background calculation sheets calculate costs and emission reductions. This also includes calculations of service sta-tions for implementation of PVR Stage II equipment, uncontrolled emissions (without Stage II), emission reductions, costs of implementation and value of petrol recovered (see sheets in Overview above).

On each sheet there is a short description of how the table figures have been calculated.

6.4 Outputs The model provides a number of results, which are presented on four result sheets. The model basically presents calculated costs and uncontrolled emis-sions for the business as usual scenario and for the different project scenarios. Hence, the key results are:

• Amount of VOC abated

• Annualised costs

• Cost effectiveness

Costs of PVR equipment

RVP, temp and summerdays


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These results are presented for all countries aggregated on the sheet "Result summary". This sheet also includes a table with the distributional results, where costs are split on consumers, oil refinery/distributor, service stations and state.

Figure 6.3 Summary of main results, sheet Result summary

Detailed results for all Member States and candidate countries are presented on "Detailed results". This sheet also present results split on size bands.

The model supports that results for all the scenarios described in section 3.4 can be readily calculated by using the drop-down box. Further, the results can be presented for the two recovery systems (conventional and "at pump") and in-cluding and excluding the value of the petrol recovered also simply by using the drop-down boxes.

On the sheet "Cost effect PVR" the cost-effectiveness of Stage II controls are presented for fixed RVP and temperature for fixed throughputs for the five dif-ferent station sizes. The calculation of emission reductions are not linked to the countries actual throughput and number of petrol stations affected by the regu-lation. The calculated cost-effectiveness is thus not linked to the country-by-country analysis. However, the cost data are consistent with the costs used in the country-by-country analysis. Cost-effectiveness of scheduled and non-scheduled implementation is presented assuming average throughput in the dif-ferent size bands (i.e. 750 m3 for a station in the size band 500-1000 m3).

The applied input data and assumptions are all associated with uncertainty and therefore the model has been supplemented by a sensitivity analysis module,


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which makes it possible to analysis the significance of uncertainty on key as-sumptions such as life time, standard unit prices of asset components and dis-count rate.

The sensitivity analysis results - in terms of cost-effectiveness 2020 for selected scenario - are presented on the sheet "Results sensitivity". Results are generated by executing the sensitivity analysis for the selected scenario.

6.5 User instructions This section provides general instructions on how to use and update the model. The instructions provided in this documentation supplements the instructions already included in the model.

Using the models require some knowledge of Excel. The aim of these user in-structions is not to teach novice Excel-users advanced Excel-functionalities. It introduces the overall principles used in the model and gives a number of gen-eral tips and hints that lead the user in the right direction. For detailed informa-tion on the advanced functionalities used in the model the user should consult the Excel manual (e.g. through F1-help).

6.5.1 General principles The Excel spreadsheets adhere to the COWI standard Excel format. This means that all input data are typed in blue, all results are typed in black and informa-tion printed in green is direct cross-references (no calculations takes place in the cell). This format allows the user to immediately identify the type of con-tents of each cell (See sheet "Introduction" for a complete list of conventions used).

Another core principle of the COWI standard Excel format is that no input data should be repeated in the workbook. Correspondingly, no input data (figures) is allowed to be directly typed in into formula cells. Whenever reference to input-data is needed, the formula points at a unique input data cell. This ensures that updating input data is simple and immediately penetrates all calculations.

6.5.2 Model structure The general model has been developed with information sheets consisting of a front page, a sheet that introduces the model and a sheet illustrating the model design. This has been further explained in section Error! Reference source not found..

To navigate in the model you can either find the sheet of interest in the tab-list at the bottom of the screen or press the corresponding button on the model overview sheet. All sheets in the model have a button at the top of the page leading you to the model overview sheet.


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6.5.3 Operating the models In its simple application the model is easy and straight forward to operate. It has been developed with extensive use drop-down boxes and navigation but-tons which makes it easy to adjust and operate.

Calculating scenario results The scenarios described in section 3.4 are reflected in the model. To generate the results for any of the pre-defined scenarios, all the user needs to do is to choose the scenario via the drop-down box "Scenario", which can be found on top of each sheet.

