Fuel duty rebate for biofuels to expire from 2010
(27/03/2008)

The Renewable Transport Fuel Obligation Programme will, from April 2008, place 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 be to require 5% of all UK fuel sold on UK forecourts to come from a renewable source by 2010. This will help meet our climate change objectives as well as contributing to other Government objectives, including security of energy supply.

In order to ensure compliance the Administrator will issue RTF Certificates according to the quantity of renewable fuel on which duty has been paid. It will be possible for companies to trade certificates. If a company cannot produce enough certificates at the end of each compliance period it will have to pay a buy out price which will go into a buy out fund.

Bioethanol is produced commercially from agricultural crops, such as wheat, sugar cane, sugar beet, and other forms of biomass. Also under development are second-generation processes which offer greater energy efficiency by using ligno-cellulose extracted from forestry and agricultural products, such as wood, straw and grass. The bioethanol is blended in high volumes with small amounts of petrol to create the eco-friendly yet potent fuel, bioethanol E85.

Unlike petrol, bioethanol consumption does not significantly raise atmospheric levels of carbon dioxide (CO2), the main 'greenhouse' gas. This is because emissions released during driving are balanced by the amount of CO2 that is removed from the atmosphere when crops for conversion are grown. In contrast, fossil-based fuels, such as gasoline and diesel, release new amounts of CO2 into the atmosphere which have been locked away underground in oil deposits.

The Fuel duty rebate for biofuels is currently 20p per litre until 2010. In response to the Chancellor’s announcement that the fuel duty rebate for biofuels will expire from 2010 Jonathan Nash, Managing Director of Saab Great Britain, ‘fears that the Government has turned its back on biofuels.’

‘I am deeply disappointed that the Chancellor has announced the removal of the fuel duty rebate for biofuels from 2010. The lack of long term consumer incentives for the use of high blend biofuels is a clear indication of the Government turning its back on this technology.

‘Although the Chancellor has stated he will encourage the development of sustainable biofuels by increasing the buy-out price for suppliers under the Renewable Transport Fuels Obligation, we are fearful that this will do nothing to encourage the use of E85 and could drive up the cost of eco-friendly bioethanol E85 at the pump for the consumer.

‘The UK continues to fall behind other European countries where a more generous package of incentives is encouraging consumers and fuel providers to embrace this exciting technology right now, and reduce the environmental impact of their new car purchase.’

Saab launched its BioPower flex-fuel technology in its domestic market of Sweden in 2005. 11,000 9-5 BioPowers sold in Sweden last year. Saab has three BioPower engines currently for sale in the UK market, all of which enjoy substantially-reduced fossil carbon dioxide (CO2) emissions, whilst delivering significant increases in power when running on bioethanol E85 compared to when running on petrol.

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