There is growing pressure on car companies to reduce the CO2 emissions from their vehicles. Just last week the EC has announced that new mandatory targets will mean that average new car emissions must be reduced to 130 g/km by 2012. Unsurprisingly manufacturers of executive and sports cars are worried and aren’t very happy about the new targets. However one manufacture has seen the current climate as an opportunity rather than a threat, and that company is Lotus.

It may come as a surprise to most people that a small volume sports car manufacturer should be spearheading the environmental charge, but that is exactly what Lotus are doing. Through their consultancy arm, Lotus Engineering, the company is rapidly positioning itself as a world leader in alternative fuel technology. It is their know-how that’s behind the Tesla, an electric sports car with a range of 250 miles and 0-60 in a shade over 4 seconds, a Brazilian sports car capable of running on three fuels, petrol, ethanol and natural gas, and a new project aimed at delivering an electric vehicle which will hit 155 mph and achieve a range of 350 miles.

On this occasion it is their work with bioethanol that took us to a wintry Norfolk to experience their expertise at first hand. The Lotus Exige 265E has got to be the world’s fastest billboard. Designed to show other car manufacturers that Lotus understands the intricacies of designing a car to run on bioethanol, and to raise the profile of the fuel itself, it has been very successful on both counts.

Bioethanol is a renewable fuel. It can be produced from a range of biomass including sugar beat, wheat, wheat straw, sugar cane, woody waste and farmed wood. There is a growing interest in biofuels as the amount of CO2 that is emitted from the exhaust is equal to the amount of CO2 absorbed by the biomass as it grows. However there are CO2 emissions involved with the cultivation, processing and transportation of the fuel, so some CO2 is emitted when you consider the whole process from “well to wheels”.

How much depends on the biomass used and the production processes. Some very inefficient processes can produce more CO2 than petrol, but these won’t be viewed favourably in the UK. The best current processes achieve reductions of around 70%, whilst 2nd generation processes which are already being trailed can increase the savings to 90%. In general savings of at least 50% are easily achievable with current technology.

The chances are that you might already be using some bioethanol without knowing it as up to 5% can be blended into petrol without the need to label it at the pumps. By 2011 all petrol will contain a 5% blend of biofuel which will reduce the CO2 emissions of all of our petrol vehicles by between 2.5% and 4.5%.

In order to achieve bigger savings you need to use more bioethanol and in order to do this you need a car capable of using higher blends, which brings us neatly back to the Exige 265E.

Lotus started with the sublime Exige S as a starting point. With a supercharged 1.8 litre engine in a car that weighs about as much as your shoes, the S can hit 60 mph in 4.1 seconds and yet it also achieves over 30 mpg which is very good for a car with this performance.

With the S as a solid starting point Lotus started to examine the potential for bioethanol. At the moment availability of bioethanol is limited and so the car had to be capable of running on different blends of fuel. This flex fuel technology allows any mixture between 100% petrol to 15% petrol and 85% bioethanol (E85) to be used. 15% petrol is kept in the mix to negate the cold start problems that occur when using E100. Next came the job of optimising the engine.

Bioethanol has a higher octane rating than petrol. Standard petrol is 95 RON with super petrol achieving around 98 RON. Ethanol on the other hand is 109 RON. This is a good thing as the higher octane allows the engine boffins to get more power and torque without the engine “knocking”. Engine knock is caused when part of the fuel/air mixture in the engine cylinder explodes rather than combusting in a controlled manor. Knock is a bad thing as it leads to loss of power, loss of refinement and if left unchecked can destroy the engine.

When using petrol, all engines are knock limited to a lesser or greater extent. That is the optimum power and torque curves cannot be achieved safely and so the engine is constrained by the fuel quality. In the case of the Exige S this pegs power to a still mightily impressive 218 bhp and torque to 159 lbs/ft.

Ethanol’s higher octane allowed the Lotus engineers to optimise the engine without being knock limited. Physical engine modifications were limited to bigger fuel injectors and the addition of two injectors before the supercharger.