The user should further choose which system (conventional or "at pump") the results should be presented for and whether or not to include the value of the petrol recovered.

Conducting sensitivity analyses The impact of variations in key parameters can be easily examined simply be choosing the pre-fined sensitivities in the drop-down box on top of each sheet. On the sheet "Sensitivity", the users can furthermore adjust the values for the parameters that are varied.

The model has also been developed with a functionality, which makes it possi-ble to generate the results of all the pre-defined sensitivity analyses. This could be done from the sheet "Results sensitivity" by simply pushing the button "Run Sensitivity Analyses". This runs the pre-defined partial sensitivity analyses that the model has been developed with for the scenario that the user selects.

6.5.4 Updating or changing data The general and key assumptions - as for example life time of service stations and projected petrol price - is found on the sheet "Key parameters" while other input data is placed on 6 other input sheets (see Overview). As described in sec-tion Error! Reference source not found. the input data in the model is type in blue. Almost all of these input data, assumptions and estimates can be changed. However, few input data on the sheet "Key parameters" should remain fixed. These include the key assumptions for the pre-defined scenarios, the price level and the petrol vapour pressure. The data that can not be changed has been marked with a light turquoise background.

If the structure and format of the data is not changed, data is updated simply by typing new data. If however, the structure of changed the user needs to make sure that the calculations depending on the revised input data are affected cor-rectly.


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7 Results This chapter shows some of the main results that derive from the analysis. As could be seen from the previous chapters, the spreadsheet allows for a wide range of different combinations of technology choices, cost choices and values of key parameters such as discount rate, vapour collection efficiency, vapour pressure and lifetimes.

For the sake of simplicity and transparency, this chapter presents selected re-sults that serve to illustrate the main results for the central case and the variant case. Further, the chapter illustrates the implications of introducing changes to some of the key assumptions.

More detailed output tables can be easily produced from the spreadsheet model.

All results are shown both with inclusion of the value of the recovered petrol and with exclusion of the value. Thereby, a distinction is made between the costs incurred on the one hand, and the additional value generated on the other hand. It should be noted though that in the case of conventional systems, the value of the recovered petrol accrues to the distributor of petrol that supplied the station with the petrol. In the case of the "at-pump" systems on the other hand, the recovered petrol remains "at the station" and therefore, the value of it will accrue to the station owner. From an overall societal perspective, this dis-tributional issue is however irrelevant. The value of the petrol is in any case to be considered as a benefit to counterbalance (some of) the costs.

Also, it may in some cases be argued that not only does the saved petrol repre-sent a value equal to its net price, but if the petrol remains within the system, there will also be an additional amount of VAT and duties that will constitute an additional gain to the "owner" of the recovered petrol - and a loss to the state which will in this case loose the corresponding revenue. However, the extent to which this will materialise, and who will, in that case benefit from it, depend very much on the national systems for collection (and related reporting) on pet-rol bought and petrol sold.

The tables that are shown in this chapter focus solely on the key outcomes of the calculations. For more detailed calculations and for the carrying out of more variant cases (sensitivity analyses), the reader is referred to the accompanying spreadsheet model. Also, for the sensitivity results presented - and for the sake


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of simplicity - all tables only include results for those parameters where the in-troduced variant leads to changes.

7.1 The central policy option Main results The below table illustrates the key results from the central case. The table thus

illustrates the implications of introducing a mandatory introduction for all sta-tions with a throughput in excess of 500 m3 by 2013 of Stage 2 PVR equipment for all newly built service stations and for all service stations that undergo a major refurbishment. This requirement thus implies that the introduction of Stage 2 PVR at any of the stations to which the regulation will apply can be done as scheduled works.

