This is predicted to save around 1 million tonnes of carbon dioxide emissions in 2010 – the equivalent of taking a million cars off the road.

Announcing the move, Mr Darling said that the carbon savings could increase in future years and help reduce the impact of transport on climate change.

“I am determined that transport should play its part in addressing the threat of climate change. Making vehicles more efficient and investing in public transport are important aspects of our strategy, but renewable fuels are equally important. This Obligation is vital in continuing to promote a shift towards cleaner, low carbon road transport,” he said.

Transport is the fastest growing source of carbon emissions and the Government has been repeatedly criticised for its abject failure to encourage people out of their cars and onto public transport.

Under the terms of the Obligation, all major oil companies and importers will have to ensure that a growing proportion of their fuel sales are from renewable sources up to 5% by 2010. This would work through production of certificates, obtained through a central administrator or regulator, demonstrating how much biofuel has been sold.

If a company exceeds their limit, the certificates can be sold on to others who need to meet the obligation.

The move will signal a huge boost to the biofuels industry – approximately a 20 fold increase in sales by 2010 over today’s levels. The Government currently supports biofuels through a 20pence per litre duty incentive, which has stimulated sales to about 10 million litres a month, or 0.25% of all road fuel sales.

Drivers themselves will see little difference as the small percentage of bio-fuels will not alter the performance of their cars, as some had feared. Results from trials at the Forestry Commission suggest that far higher concentrations of bio-fuel do not affect performance either as they have been running several vehicles in their fleet on both bio-fuels and waste oils (see related story) with no adverse effects.

A majority of bio-fuels at present come form crops like oilseed rape and wheat although the Government has said that more advanced fuels could be made from waste and even hydrogen.

The use of rape and wheat for fuel has been criticised in the past by companies like D1 Oils who say that the crops are grossly inefficient and vast areas of the country would have to be turned over to growing them to produce only a fraction of transport’s energy requirements.

Instead, they use high-energy crops such as the jatropha plant, the seeds of which have up to a 40% oil yield. D1 has also posited that this could help local farmers in the developing world as it can be grown alongside their own crops (see Can Africa, India and Asia relieve the EU’s bio-fuel famine) and could create jobs in refinement.

The Government has said that it will ensure that the bio-fuels are sourced sustainably and proposes to develop an assurance scheme as part of the Obligation.

Alastair Darling also highlighted the Government’s intention to investigate further the potential for hydrogen fuel in the UK. The announcement was made at the Environmentally Friendly Vehicles Conference in Birmingham.

By David Hopkins

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