Superchargers work best when the air entering them is cold, as it is denser. This is why intercoolers are common on supercharged engines. Ethanol requires five times more heat energy to vaporise than petrol. This characteristic allows the ethanol injected into the supercharger to effectively cool the metal components increasing the efficiency.

The results of all this engineering wizardry are impressive. Power is boosted to 265 bhp whilst torque rises to 181 lbs/ft. With 0-60 now despatched in 3.88 seconds the 265E is the fastest road legal car ever to emerge from Lotus’s gates. On the road the extra power and torque provides acceleration of biblical proportions. The bolstered torque figures are particularly impressive below 4,500 rpm where the petrol engine is significantly knock limited. On ethanol the engine pulls smoothly from as little as 1,000 rpm providing a surprisingly flexible package for urban driving. When let loose on the Lotus test track the engine is just as impressive. Revving to a heady 8,500 rpm the power delivery is incessant and is accompanied by a hard edge soundtrack that adds to the drama.

What Lotus has achieved with this car is deeply impressive. They are convinced that bioethanol is not just an alternative fuel which engineers have to make do with, but that it is a superior fuel to petrol.

You may be thinking at this point that this is all well and good but E85 doesn’t exist in the UK. Well you’d be wrong. We refuelled the Exige with E85 during our test, not at Lotus’s facilities but at a local Morrisons forecourt. There are currently six Morrisons forecourts selling E85 in Norfolk, Suffolk and Somerset and there are plans to expand the network. The problem is there is currently limited availability of E85 vehicles. Saab has done some stellar work in this field and currently offers two models whilst Ford has supported several trials.

We are therefore in the classic chicken and egg situation. Fuel suppliers want to see more cars capable of using the fuel whereas consumers want to see more fuel availability before buying a car. The beauty of these flex fuel vehicles is that they can run on petrol if E85 isn’t available so customers will never get stuck for lack of fuel.

In order to encourage people to buy flex fuel cars they need some encouragement. In Sweden a range of fiscal incentives including free parking, exemption from congestion charging, reductions in tax and a good fuel supply network has lead to a large demand for flex fuel cars. In Brazil the market is dominated by them. There is no reason why this can’t happen in the UK too, but there needs to be some clear Government backing.

In particular flex fuel cars don’t benefit from the reduction in car tax that they could as currently the scheme is based on CO2 emissions from the exhaust and not on a well to wheels basis. If the life cycle emissions were taken into account such cars would benefit from at least a 50% reduction in their CO2 emissions. In the case of the Exige 265E should Lotus put this car into production the tax would currently be £190 a year as it emits around 200 g/km running on E85 compared to 215 g/km on petrol. If a 50% reduction in CO2 were given, this would reduce the tax to £0 a year. Substantial savings would also be made by company car drivers as company car tax is also graduated according to CO2.

Secondly, although there is more energy in every kg of ethanol than petrol there is less energy in every litre of ethanol than petrol so fuel consumption in litres is increased. Although when we bought it the E85 was 2p a litre cheaper than standard petrol, consumption is typically around 20% higher. If fuel was priced based on its energy content rather than volume, ethanol would be cheaper.

Whilst the industry waits for support from Government, car companies have to find ways of marketing E85 to the public, and dramatic increases in power output have always been a good way of doing this. Lotus has shown that they are ready to play their part in developing this market. For many smaller manufacturers Lotus offers their best hope of getting hold of flex fuel technology. For larger manufacturers they offer a fast track route, leapfrogging the early development work that needs to be undertaken allowing cars to be brought to market more quickly.

In the UK, E85 is unlikely to replace petrol in the short to medium term, but it deserves to take its place in the fuel mix where it will make a significant contribution to reducing CO2 emissions whilst also giving customers added benefits. The car companies have taken note, the Brazilian and Swedish Governments have seized the initiative, now it is time for the UK Government to do the same here.