Table 7.1 Results in 2020 for the central case

Technology choice Results in 2020


Emissions (t/year) 46,847 46,847

Reduction relative to baseline, % 20 20

Total costs, 1000 € 209,470 179,457

Total annualised costs, 1000 €/year 26,377 23,706


2,173 1,953

Value of recovered petrol 1000 €/year 7,611 7,611


18,767 16,095


1,546 1,326

Note: see footnote26

26 Note: The above results are economic, i.e.societal in the sense that they consider the costs and benefits to society no matter who bears the costs or gains the benefits. Hence, the distribution of costs and benefits amongst agents is not illustrated. There however distributive effects. The additional profit from the recovered petrol would lie with the distributor/refinery in the case of conventional technology choice, and with the service station in the case of "at pump" technology choice. In the latter case of "at pump" technology choice, and solely if the VAT and the duty is calculated on the basis of the quantities delivered to the service station, there will be an additional economic gain to the owner of the service station. This gain stems from VAT and duties that are collected from the consumers, but are not transferred to the State (as a consequence of the basis for calculating VAT and excise duty payments). Thus, this amount presents an additional gain to the service station owner, and a similar loss to the State (foregone revenue).


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As can be seen from the above table, at pump systems are a somewhat cheaper option for compliance in the central case. The cost per tonnes of petrol recov-ered is 232 € less in that case than in the case of the conventional system corre-sponding to about 15% less. This of course assumes that the system is as reli-able and well-functioning as the conventional system.

Cost range results To further illustrate, the cost ranges the below table summarises the results using the central cost estimates as well as the low and the high cost estimates. This table thus illustrates the ranges within which the realised costs and cost-effectiveness are likely to be. The difference between conventional and at pump cost estimates are primarily due to below ground equipment costs. The below ground costs difference does not occur in relation to at pump technology, but only in relation to the conventional technology. Though when the difference between conventional and at pump technology is not striking, this is due to dif-ferences in above ground equipment costs, which does carry the greatest weight, also in relation to the conventional technology.

Table 7.2 Results for the central case introducing variant cost estimates

Conventional At pump Results in 2020

low central high low central high

Total costs, 1000 € 132,121 209,470 286,819 114,113 179,457 224,802

Total annualised costs, 1000 €/year 17,436 26,377 35,319 15,833 23,706 31,579


1,436 2,173 2,909 1,304 1,953 2,601


9,825 18,767 27,708 8,223 16,095 23,968


809 1,546 2,282 677 1,326 1,974

The above calculations assume collection efficiencies of 85%. The below table show the results if the collection efficiencies were instead only 80% or as high as 90%.

The higher the collection efficiency, the more cost effective is Stage 2 PVR. In relative terms, the implications are of a relatively similar order of magnitude in the two cases of either conventional systems or at pump systems. If collection

In the central case scenario with "at pump" technology choice and under the abovemen-tioned special circumstances assumed for all Member States, the VAT and duty earnings are calculated to be EUR 9.914,784 (annualised) per year. Most likely, VAT and duties are however, assumed to be calculated on the basis of the quantity of petrol sold from the service station and on the basis of the petrol bought for re-sale from the distributors by the service station, as VAT is typically an excess profits tax. Thus, it would appear likely that in most cases the owner of the service station will gain the additional profit from recovered petrol, but not the additional VAT and duties.

Variant assumptions on collection effi-ciency


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efficiency falls by as much as 15 percentage points down to only 70%, this will thus involve an increase in the cost per ton of VOC abated in the order of about 25%.

Table 7.3 Result table for the central case assuming different collection effi-ciencies.

Conventional

collection efficiency

At pump

collection efficiency

Results in 2020 with different collection efficiencies 70% 80% 85% 90% 100% 70% 80% 85% 90% 100%

Emissions (t/year) 71,060 54,918 46,847 38,777 22,635 71,060 54,918 46,847 38,777 22,635

Reduction relative to baseline, %

12 17 20 25 37 12 17 20 25 37


2,638 2,308 2,173 2,052 1,847 2,371 2,075 1,953 1,844 1,660

Value of recovered petrol 1000 €/year

6,268 7,163 7,610 8,059 8,954 6,268 7,163 7,610 8,059 8,954


2,011 1,681 1,546 1,425 1,220 1,744 1,448 1,326 1,217 1,033

The below table shows that results of the central case assuming that the lifetime of above ground equipment is 5 and 15 years respectively. The central calcula-tion assumes a lifetime of 10 years, and is also shown in the table for the sake of comparison.

