Policy and Economic Overview

In an ideal world we would satisfy all our energy needs from natural sources such as the sun, the
wind or the oceans and rivers. Indeed, as mankind becomes more aware of the damage caused to
our environment and wellbeing through pollution and climate-impacting activities, many avenues
are now being pursued to harness energy from these clean natural sources.
Despite these endeavours, energy from renewable sources will for the forthcoming decades
continue to satisfy only a very limited fraction of global energy demand. The overwhelming
majority of our energy needs will continue to be met by a range of fossil fuels.
Making the right decisions about which fuels to use can deliver environmental and health benefits
on both a local and a regional scale. As we will see later in this document, fuel choice can
significantly reduce the incidence of respiratory ailments, heart disorders and other illnesses,
which place such a burden on the fabric of developed and developing countries alike.
Most governments now recognise at a macro level the financial and social benefits of reducing
human exposure to pollution – but they must also send the right signals to business and the
community at large, either through economic policies, education/awareness programs or through
regulation.
2.1 Pricing Policy
Fuel taxation remains a contentious issue in many countries, but it nevertheless provides a very
convenient mechanism for governments to generate revenues on one hand, and on the other to
influence fuel selection and purchasing patterns.
The following table (2.2) illustrates some current examples of these pricing policies in the
transport sector.
Average Pump Price (per litre) in Local Currencies*
Country LP Gas Gasoline Diesel
UK (£Stg) 0.52 0.89 1.00
Australia (AU$) 0.52 1.20 1.22
France (€) 0.69 1.13 1.08
* Typical pump prices, February 2009
Table 2.2: Typical LP Gas, Gasoline and Diesel Pump Prices
In some cases the incentives are even more direct. The UK government, for instance, waives the
London Congestion Charge of £8 per day for most LP Gas fuelled commuter vehicles (a saving of
£2000 per annum for daily commuters), as well as levying a lower company car tax and
discounting the vehicle excise duty (annual car tax) by around £35 for a typical mid-sized car.
By exempting LP Gas from the excise fuel tax, the Australian Federal Government provides direct
financial incentives for people to use LP Gas for a wide range of energy needs. In addition to
saving the 38 cents per litre tax applied to gasoline and diesel fuel, car owners purchasing a
factory-built LP Gas car (purchased on or after 10 November 2008), or converting a gasoline car to
LP Gas operation, also receive a cash rebate of A$2000.

Although social and health cost impacts are the principal driving force behind policies and
measures to reduce energy-related pollution, there is a move around the world to also take
account of a broader range of external factors, including climate change, infrastructure
deterioration, soil degradation, water quality and lost productivity. Some of the data presented in
this study include some of these factors (examples are Figure 5.2 and Table 4.3).
New taxation and fiscal frameworks are now integrating, or will be based on, life cycle analysis of
fuels, and will inevitably reshape the future global energy picture.
2.2 Public Health
Although residents of cities in the wealthier countries may rightly consider themselves fortunate
to live in relatively pleasant and comfortable surroundings, this does not mean that they are
necessarily spared the health consequences of breathing pollution-laden air.
In 2005 the WHO completed an intensive study into the health impacts of human exposure to
airborne particles (mostly combustion generated) in the European Union. The research concluded
that exposure to particles reduces the life expectancy of every person in the European Union (EU)
by an average of nine months, and has a direct economic impact of up to €161 billion (US$220
billion) every year
2.3 Climate Change
(WHO 2005-1).
A 2006 cost-benefit study (WHO, 2006) performed by the World Health Organisation concluded
that investing US$13 billion a year to provide LP Gas access worldwide to halve the number of
people cooking with solid fuels by 2015 would generate a return of US$91 billion in health and
other community benefits.
In numerous poorer countries many inhabitants are living in dire circumstances. Malnutrition
robs whole populations of a healthy and productive life. But the problems lie not just in a lack of
food. The way food is cooked also represents a major health hazard in its own right. The
seriousness of the problem has been summarised by the World Health Organization as follows:
"More than half of the world’s population rely on dung, wood, crop waste or coal to
meet their most basic energy needs. Cooking and heating with such solid fuels on
open fires or stoves without chimneys leads to indoor air pollution. Exposure is
particularly high among women and young children, who spend the most time near
the domestic hearth. Every year, indoor air pollution is responsible for the death of
1.6 million people - that's one death every 20 seconds”. (WHO 2005-3)
So, whether the focus is on vehicles in city streets, or the preparation of a simple meal, fuel choice
has a critical influence on human health and is a decision which should be made with care.
In fact, for almost every application that involves converting a fuel into energy for heat or power,
LP Gas can do the job cleanly, efficiently and economically.
From a global warming perspective, fuel selection can play a significant role in reducing emissions
of carbon dioxide and other greenhouse gases.
For many applications, including transport, cooking, heating, industrial processes and local power
generation there is a major role in small and medium scale applications for alternative low carbon
fuels, such as LP Gas, which have a smaller carbon footprint than traditional fuels.
LP Gas and CNG are often compared from a global warming perspective. On one hand, the lower
carbon content of CNG results in lower CO2 emissions from combustion. However, considerable
energy is expended in compressing natural gas for storage, and any unburned gas released to the tmosphere has a global warming potential 23 times higher than CO2, whereas unburned LP Gas is
greenhouse neutral. These factors tend to narrow the difference between the two fuels. In
practice, both LP Gas and natural gas share the same clean burning, low-carbon attributes and
both compare extremely favourably with the traditional liquid fuels.
For a comprehensive discussion on greenhouse gas emissions from LPG and other fuels, please
consult WLPGA publication “LP GAS: AN ENERGY SOLUTION FOR A LOW CARBON WORLD”.