Biofuel inaction

Graham Hilton of EIC says, if fuel-price hikes and environmental catastrophe fail to prompt swift action on biofuels, it is difficult to guess what will


Hurricane Katrina has thrown a spotlight on the short-term impacts of climate change, whose longer-term effects were recently described, at the launch of a European satellite-monitoring project, as the largest challenge facing mankind.

The impacts of Katrina on global oil supply also exacerbated shortages and record oil prices, again raising the spectre of fuel blockades. Anticipation of fuel-security issues and environmental impacts were at the heart of EU thinking when, in 2003, the EU Biofuels Directive suggested EU governments should aim for more than 5% of renewable fuels in transport usage by 2010.

Given the high priority the British Government appears to place on the environment, an enthusiastic response to the EU's call might seem likely, particularly given the rapidly rising proportion of emissions from transport.

UK agricultural advantage
The UK also has a great advantage in adopting renewable transport fuels. The mainstream technologies for such fuels currently rely on agricultural production for their raw materials, such as wheat and sugar beet for ethanol, and rape for bio-diesel. With one of the most efficient arable farming communities in the world, the UK is uniquely placed to meet the demands of a new biofuels industry. This would replace the demands of previous EU farming regimes with those of a new energy market, maintaining and caring for the countryside on an economic rather than subsidised basis.

It would reduce dependence on imported oil, and replace carbon emissions from fossil fuels with those from crops, which absorb huge quantities of carbon during cultivation. Initial signs were encouraging, with 20p/l duty concessions, first for bio-diesel and then for bio-ethanol.

Recognising that these concessions lagged behind other European countries in value and length of commitment, the Government, with cross-party support, also made provision for a Renewable Transport Fuel Obligation (RTFO) in the 2004 Energy Act. This obligation provides a simple, self-balancing addition to the existing duty concessions, with fines for those suppliers not including renewable fuels, and the pool of fines returning to those developing biofuels.

Sadly, it is at this point, that the story starts to go wrong. Having passed primary powers in the Energy Act of June 2004, support for biofuels has been consigned to lengthy prevarication. The RTFO is now expected to finally arrive in 2008 or even 2009 - too late to make any real impact on biofuel production before the EU reference date of 2010. If recent fuel-price hikes and environmental catastrophe are not enough to prompt swift action, it is difficult to guess what will.
Clear message
Earlier this year the EIC Renewable Transport Fuels Working Group was established. The group has already produced a position paper called Fuelling a Sustainable Transport Industry. The main thrust of EICs campaigning is that the Government must act quickly, sending a clear message. In particular EIC is lobbying on the following:
  • The Government should aim to achieve the 5.75% penetration level given in the EU Biofuels Directive for 2010
  • The RTFO should be the main driver to achieve this, backed up by the existing duty differential
  • The RTFO should be in place by 2000
  • The RTFO should incorporate a certification scheme to prove fuels' carbon savings, which should not delay a basic RTFO
  • The three-year rolling commitment in the Alternative Fuels Framework should be lengthened.

    An active biofuels industry could deliver environmental benefits, reduce dependence on imported oil, and form the foundation for a biochemicals industry in which UK technology already leads the world. In addition, as the raw material for the industry comes from arable crops, farming could be helped towards a margin rather than subsidy base.

    The time has come for the Government to put in place the RTFO before the UK falls further behind its European partners, and misses a great opportunity for the environment, motorists, industry and farmers alike.
    Graham Hilton is Chair of the Environmental Industries Commission's Renewable Transport Fuels Working Group. For more information contact Merlin Hyman on 0207 935 1675 or email info@eic-uk.co.uk

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