Table 7.4 Result table for the central case assuming different life times for above-ground equipment.

Conventional

lifetime of above ground equipment

At pump Results in 2020 with different lifetime assumptions for above ground equip-ment

5 years 10 years 15 years 5 years 10 years

15 years

Total annualised costs, 1000 €/year 41,454 26,378 21,416 38,867 23,706 18,717


3,414 2,173 1,764 3,201 1,953 1,542

Cost-effectiveness, €/ton (including value of petrol recovered)

2,787 1,546 1,137 2,574 1,326 915

The table below shows the costs based on ENTEC's central cost estimates, which are somewhat lower than the estimates based on DEFRA cost estimates. On the other hand though, the results are much more similar when comparing the results based on ENTEC's high-end cost estimates and the DEFRA cost es-

Variant assumptions on lifetime


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timates. The reason for this is that ENTECs high estimate for above ground scheduled work is very close to those of DEFRAs central case above ground scheduled work estimate. However, ENTECs central estimate for above ground scheduled work is about half that of DEFRAs central estimate for above ground scheduled work. Thus since all introduction of Stage II PVR is scheduled in the central case this difference between studies will largely influence results. Fur-thermore it should be noted that the central and high case estimates of below ground work in the ENTEC study are alike and noticeably close to DEFRAs central below ground estimates, which means that these do not cause any dif-ference between the study results.

Table 7.5 Results in 2020 for the central case and ENTEC data

Technology choice ENTEC cost data (only conventional) Results in 2020

Conventional At pump Low estimate High estimate

Emissions (t/year) 46,847 46,847 46,847 46,847


Total costs, 1000 € 209,470 179,457 127,631 198,380



2,173 1,953 2,291 1,573



18,767 16,095 11,482 20,205


1,546 1,326 946 1,664

7.2 The alternative policy option The alternative policy option introduces a requirement that all stations with a throughput in excess of 3,500 m3 should be equipped with Stage 2 PVR by 2020 at the latest. Thus, this policy option introduces the necessity that some stations will need to install this equipment in an unscheduled manner, i.e. they will not be able to integrate this into their normal investment cycle, but need to install the PVR equipment as unscheduled works. This will involve additional costs onto the stations that are fairly new or which have quite recently under-gone a major refurbishment. These stations will not undergo another major re-furbishment until after 2020.

It should be noted here that while the policy option sets the size limit of these stations to 3,500, the calculations carried out here applies a limit of 3,000. This has been necessary in order to align with the background data applied. The im-plication will be a slight overestimation of the costs and a slight underestima-tion of the abated amount of VOC.


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The below table illustrates the implications of this option. This option about doubles the achieved VOC reductions, but the cost-effectiveness is reduced as it is reflected in higher costs per tonnes of abated VOC. This is also what one could expect, as the alternative policy introduces unscheduled work into the costs. It is interesting also to note that the relative loss in cost-effectiveness is lower for the at pump technology than for the conventional technology.

Table 7.6 Results in 2020 for the variant policy option (presenting also the cen-tral estimates for the central policy option)

Conventional technology At pump technology Results in 2020

Central case Variant case Central case Variant case

Emissions (t/year) 46,847 41,219 46,847 41,219


Total costs, 1000 € 209,470 388,976 179,457 317,417



2,173 2,675 1,953 2,319



18,767 36,398 16,095 30,060


1,546 2,048 1,326 1,692

Table 7.7 sensitivity results for the variant case

Cost effectiveness in 2020 in terms of €/ton and in-cluding the value of the recovered petrol


Variant case result 2,048 1,692

Result if only 10% can retrofit 2,254 1,888

Result if 75% can retrofit 1,809 1,463



Result if fraction with existing pipework at hand is zero

2,099 1,692

Result if fraction with existing pipework at hand is 50%

1,930 1,692

Existing pipework at hand implies, that some, especially larger, service stations have been far-sighted and have had below ground equipment installed as part of a construction or refurbishment of service stations. Thus costs are significantly lower for these stations with existing pipework at hand, as they have no extra costs for below ground equipment if mandatory Stage II enters into force.


