A challenging Autumn for the fuel sector
Operator federations suggest that the next few months will be decisive as regards tackling issues such as rationalisation of the network, the fight against illegality, digitalisation, the green transition and taxation
The corona virus pandemic has had a massive impact on the economy and the fuel supply chain is no exception. The resumption of economic activities throughout Italy on 4 May and the re-opening of schools on 14 September were steps towards a gradual return to normality; this not only confirmed 2020 as a critical year but was also an opportunity to rethink sector organisation as it struggles with a dramatic fall in consumption (estimated at 15% this year compared to 2019). In this context, operator federations engaged in negotiations with oil companies and the government view the closing months of 2020 as decisive. The sector is called upon to tackle a series of challenges highlighted all the more by the corona virus pandemic, such as rationalisation of the network, the fight against illegality, digitalisation and the introduction of low environmental impact fuels in line with de-carbonisation objectives.
The question as regards rationalisation of the network will have to face up to the European Union policies concerning de-carbonisation and greater efficiency in the motor vehicle industry, which in turn will require recalibrating points of sale. Requests to rationalize the network come from all quarters – from trade unions to industrial associations – and suggest that it will be necessary in coming years to reduce the current 25,000 points of sale, far too high compared to the past, given the 80% drop in sales since 2008.
Rationalisation of the network would also have positive repercussions for combating illegality. This phenomenon is increasingly widespread and the latest “Blue Book” published by the Customs and Monopoly Agency indicates emerges that 983 violations were ascertained in the fuel sector in 2019 involving tax evasion of about 108 million euros.
Another task facing the industry concerns the digitisation process. The obligation to use the IT system to issue and compile the Simplified Accompanying Document (Das) limited to the movement, within Italy, of petrol and diesel fuel used as fuel subject to excise duty came into force on 1 October. Briefly, the form (e-dad) accompanying the sale of commercial products subject to excise duty in Italy is now electronic. This should facilitate controls of fuel movements and prosecutions of illegal import and trade in petroleum products for transport purposes. However, the ratification of the e-Das obligation in these times of crisis raised some concerns over the burden of adapting IT systems and updating procedures.
The oil distribution chain is also faced by a change in sources of supply, ranging from gas in various forms (CNG, bio-CNG, LNG and bio-LNG) to new fuels with low environmental impact, such as bio-diesel and electricity. The transition to such sources is the basis for the Green Deal of the European Union, which envisages for carbon neutrality in the transport field by 2050; it is vital to intercept the funds that will be made available by the EU, since 37% of resources disbursed through the Recovery Fund will focus on “green” projects. The path towards using of new sources for mobility, especially heavy freight, is already underway – as shown, for example, by the Ministerial Decree dated 14 August (published in the Official Gazette on 23 September) whereby the Ministry of Infrastructure and Transport (Mit) outlined incentives for so-called “green trucks”, with contributions for freight and haulage companies ranging from a minimum of 2000 to a maximum of 20,000 euros for each vehicle.
The challenge in coming months and 2021, against this background, also involves taxation, a recurring topic in the fuel industry. Data made available by Unione Petrolifera demonstrate how excise duty means that Italian consumers (private and commercial alike) pay a higher price for the most widely used petroleum products coming to about 4 billion euros more than the European average. Government authorities are examining cuts to environmentally harmful subsidies which may well bring about a further increase in the excise duty on diesel fuel, which currently benefits from subsidies. As pointed out by several operators in the sector, with the evolution of motor vehicles now at Euro 6d levels and work already launched for a new Euro 7 standard, fuel emissions are very low and in some cases even already close to zero. The request from many sides is to take into account the entire life cycle of the vehicle-fuel combination and not only exhaust aspects, not the least through a reformulation of the European energy tax system based on effective carbon dioxide emissions calculated using the LCA (Life Cycle Analysis) method.