New stats reveal sustainable biofuels slash GHG emissions by 66%, but industry flat lining due to policy instability

The REA today calls on Government to set a trajectory for achieving the binding 2020 renewable transport target before the next election, or risk missing out on jobs, investment and cost-effective emissions savings as companies take their biofuel projects elsewhere [1]. The call comes the same day as the Government's final biofuels statistics for 2012/13 reveal that the sector is flat lining in spite of its strong performance on greenhouse gas savings from transport [2].

The Post-Implementation Review of the Renewable Transport Fuel Obligation (RTFO)

Responding to a Government consultation on biofuel policy which closes tomorrow [3], the REA stresses three key messages:

* The REA welcomes the consultation's acknowledgement that the costs of biofuels are "in line with other CO2 abatement options in transport" and that biofuels are "a relatively low cost means of complying with EU renewable energy targets." [4]

* The only way the Government can restore the market confidence that both conventional and advanced biofuel producers need is by amending the RTFO to set out a firm trajectory to achieving the 2020 target of 10% renewable transport. Currently, annual obligations are set out to 2014, which serve as interim targets for industry, but Government has still not set out annual obligations through to 2020. The Government's stated commitment to the 2020 target and to developing the UK's nascent advanced biofuels industry are both in jeopardy without a clear trajectory to 2020.

* Since the RTFO was introduced in 2008, the Government has done nothing but row back its ambition for biofuels with serious adverse impacts on investor confidence. For instance, the original 2010 obligation of 5% biofuel by volume was pushed back four years to 2014 and then reduced to 4.75%, with the Government now backing a 5% cap on conventional biofuels at European level.

REA Head of Renewable Transport Clare Wenner said:

"The RTFO is an effective mechanism undermined by disastrous policy decisions. Transport is powered by fossil fuels and accounts for 25% of our greenhouse gas emissions, so we cannot simply ignore it. Sustainable biofuels offer cost-competitive emissions savings in transport, and are actually one of the cheapest ways of meeting the overall 2020 renewables target.

"The UK needs to show the world it is committed to low carbon fuels and innovation in bio-based industries, or we will miss out on the jobs and growth opportunities in advanced biofuels. Government must set a trajectory to 2020 before the next election so industry can get going again, building refineries and helping regenerate the regions."

Final RTFO statistics for 2012/13

The DfT today published final confirmed RTFO statistics for 2012/13 and the latest statistics up to Q2 2013/14. The statistics for the latest full year, 2012/13, reveal that:

* The UK is failing to meet its interim targets even after they have been pushed back and watered down. The level of biofuel in the fuel mix in 2012/13 is confirmed at 3%. This means a third of the 2012/13 obligation of 4.5% has been achieved by certificate trading, which is a missed opportunity for green jobs and greenhouse gas savings.

* The share of home-grown biofuels has increased as several projects came on-stream last year, with the proportion of home-grown biofuel now standing at 21%. This is good news for green jobs in the UK and especially in the regions. However, the pipeline has dried up due to policy uncertainty. Given the time it takes to develop a project, the UK is unlikely to see any new biofuel refineries open before 2018 at the earliest.

* The figures reveal that biofuels used in the UK are 99.6% compliant with sustainability criteria, achieving average greenhouse gas savings of 66% (up from 61% the year before) compared with fossil fuels. The very latest statistics, to Q2 2013/14, reveal average greenhouse gas savings of 71%.

REA Head of Renewable Transport Clare Wenner said:

"The Government's own figures demonstrate the benefits of biofuels in black and white, but also reveal that the lack of policy stability is seeing investment dry up. Make no mistake – there is no shortage of supply, as countries like Brazil and the USA are racing ahead of us. The only limiting factor is the UK's own policy.

"For jobs, for industry, and for cost-effectiveness in environmental targets, Government must urgently amend the RTFO to set out the trajectory to 2020. Then we can start to have an informed conversation about 2030!" [5]