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7.3 Comparisons with other measures To allow for comparison with other emissions reduction costs as well as with the results from the ENTEC study a stationary cost curve has been prepared using the RAINS model27. A 2020 VOC cost curve is produced based on the RAINS 'with climate policies' (CP_CLE Aug04 (Nov04)) scenario for EU30.

Data differs from ENTEC data, as we chose to base the VOC curve on EU30 and extracted EU27 data (excluding Norway, Switzerland and Turkey). The CP_CLE initial emissions reported by RAINS for EU27 in 2020 are considered the baseline. All additional measures that are not planned under this baseline scenario and up to the 'maximum feasible emissions reduction' for under RAINS are ranked according to their cost-efficiency.

As RAINS data are supplied at country level, emissions reductions are added across countries by sectors. The average costs effectiveness of emissions reduc-tions is estimated by constructing a weighted average according to the emis-sions reductions expected in the countries and within each sector.

The figure below presents the VOC cost curve data for all possible measures identified to reduce VOC emissions beyond those already assumed to be achieved under current legislation according to RAINS. Illustrated is the cost-effectiveness below €10.000 per tonne of abated VOC.

To provide for a comparison with RAINS data, the key results from this study has been plotted in. This illustrates the cost range of the costs efficiency of abatement by petrol vapour recovery compared to cost-effectiveness of other measures. All results entered are by "at pump" technology for 2020.

Figure 7.1: Comparison of cost-effectiveness of measures with RAINS cost curve for VOC emissions for EU27, scenario CP_CLE Aug04(Nov04) for 2020.

27 www.iiasa.ac.at/web-apps/tap/RainsWeb/


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0

1

2

3

4

5

6

7

8

9

10

4.000 4.500 5.000 5.500 6.000 6.500

Emissions remaining (kt)

€k/t

All stations >3000 m3 by 2020. Alternative case, At pump. 1742 €/t

All stations >500m3 by 2020.Alternative case, At pump. 1691 €/t

All stations >500 m3 by 2020.Central case, At pump. 1.324 €/t

Source: RAINS, IIASA (www.iiasa.ac.at/web-apps/tap/RainsWeb/).


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Annex A Number of petrol stations The table below provide the number of petrol stations by size for each country.

Total number of petrol stations Country Breakdown 2005 2010 2015 2020

Total 2852 2852 2852 2852 Size 1 766 766 766 766 Size 2 408 408 408 408 Size 3 660 660 660 660 Size 4 504 504 504 504 Size 5 514 514 514 514

Austria

Check total 2852 2852 2852 2852 Total 4177 4177 4177 4177 Size 1 1122 1122 1122 1122 Size 2 597 597 597 597 Size 3 966 966 966 966 Size 4 738 738 738 738 Size 5 753 753 753 753

Belgium


Cyprus


Czech Republic


Denmark


Estonia

Check total 500 500 500 500 Finland Total 1668 1668 1668 1668


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Size 1 339 339 339 339 Size 2 548 548 548 548 Size 3 307 307 307 307 Size 4 235 235 235 235 Size 5 239 239 239 239 Check total 1668 1668 1668 1668 Total 14530 14530 14530 14530 Size 1 3903 3903 3903 3903 Size 2 2077 2077 2077 2077 Size 3 3361 3361 3361 3361 Size 4 2567 2567 2567 2567 Size 5 2621 2621 2621 2621

France


Germany


Greece


Hungary


Ireland

Check total 1634 1634 1634 1634 Total 22450 22450 22450 22450 Size 1 12192 12192 12192 12192 Size 2 4736 4736 4736 4736 Size 3 4942 4942 4942 4942 Size 4 412 412 412 412

Italy

Size 5 167 167 167 167


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Latvia


Lithuania


Luxembourg


Malta


Netherlands


Poland

Check total 6763 6763 6763 6763 Total 2800 2800 2800 2800 Size 1 1210 1210 1210 1210 Size 2 534 534 534 534

