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Energy: Biofuels

Volume 707: debated on Thursday 12 February 2009

Question

Asked by

To ask Her Majesty's Government whether, following an error in the definition of "relevant fossil fuel" in the Renewable Transport Fuel Obligations Regulations, (a) it will be obvious should an oil company use the error to avoid this year's renewable obligation; (b) current legislation will provide access to oil company data necessary to determine whether this year's obligation has been avoided; (c) any avoidance by oil companies operating in the United Kingdom but with overseas Head Offices will be measurable; and (d) whether the Government intend to measure the degree of such avoidance by oil companies operating in the United Kingdom. [HL1412]

To ask Her Majesty's Government what measures they will take to assist small United Kingdom-based biofuel producers whose market has contracted this year due to an error in the definition of “relevant fossil fuel” in the Renewable Transport Fuel Obligations Regulations. [HL1413]

To ask Her Majesty's Government whether, in the light of an error in the definition of "relevant fossil fuel" in the Renewable Transport Fuel Obligations Regulations, the 2008–09 target for biofuel use in road transport will be attained; and what the target will be for 2009–10. [HL1414]

The discrepancy concerning the definition of relevant hydrocarbon oil in the Renewable Transport Fuel Obligations (RTFO) Order 2007 (No. 3072) means that any fossil fuel which is blended with renewable fuel before the excise duty point is excluded from the calculation of a supplier’s obligation. The result is that less fossil fuel than was intended is taken into account in calculating suppliers’ obligations, and therefore less renewable fuel is required to be supplied than was intended.

Fossil fuel that is supplied to the consumer separately from biodiesel or bioethanol or is blended after it passes the duty point will be taken into account in calculating a supplier's obligation. It will be a matter for obligated suppliers to determine how they supply their fuels and meet their obligation under the RTFO scheme for the year 2008-09.

Any supplier of fossil fuel in the UK is subject to the obligation regardless of whether its Head Office is located within or outside the UK. A supplier can meet its obligation in three ways: through supplying biofuel; purchasing certificates from other suppliers of biofuel; or by buying out of its obligation. The 2007 RTFO order provides for the Renewable Fuels Agency (RFA) to require suppliers to report volumes of fossil and biofuel supplied and this information will be used to determine a supplier's obligation and if it has been met. Provisions in the Climate Change Act 2008 provide for information to be supplied to the RFA by Her Majesty’s Customs and Excise to verify these reports. Information about how suppliers have complied with their obligation will be made available in the RFA’s reports to Government and Parliament.

The full effect of the discrepancy on the volume of biofuel supplied in the first obligation year (2008-09) will not be known until after the end of the obligation year. Following a consultation, on 28 January the Government announced our intention to introduce legislation to slow down the rate at which the obligation increases until 2013-14. A draft order was laid in Parliament on 9 February to amend the obligation levels specified in the 2007 order and this sets a level of 3.25 per cent of total fuel supplied for 2009-10. We have proposed a higher level than the 3 per cent level proposed in the consultation and have taken into account concerns expressed by producers about the effects of the discrepancy on biofuel demand during the first obligation year as well as environmental concerns about biofuel levels.