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The UK Parliament has voted to approve the RTFO Order which will give legal effect to the Government's Renewable Transport Fuel Obligation. The Government says that the RTFO is set to deliver significant and immediate carbon savings from the transport sector and is an important part of the wider package of measures to reduce the environmental impact of transport.
The RTFO has been under development since 2004, when the Energy Act 2004 gave the necessary primary powers to introduce an obligation along these lines. The detail has been the subject of much discussion with stakeholders over the past three years, including two major public consultations during 2007. The Low Carbon Vehicle Partnership has taken a lead role in the sustainability and carbon accreditation aspects of the move to biofuels which have become an increasingly important focus for discussions.
The Government will be adopting what it describes as 'a sophisticated and robust reporting mechanism to encourage transport fuel suppliers to source only the best biofuels'. The information from biofuel suppliers will be provided to the new Renewable Fuels Agency (see related story), which will be able to publish the data and demonstrate the full life-cycle impacts of biofuels supplied to the UK market. It is the Government's intention to move to a system of regulated controls on biofuels sustainability from 2011.
The European Commission is also working on a related system of standards for biofuels supplied to the European market.
The RTFO will require that suppliers of fossil-based road transport fuels in the UK redeem a certain number of renewable transport fuel certificates with the Renewable Fuels Agency each year or pay a buy-out price. Transport fuel suppliers will be able to acquire these certificates either by supplying renewable transport fuels themselves or by purchasing them from other transport fuels suppliers who have put renewable transport fuels on to the market. Barring any unforeseen rapid changes in the economics of transport fuels, the Government expects transport fuels suppliers to fulfil their obligations without significant resort to the buy-out option, which is there as a safety valve to protect motorists against steep increases in the price of biofuels.
The RTFO will become the Government’s primary support mechanism for biofuels. The Government's latest estimate is that the RTFO should deliver savings somewhere between 700,000 and 800,000 tonnes of carbon a year from 2010-11, equivalent to around 2.6 million to 3 million tonnes of carbon dioxide.
The RTFO Order was passed with clear majorities by the House of Commons, the House of Lords and the RTFO Standing Committee.