Portugal

Size 3 640 640 640 640


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Size 4 212 212 212 212 Size 5 205 205 205 205 Check total 2800 2800 2800 2800 Total 778 778 778 778 Size 1 50 50 50 50 Size 2 210 210 210 210 Size 3 204 204 204 204 Size 4 156 156 156 156 Size 5 159 159 159 159

Slovakia


Slovenia


Spain


Sweden


UK


Bulgaria

Check total 1905 1905 1905 1905 Total 600 600 600 600 Croatia Size 1 161 161 161 161


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Size 2 86 86 86 86 Size 3 139 139 139 139 Size 4 106 106 106 106 Size 5 108 108 108 108 Check total 600 600 600 600 Total 1954 1954 1954 1954 Size 1 525 525 525 525 Size 2 279 279 279 279 Size 3 452 452 452 452 Size 4 345 345 345 345 Size 5 352 352 352 352

Romania

Check total 1954 1954 1954 1954 Source: ENTEC


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Annex B Cost effectiveness of Stage II controls Costs for stage II controls are illustrated by annual throughput for petrol sta-tions in the below table. Figures illustrate the cost-effectiveness of Stage II con-trols at fixed throughput, RVP and temperature. Thus these figures are not used in the country by country analysis, though data is consistent with those used in the country by country analysis.

For calculating capital costs it is assumed that 15% are with existing pipework at hand and 40% are only required to retrofit. Other assumptions made in these calculations are, that efficiency is expected to be 85%, RVP 58kPa during summer and 75kPa during winter, temperature 15C during summer and 2C dur-ing non-summer and the number of summer days 153 a year.

Cost-effectiveness of Stage II controls, Central case, at pump

Annual throughput (m3)2004-prices Unit < 500 500-1000 1000-2000 2000-3000 > 3000Assumed number of dispensers no. 1 2 3 4 6Number of petrol nozzles per dispenser no. 4 4 4 4 4

Operating costs Maintenance and testing costs €/a 249 338 427 516 693 Power cost €/a 7 15 22 30 44Total operating costs €/a 257 353 449 545 738

Capital costs of above-ground equipment (schedueled) € 5.287 10.573 15.860 21.146 31.719 of above-ground equipment (non-schedueled)€ 12.176 24.353 36.529 48.705 73.058 of below-ground pipework (scheduled) € 486 972 1.458 1.944 2.916 of below-ground pipework (non-scheduled) € 486 972 1.458 1.944 2.916Total capital costs (schedueled) € 5.773 11.545 17.318 23.090 34.635Total capital costs (non-schedueled) 12.662 25.325 37.987 50.649 75.974

Annualised capital costs of above-ground equipment (schedueled) €/a 652 1.304 1.955 2.607 3.911 of above-ground equipment (non-schedueled)€/a 1.501 3.002 4.504 6.005 9.007 of below-ground pipework (scheduled) €/a 44 87 131 175 262 of below-ground pipework (non-scheduled) €/a 44 87 131 175 262Total annualised capital costs (schedueled) €/a 695 1.391 2.086 2.782 4.173Total annualised capital costs (non-schedueled) 1.545 3.090 4.635 6.180 9.270

Annualised capital costsTotal annualised cost (schedueled) €/a 952 1.744 2.535 3.327 4.911Total annualised cost (non-schedueled) €/a 1.801 3.443 5.084 6.725 10.007

Total abated VOC emissions* t/a 0,209 0,628 1,256 2,093 3,349Savings from recovered petrol** €/a 111 333 666 1.110 1.777

Cost effectivenessCost effectiveness (schedueled) €/t 2.792 1.685 1.131 799 716Cost effectiveness (non-schedueled) €/t 6.850 4.390 3.160 2.422 2.237


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Annex C Cost assumptions for conventional systems The below table provide an overview of the input unit cost data that enter the calculations for conventional technology. Costs depend on the choice of tech-nology, as the costs data provided from DEFRA differ between conventional and at pump technology. Costs are illustrated for unscheduled and scheduled refurbishments as well as retrofitting and costs for new dispensers. Costs are shown by throughput category for petrol stations.

