The UK’s Renewable Transport Fuels Obligation (RTFO), announced today by Transport Secretary Alistair Darling, will require that 5% of all UK retail fuel come from a renewable source by 2010. A 5% level would represent a 20-fold increase in biofuels sales over current amounts.
The benefits in 2010, according to a feasibility study published by the Government, would be a reduction of around 1 million metric tons of carbon per year: between 2%–3% of transport emissions.
The feasibility study also looks ahead to a “second generation” of biofuels by 2020 that would use lower-value feedstocks such as straw and even organic waste materials. Those fuels, notes the government, offer even higher levels of carbon savings, and potentially lower costs, and could provide a steppingstone to renewably-produced hydrogen.
Taking action to tackle climate change is essential. The Renewable Transport Fuels Obligation I am proposing today is predicted to save around 1 million tonnes of carbon dioxide emissions in 2010—the equivalent of taking 1 million cars off the road. Carbon savings could also increase in future years. This will help reduce the impact of transport on climate change, and bring environmental benefits for us all.
I am determined that transport should play its part in addressing the threat of climate change. Making vehicles more efficient and investing in public transport are important aspects of our strategy, but renewable fuels are equally important. This Obligation is vital in continuing to promote a shift towards cleaner, low carbon road transport.—Transport Secretary Darling
To ensure that biofuels are sourced sustainably, the Government proposes to develop a carbon and sustainability assurance scheme as part of the obligation. Obligated companies would be required to report on the level of carbon savings achieved and on the sustainability of their supplies.
The UK currently supports biofuels through a 20 pence per liter ($1.32 per gallon US) tax incentive. This has stimulated sales of around 10 million liters (2.64 million gallons US) a month—0.25% of all road fuel sales.
The government will set up a certification and credit trading mechanism as part of the RTFO. An oil company will receive certificates from an administrator to demonstrate how much biofuel it has sold. If the company sells more than its 5% obligation, it would then be able to sell those certificates to other companies who need more to meet the obligation.