Under the Renewable Transport Fuel Obligation (RTFO) Order, which came into effect in 2007, obligated suppliers – those supplying in excess of 450,000 litres of road transport fuels per year – must supply a certain percentage as biofuel or purchase Renewable Transport Fuel Certificates (RTFC) or pay in to the buy-out fund (at 30ppl) for the shortfall.
Biofuels since the introduction of RTFO
Since the Order was established the targets for the percentage of biofuel have increased annually from 2.50% in 2008/09 to the present 4.75% established in 2013.
From April 2013 end uses covered by the RTFO were amended to include non-road mobile machinery used in mining, agriculture, inland waterway vessels, etc. which was typically fuelled by low sulphur gasoil. To keep the supply of biofuel broadly consistent, the target was adjusted down from 5% to 4.7501%, based on industry data relating to the volume of low sulphur gasoil consumed by non-road mobile machinery.
Current specifications permit up to 7% biodiesel content in diesel (meeting BS EN590) and up to 5% bioethanol content in motor spirit (meeting BS EN228). The table below traces the evolution of physical supplies of biofuels (million litres) since the introduction of RTFO
Over the past five years, shortfalls in physical volumes supplied to the transport fuels market vs RTFO have been met through the purchase of the requisite number of RTFCs during the reporting period, reflecting a shift in the balance of attractiveness of blending v RTFC costs.
% of ground transport fuels
Sources and feed stocks
The *Department for Transport’s RTFO reporting process tracks compliance by obligated suppliers. Apart from the quantitative data, it also highlights sustainability factors associated with sources and feed stocks as well as assessed savings in GHG emissions.
For biodiesel, in the first two years – 2008/09 & 2009/10 – the most widely reported source of feed stock was soy, since then it has been used cooking oil.
For bioethanol, the most widely reported source of feed stock was sugar cane – again, since 2010/11 it has been corn, latterly this has been principally from the Ukraine.
UK production plants
Since the start-up of the first plant in 2005, there have been seven further commercial scale (10m + litres per annum) production facilities established in the UK – four biodiesel and three bioethanol.
A new bioethanol plant, owned and operated by Ineos Bio, is planned to come on stream in 2016, at Seal Sands, Teesside with a capacity of 30m litres per year.
Start up date
601m litres pa
890m litres pa
(1) Built originally by Biofuels Corporation, subsequently taken over by Harvest Energy; acquired by Greenergy in January 2015
Biofuels – issues and challenges
Data on indigenous biofuels production has proved to be highly elusive. In the case of biodiesel, the position appears to reflect wider European experience i.e. capacity utilisation running at circa 50%. Utilisation of bioethanol production capacity appears to be even lower, at around one third. This picture does not provide any compelling incentives to add to existing capacity!
Among the many issues that need to be addressed are the need for a forward trajectory around obligations which currently does not extend beyond 2014 and the following:
- How does the government foresee being able to meet the over-arching EU target of meeting 10% of transport fuel requirements from renewables by 2020?
- The problems associated with volatility of RTFC prices and volumes traded
- The impact of continued low oil prices on blending economics
- The consideration of different obligation levels for biodiesel/bioethanol eg. in Germany and Austria
- The impact on cheap sources of imported biofuels on indigenous production capability
Absence of resolution on these issues will frustrate the sector’s planning and preparation for a future where renewables will play an increasingly important role.
*The Renewable Fuels Agency was set up as an independent body to manage and monitor the government’s commitments to reduction of GHG emissions from the transport sector. Disbanded in 2011, its responsibilities were transferred to the Department For Transport. In 2009 and 2011, the original RTFO Order was subject to amendments to incorporate the requirements of the Renewable Energy Directive.