Renewable Transport Fuel Obligation
The Renewable Transport Fuel Obligation Programme (RTFO) came into effect on 14 April 2008 and places an obligation on fuel suppliers to ensure that a certain percentage of their aggregate sales is made up of biofuels. The effect of this will require five per cent of all UK fuel sold on UK forecourts to come from a renewable source by 2010.
Volume targets have been set as follows.
| Of total fuel sales | Deadline |
| 2.5% | 2008/09 |
| 3.75% | 2009/10 |
| 5% | 2010/11 |
The programme is in response to the European Parliament Biofuels Directive (2003/30/EC). The level of obligation for 2010-11 falls below the level of 5.75 per cent set out in the directive. However, the directive allows member states to set different targets provided that any differentiation is justified. The UK Government set the level at five per cent as it was not confident that higher levels of biofuels can be delivered as yet. The five per cent by volume target also represents the maximum biofuel content allowed by European specifications to be sold on the forecourts as standard petrol or diesel.
The RTFO is modelled on the existing Renewables Obligation in the UK electricity supply industry. The RFTO will work through a system of certification. Under the scheme certificates can be claimed when renewable fuels are supplied and fuel duty is paid on them. At the end of an obligation period, these certificates may be redeemed to demonstrate compliance and certificates can be traded. If any obligated supplier does not have enough certificates at the end of an obligation period, it has to 'buy-out' of the balance of its obligation by paying a buy-out price. The buy-out will need to be kept sufficiently high and regularly reviewed to ensure that suppliers do not routinely resort to using it.
There has been criticism that the RTFO is imposing quotas for the use of biofuels without ensuring that they can be obtained from sustainable sources. The Renewable Fuels Agency (RFA) which has been set up to administer the scheme will now lead a study of the wider economic and environmental impacts of different forms of biofuel production. The results of the study will help inform the development of both the UK and EU's policies in this area, and will underpin the consideration of EU biofuel targets after 2010.
For more information on the Renewable Fuels Agency, please click here .
