Lack of clear policy framework for sustainable biofuels sees UK lose out as investments and jobs go overseas

The REA is frustrated by the lack of concrete measures to improve the policy framework for sustainable biofuels in Government decisions published yesterday [1]. In responses to two important consultations, the DfT proposed a limited set of changes to the Renewable Transport Fuel Obligation (RTFO) and stopped short of outlining how it will meet its binding 10% 2020 renewable transport target. The current RTFO obligation level is set at 4.75% by volume, or approximately 3.5% by energy, so a nearly three-fold increase in biofuel supply is needed by 2020. But in these documents the DfT again fails to set out how the RTFO obligation level will increase towards the 2020 target.

REA Chief Executive Dr Nina Skorupska said:

"Sometimes policy moves too fast and becomes unstable, as we've seen with drastic changes to support for solar power. But sometimes policy moves too slowly and remains unclear, as we are still seeing with sustainable biofuels. Government has missed an opportunity here to set out a trajectory to its 2020 10% renewable transport target and will not introduce any substantive support for advanced biofuels until the second half of 2015 at the earliest. Meanwhile the UK is missing out on jobs as investors move their money to more supportive policy environments such as the USA."

The REA's new report REview documents three successful UK projects built by REA members since 2010, creating construction, manufacturing, science and engineering jobs in Teesside, Merseyside and Humberside [2]. Biofuel produced in the UK is consistently shown to have greater GHG savings than the EU average, whilst also creating sustainable animal feed co-products that reduce the UK's imports of soymeal [3]. However, at least four projects have been cancelled due to the unclear policy framework, and studies accompanying these consultations indicate that over half of the smaller UK producers have gone out of business.

REA Chief Executive Dr Nina Skorupska added:

"On the whole, Government is delivering clear, stable policy for renewable heat and power, which is attracting investment, creating jobs and growing the UK's share of clean, home-grown energy. But it must up its game on transport to make the most of the economic and environmental benefits of sustainable biofuels. It doesn't make sense for the Government to refuse to raise the RTFO obligation level when it is committed to a near-threefold expansion on current levels by 2020."

The REA welcomes the three substantive RTFO changes proposed by the Government, which would improve support for biomethane from anaerobic digestion, add support for synthetic fuels made using renewable electricity and balance the playing field for different types of biodiesel. However, significant investment will not be forthcoming until the Government sets out how the obligation level within the RTFO will increase year-on-year to meet the 2020 10% target. A proven market in conventional biofuels is vital for building confidence and spurring investment in advanced biofuels which, although costlier and more technologically risky right now, can provide even greater environmental benefits.