Stores set to sell rubbish new petrol

Sainsbury's and Tesco are in advanced talks to sell Kwikpower's ultra-green renewable fuels

A US company that converts household rubbish and agricultural waste into cleaner-burning petrol could be close to striking a major deal with Britain's biggest supermarket chains.

The company, Kwikpower International, has revealed that it is in "advanced talks" to supply its ENGAS renewable fuels to the forecourts of two of the leading supermarket chains.

Industry analysts believe the most likely candidates are Sainsbury's and Tesco, based on their corporate histories of environmental friendliness.

The deals, which could be completed by as early as the end of this year, would mean that the ultra-green recycled fuels, which can be used in normal cars, would be sold from at least one pump at each of the petrol stations run by the companies.

Kwikpower's technology has been kept closely under wraps for some years. Working partly out of a UK-based laboratory, and in partnership with the oil giant Conoco, the company has designed a number of alternative energy solutions, each based on environmentally friendly processes.

The one that has caught the attention of the supermarkets, which have traditionally beaten the major oil companies to supplying greener fuels to consumers, is Kwikpower's fuel produced from rubbish. It has the double advantage that as well as being produced from recycled materials, its emission levels when burned are also extremely low.

"Petrol is essentially produced from complex hydrocarbons," explains Kwikpower's chief executive James Watkins, "and that happens to be what a lot of household and agricultural waste is made of. Society has a problem getting rid of its waste and a problem of generating greener energy. We provide the solution to both."

Kwikpower's strategy is to set up its refining operations near landfill sites around Britain, where a constant supply of rubbish can be assured. Although other waste recycling processes are often themselves very energy draining, Kwikpower has also developed the technology to run the refining process ultra-efficiently.

It will also draw on waste oils, particularly those produced by the shipping industry. At the end of long voyages, many vessels illegally dump their burnt engine oils into the sea. Kwikpower plans to set up refineries at major ports to collect this and re-convert it to useful fuel.

For their part, Sainsbury and Tesco are known to be interested in boosting their environmental profile. At its store in Greenwich, Sainsbury has installed wind turbines and solar panels to power the store's lighting, and 5 metre-high mud walls insulate it from summer heat and winter cold.

But it is in its petrol business that Sainsbury has taken a particular lead. In November 1999, the company began supplying liquid petroleum gas (LPG) as an alternative to petrol. Although only a minority of cars are built to run on LPG, sales have doubled over the past six months, and the store now plans to supply it in a further 20 of its stores around the country.

"You could certainly see Sainsbury and Tesco wanting to get involved with a new green fuel," said one City analyst, "They are in a market share battle with the likes of Esso and Shell, and will see something like this as giving them the edge."

The inspiration for Dr Watkins' fuel has come from ever-tightening fuel emissions regulations across the globe. The EU has been tightening its rules for nearly a decade, and cars in Europe are currently the cleanest in the world. Not far behind is the US, which is imposing tighter restrictions over a period of several years.

The Kwikpower fuel, which has been tested by a US government lab, has beaten existing gasolines on emissions levels. Particularly important to Kwikpower are the very low carbon dioxide (C02) levels it produces.

It recently became possible for low-emissions companies to trade CO2 "credits" with bigger polluters, and Kwikpower has projected that it will be able to raise £165m a year from this alone. Dr Watkins' ambitions for his company include a New York and London market flotation to help finance the group's aggressive expansion plans in Europe and the US. Its estimated value when it was founded in 1996 was $15m (£10m), but a flotation is expected to value Kwikpower at $5bn.

"All the evidence of the past few years shows that there is going to be a lot of money in being green," said Dr Watkins, "Everything we have is under patent or patent pending, so we expect some market interest."