Costs of the conventional systems (vapour is collected, and returned to under-ground storage tanks) - Costs per site


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Annual throughput (m3) 0 - 500 500 - 1000 1000 - 20002000-3000 3000+Assumed number of dispensers 1 2 3 4 6Number of petrol nozzles pr dispenser 4 4 4 4 4

Supplementary materials and labour

Unscheduled inst. of underground pipeworkSupplementary materials & equipment Underground pipework 4.860,00 5.265,00 6.075,00 7.290,00 8.910,00Surround to pipework 405,00 810,00 1.215,00 1.620,00 2.430,00Tank connections and shear valves 494,10 988,20 1.490,40 1.992,60 2.972,70Labour Trench excavation for vapour recovery pipework 5.670,00 6.075,00 6.885,00 8.100,00 12.150,00Remove pumps and replace 405,00 810,00 1.215,00 1.620,00 2.430,00Installation of vapour recovery equipment 486,00 972,00 1.458,00 1.944,00 2.916,00

Unscheduled total, high estimate 12.320,10 14.920,20 18.338,40 22.566,60 31.808,70Unscheduled total, low estimate Unscheduled total, best estimate 12.320,10 14.920,20 18.338,40 22.566,60 31.808,70

Scheduled inst. Of underground pipeworkSupplementary materials & equipment Underground pipework 1.344,60 1.393,20 1.458,00 1.558,44 1.934,28Surround to pipework 324,00 567,00 810,00 1.296,00 1.944,00Tank connections and shear valves 494,10 988,20 1.490,40 1.992,60 2.972,70Labour Trench excavation for vapour recovery pipework 0,00 0,00 0,00 0,00 0,00Remove pumps and replace 405,00 810,00 1.215,00 1.620,00 2.430,00Installation of vapour recovery equipment 486,00 972,00 1.458,00 1.944,00 2.916,00

Scheduled total, high estimate 3.053,70 4.730,40 6.431,40 8.411,04 12.196,98Scheduled total, low estimate 2.162,70 2.948,40 3.758,40 4.847,04 6.850,98Scheduled total, best estimate 2.608,20 3.839,40 5.094,90 6.629,04 9.523,98

Existing pipework at hand Supplementary materials & equipment Underground pipework 0,00 0,00 0,00 0,00 0,00Surround to pipework 0,00 0,00 0,00 0,00 0,00Tank connections and shear valves 494,10 988,20 1.490,40 1.992,60 2.972,70Labour Trench excavation for vapour recovery pipework 0,00 0,00 0,00 0,00 0,00Remove pumps and replace 405,00 810,00 1.215,00 1.620,00 2.430,00Installation of vapour recovery equipment 486,00 972,00 1.458,00 1.944,00 2.916,00

Existing pipework total, high estimate 1.385,10 2.770,20 4.163,40 5.556,60 8.318,70Existing pipework total, low estimate 494,10 988,20 1.490,40 1.992,60 2.972,70Existing pipework total, best estimate 939,60 1.879,20 2.826,90 3.774,60 5.645,70

Costs per nozzle of PVR Stage 2 equipment

New dispenser (unscheduled)Dispenser 10.484,32 20.968,64 31.452,96 41.937,28 62.905,92Vapour recovery equipment (average) 2.930,40 5.860,80 8.791,20 11.721,60 17.582,40Nozzle 2.326,56 4.653,12 6.979,68 9.306,24 13.959,36New dispenser (unscheduled), total 15.741,28 31.482,56 47.223,84 62.965,12 94.447,68

New dispenser (scheduled)Dispenser 0,00 0,00 0,00 0,00 0,00Vapour recovery equipment (average) 2.930,40 5.860,80 8.791,20 11.721,60 17.582,40Nozzle 2.326,56 4.653,12 6.979,68 9.306,24 13.959,36New dispenser (scheduled), total 5.256,96 10.513,92 15.770,88 21.027,84 31.541,76

