The Government encourage the use of alternative fuels through reduced rates of vehicle excise duty for cars run on certain alternative fuels and registered after 1 March 2001, and through differentials in fuel duty between petrol and diesel and other fuels. Vehicles powered wholly by electric power are exempt from VED.
The Government fund the running of an Infrastructure grant programme. The grants assist the building of refuelling stations for alternative fuels (natural gas/biogas, hydrogen and bio-ethanol). It is also funding research and development into battery electric and plug-in hybrid vehicles through a low carbon vehicles innovation platform, which brings together funding from the Department for Transport, Technology Strategy Board and the Engineering and Physical Sciences Research Council.
The Government have also introduced the renewable transport fuel obligation (RTFO). The RTFO, which came into effect from 15 April 2008 aims to ensure that sustainable biofuels make up an increasing percentage of total UK road transport fuels, and means that biofuels are starting to become available in low blends at the majority of forecourts in the UK.