EU's 'green' petrol will drive up prices by the end of the year and could damage your car



E10 means a typical family will pay around £80 a year extra for petrol

The fuel is due to be launched in the UK later this year

David Cameron has hinted there may be a freeze in fuel duty in the Budget



Millions of drivers have been warned about higher fuel costs and even engine damage if they use a new ‘green’ petrol.



Britain has signed up to an EU directive which says suppliers must dilute petrol with environmentally-friendly alternatives such as ethanol made from corn.



The new petrol is called E10 and is 10 per cent ethanol. It is due to be launched in the UK later this year, alongside standard petrol and other green fuels.



Paying extra at the pump: The new biofuel gives fewer miles to the gallon

However, a study today warns E10 gives fewer miles to the gallon, so a typical family will pay around £80 a year extra to travel the same distance.



There are also fears that the high ethanol content can effectively melt components of some engines in older cars and motorbikes.

Up to 8.6million vehicles may not be compatible with E10 fuel, according to estimates by the Department for Transport. Its arrival on forecourts will be confusing for drivers unless pumps are clearly labelled and they know whether it is safe for their car.



Possible inclusion in the Budget: David Cameron has hinted at a cut or freeze in fuel duty to help drivers struggling with his prices

The move to E10 is part of a wider policy to cut the use of fossil fuels and so reduce their contribution to the creation of greenhouse gases and global warming.



A study by respected think-tank Chatham House warns: ‘The increased use of ethanol in petrol to meet EU sustainability targets is resulting in drivers paying extra at the pump.’



The EU’s Renewable Fuel Transport Obligation requires 5 per cent of the fuel supply of member states to be renewable by 2014.



This is due to increase in the next seven years under the EU’s Renewable Energy Directive, which requires 10 per cent of transport energy from renewable sources by 2020.



Oil companies have decided to use ethanol as this renewable source. Most comes from the US, where it is made from corn, while some comes from Brazil’s sugar cane and a small amount from British sugar beet.



However, using petrol diluted with ethanol generally cuts a vehicle’s fuel efficiency.



The report calculates that if the EU policy of supplying 10 per cent of transport energy from renewable sources had been applied in the UK in 2011-12, it would have cost motorists some £1.5billion, or around £80 a year more per family.



Biofuel: A fuel nozzle serving E10 at a petrol station in Berlin

Author Rob Bailey, a senior research fellow at Chatham House, warned E10 petrol is not compatible with millions of older vehicles.



‘Based on case studies in other countries that have introduced E10, field trials and laboratory tests, the research found issues of material incompatibility, corrosion and drivability problems for vehicles of ten years or older,’ he said.



E10 was introduced in Germany two years ago. Many drivers have decided not to use it in case it damages their engines.



‘German motorists are also thought to be suspicious of the wider environmental and social impacts of ethanol,’ said Mr Bailey.



The Government has asked suppliers to delay introducing E10 to allow time for an information campaign and to compile a list of incompatible vehicles for drivers.



Mr Bailey, a former top official with Oxfam, added that taking farmland out of food production to grow fuel crops also threatens to put up food prices. He said: ‘Biofuels increase the level and volatility of food prices, generating social impacts in low income food importing countries.’



The study was funded by Olleco, a business which collects and refines waste cooking oil to be used as biodiesel in vehicles.