Retrofit to existing dispenser Dispenser 0,00 0,00 0,00 0,00 0,00Vapour recovery equipment (average) 3.984,16 7.968,32 11.952,48 15.936,64 23.904,96Nozzle 2.344,32 4.688,64 7.032,96 9.377,28 14.065,92Retrofit to existing dispenser, total 6.328,48 12.656,96 18.985,44 25.313,92 37.970,88

Recurring costs (per year - dependent on number of dispensers)

Maintenance and power costs


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Annex D Cost assumptions for "at pump" systems The below tables provide an overview of the input unit cost data that enter the calculations. Cost data for at pump technology is from DEFRA study as afore-mentioned. Costs for "at pump" systems are illustrated below by throughput, new technology, new dispenser (scheduled and unscheduled), retrofitting costs and recurring costs.

Costs for the newer "At-pump" systems (vapour is collected, and returned to the car fuel tank) - Costs per site

Annual throughput (m3) 0 - 500 500 - 1000 1000 - 2000 2000-3000 3000+Assumed number of dispensers 1 2 3 4 6Number of petrol nozzles pr dispenser 4 4 4 4 4

Supplementary materials and labour

System using new technology (Regardless of new, scheduled or unscheduled) Supplementary materials & equipment Underground pipework 0,00 0,00 0,00 0,00 0,00Surround to pipework 0,00 0,00 0,00 0,00 0,00Tank connections and shear valves 0,00 0,00 0,00 0,00 0,00Labour Trench excavation for vapour recovery pipework 0,00 0,00 0,00 0,00 0,00Remove pumps and replace 0,00 0,00 0,00 0,00 0,00Installation of vapour recovery equipment 486,00 972,00 1.458,00 1.944,00 2.916,00

New technology total 486,00 972,00 1.458,00 1.944,00 2.916,00

Costs per nozzle of PVR Stage 2 equipment

New dispenser (unscheduled)Dispenser 10.484,32 20.968,64 31.452,96 41.937,28 62.905,92Vapour recovery equipment (average) 2.960,00 5.920,00 8.880,00 11.840,00 17.760,00Nozzle 2.326,56 4.653,12 6.979,68 9.306,24 13.959,36New dispenser (unscheduled), total 15.770,88 31.541,76 47.312,64 63.083,52 94.625,28

New dispenser (scheduled)Dispenser 0,00 0,00 0,00 0,00 0,00Vapour recovery equipment (average) 2.960,00 5.920,00 8.880,00 11.840,00 17.760,00Nozzle 2.326,56 4.653,12 6.979,68 9.306,24 13.959,36New dispenser (scheduled), total 5.286,56 10.573,12 15.859,68 21.146,24 31.719,36

Retrofit to existing dispenser Dispenser 0,00 0,00 0,00 0,00 0,00Vapour recovery equipment (average) 4.440,00 8.880,00 13.320,00 17.760,00 26.640,00Nozzle 2.344,32 4.688,64 7.032,96 9.377,28 14.065,92Retrofit to existing dispenser, total 6.784,32 13.568,64 20.352,96 27.137,28 40.705,92

Recurring costs (per year - dependent on number of dispensers)

Maintenance and power costsIncremental maintenance and tests 249,13 337,93 426,73 515,53 693,13Incremental power (£ 5 pr dispenser) 7,40 14,80 22,20 29,60 44,40Total "m&p" costs per dispenser 256,53 352,73 448,93 545,13 737,53


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Annex E: References ENTEC UK Limited, 2005: Stage II Petrol Vapour Recovery, Report prepared for DG Environment, final report, 2005.

DEFRA, 2005: Consultation Paper on the implementation of Petrol Vapour Recovery Stage II Controls, 2005.

DEFRA, 2005: Final Regulatory Impact Assessment on Petrol Vapour Recov-ery Stage II Controls (PVR II), 2005.

Department of Environment and Climate Change NSW, August 2007: ACTION FOR AIR, Improving Air Quality through Vapour Recovery at Service Stations, Discussion Paper, 2007

Documents

Analysis of costs associated with the mandatory deployment ...ec.europa.eu/environment/air/pdf/cowi_report_stage2_feb08.pdf · • The central case: introducing requirements for Stage