UK Government establishes Renewable Fuels Agency to supervise compliance with Renewable Transport Fuel Obligation

In the UK, the government has established a Renewable Fuels Agency to manage compliance with the new Renewable Transport Fuel Obligation, which takes effect in April 2008. The Obligation mandates that, by 2010, five per cent of all fuel sold in the UK must be from renewable sources.

The Government recently revised its costs and carbon savings from the proposed implementation of the Renewable Transport Fuel Obligation (RTFO). The cost has risen 87% to $760 per ton of carbon emission saved based on an estimated carbon savings of 700,000-800,000 tonnes. The RTFO imposes a 2.5 percent biofuel mandate in 2008, increasing to 5 percent in 2010.

The UK has been slow to build biofuel production capacity, primarily as a result of a shortage of feedstocks. Last month, the EU approved plans by BP Associated British Foods to construct a 111 Mgy ethanol plant in Hull, England, scheduled to be online in 2009 and will use wheat as a feedstock. Wheat-based ethanol came under scrutiny recently when the director of the Spanish Flour and Semolina Producers Association blamed biofuels for up to 50% price increases in bread prices as soon as next year.

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