DfT lowers biofuel targets but avoids 2020 decision

The government is consulting on transposing the transport elements of the Renewable Energy Directive and parts of the Fuel Quality Directive, into UK law. But it has avoided tough decisions on future biofuel use that these present.

The Department for Transport (DfT) is slowing the UK’s biofuel targets to avoid causing a rise in the supply of biofuel.

But the reasoning is questionable because it also allows biofuels made from wastes to count double towards the targets. This means the absolute amount of biofuel supplied in the UK should drop substantially once the changes come into force.

The announcement is made in a consultation issued on 11 March on implementing the transport elements of the EU Renewable Energy Directive (RED).1 This requires 10% of transport fuel to come from renewable sources by 2020.

The DfT issued another consultation on the same day on transposing parts of the EU Fuel Quality Directive into UK law.2 This is a sister directive of the RED and requires fuel suppliers to reduce the greenhouse gas intensity of their fuel by 6% by 2020. The government expects to meet both targets using biofuels.

Renewable fuels transport obligation

The UK already has a mechanism in place to increase biofuel use called the renewable transport fuels obligation (RTFO). This requires suppliers to blend a growing portion of biodiesel or bioethanol into their fuel to reach 5% in 2013/14 (ENDS Report 406, p 41).

However, the RTFO only includes petrol and diesel. It does not include gas oil used by “non-road mobile machinery”, such as bulldozers, which also falls under the scope of the Fuel Quality Directive.

To overcome this problem, the DfT is proposing to expand the scope of the RTFO to include suppliers of gas oil, as gas oil can include biodiesel.

However, the government does not want to raise the overall supply of biofuel due to fears that growing biofuel crops can displace existing food crops and indirectly add to deforestation and significant greenhouse gas emissions (ENDS Report 430, pp 16-17).

As a result, it intends to cut the RTFO’s overall targets so suppliers will only have to get 4.7% of their fuel from biodiesel or bioethanol in 2013/14 (see table).

Future biofuel targets*

The decision seems sensible from an environmental standpoint. However, it fails to take account of the fact that the amount of biofuel supplied in the UK is likely to drop substantially soon.

Under the RED, biofuels made from wastes, residues and non-food material are meant to count double because they pose fewer environmental risks. The DfT proposes to implement this requirement by allowing these biofuels to count twice towards RTFO targets.

This change would affect two types of biofuel: those made from used cooking oil and those made from tallow. Between April and October 2010, the last period for which data are available, these fuels made up 27% of total biofuel supplied. If they counted double, some 232 million litres of biofuel would not have been needed under the RTFO.

The DfT does not mention this impact in its consultation, and it is only dealt with in one paragraph of the impact assessment.

The consultation also reveals that the DfT is not yet ready to set targets for biofuel use to 2020. It is inappropriate to do so until there “is a greater evidence base regarding biofuel sustainability and deployment issues”, the consultation says.

Instead, an obligation will be put on the Secretary of State for Transport “to propose measures to ensure the delivery of the transport requirements of the RED... at a later date.” No timescale is mentioned.

Again, this decision seems environmentally sensible. However, it is hard to understand from a practical point of view. The European Commission is developing proposals for combatting the indirect land-use change effects of biofuels (ENDS Report 432, p 50) and there is little suggestion it will lower the 10% target for 2020.

If the UK delays setting targets, it could dent industry confidence and stop firms from investing in domestic biofuel supply chains with low environmental impacts.

Other proposals include:

• Carbon targets: All biofuels must achieve  at least 35% greenhouse gas saving, as required by the RED. This rises to 50% from 2017. These targets do not encompass emissions from indirect land use change.

The average saving of biofuels used in the UK in 2009/10 was 51%, according to the Renewable Fuels Agency (ENDS Report 426, p 18).

• Sustainability reporting: Suppliers must already report on the environmental impacts of their biofuels under the RTFO. However, the DfT is proposing that suppliers will now also have to report annually on measures they take to protect soil, water and air, restore degraded land and avoid excess water use in areas of water scarcity. This is a requirement of the RED.

• Fuel Quality Directive measures: The DfT will set a target for 2020 for suppliers to reduce the carbon intensity of fuel by 6%, but it will not set interim targets.

Interim targets would encourage firms to use more biofuel than the government wants under the RTFO. In 2013/14, the RTFO will only have reduced the carbon intensity of fuels by about 1.5%.

Suppliers will have to submit annual reports to the DfT showing the carbon intensity of their fuels.

Electricity firms can contribute towards the overall target, but they must provide the government with evidence that their electricity is used to power vehicles.

Any supplier that fails to meet the 2020 target will be made to pay a fixed penalty of £50,000 or 10% of turnover, whichever is lower. It will also have to pay a fine equal to the volume of biofuel that would have been needed to make up the shortfall.

Both consultations run until 2 June. The changes to the RTFO are expected to come into force on 15 December 2011, assuming a draft Renewable Transport Fuel Obligations (Amendment) Order 2011 receives parliamentary approval.

A separate consultation will soon be issued on biofuel labelling. Under RED, member states have to ensure information on biofuel blends is given at point of sale.

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