The Government are incentivising the production and use of biofuels through a 20p per litre duty rate cut for biodiesel and bioethanol which has been extended to 2008-09. This has led to a growth in the sales of biofuel, and figures from Her Majesty's Revenue and Customs give a total of around 21 million litres sold in July this year. This suggests a likely market share of around 0.5 per cent of road fuels for 2006, doubling that of 2005, produced from a variety of feedstocks.
To further develop the supply of biofuels, a renewable transport fuel obligation will be introduced in April 2008 which will require 5 per cent of fuel sold in the UK to come from a renewable source by 2010. A number of companies are building biofuel processing plants in the United Kingdom which will use UK-grown crops, such as oilseed rape, sugar beet and wheat, as a feedstock. Farmers can claim the single payment for biofuel crops grown on set-aside land or where the €45 per hectare energy aid payment is claimed for crops on non-set-aside land.