(NFU) The promise of a consultation on how low carbon fuels are rewarded under the Renewable Transport Fuel Obligation, potentially leading to the crop cap being removed, and the exploration of moving beyond E10 fuels are key among the changes the Department for Transport has outlined following NFU lobbying.
The DfT (Department for Transport) has published an update to government policy as part of its RTFO (Renewable Transport Fuel Obligation) statutory review. The RTFO sets annual obligations for fuel suppliers to ensure a certain percentage of renewable, low carbon fuel is supplied to road vehicles, non-road mobile machinery and other surface transport modes.
The British biofuel industry is a significant domestic market for growers. AHDB analysis indicates that the volume of UK wheat entering the bioethanol supply chain has been as high as 1.2m tonnes (in 2017 which was approx. 8% of the UK crop), prior to changes to the RTFO which artificially capped the UK bioethanol market.
The NFU has been campaigning for policy changes to address key issues growers have raised including:
- Setting the crop cap at its maximum level, or even removing it altogether.
- Recategorisation of waste-based feedstocks and their double reward.
- A switch to greenhouse gas-based reporting.
- Investigating opportunities for E20 petrol.
In the update, published last week, the DfT has provided assurances that its future work would include:
- A consultation on the broader RTFO scheme containing proposals for the future target trajectory, including options for increased targets and improving the development fuel obligation.
- A call for evidence, to be published later in 2025, on the eligibility of different types of crops in the SAF (Sustainable Aviation Fuel) mandate.
- Convening an expert working group to explore whether ethanol blending in petrol can be increased beyond E10 (10%) in the UK.
Government has listened
The NFU engaged with DfT on the call for evidence in early 2025, including a private meeting with a DfT minister, stating the importance of the bioethanol industry to UK farmers. Separately, we've been working with stakeholders on enabling crop-derived feedstocks to be permitted under the SAF mandate for aviation fuel, which are currently not allowed to be used.
We're pleased to see that DfT has listened to our calls for enhanced long-term opportunities for UK growers to supply our domestic biofuel plants, however, we have expressed frustration at the timescales at which change is likely to be delivered.
It is also disappointing that this announcement comes alongside the decision by the UK government to not provide the essential short-term support needed to keep the UK’s two bioethanol plants viable. This has already resulted in the closure of Vivergo, the one plant which consistently uses UK wheat, while the future of Ensus, which reportedly uses imported grains more so than UK grains, remains in the balance.
NFU Combinable Crops Board Chair Jamie Burrows said the closure of Vivergo was a "huge blow", not just for the workers who will lose their jobs, but the thousands of people whose livelihoods depend on that supply chain.
The crop cap
Measures to limit the use of crop biofuels were introduced via a crop cap in April 2018. This defined the maximum contribution that biofuels made from agricultural crops can make towards meeting suppliers' obligations. The change was made to encourage the use of sustainable waste-derived fuels due to their lower lifecycle emissions and reduced pressure on land use.
The maximum level for crop-derived fuels was set at 4% of total fuel in 2018 and from 2021 reduces linearly each year to reach 3% in 2026 and 2% in 2032. It is set to remain at the 2% level in subsequent years.
Categorisation of waste-based feedstocks
The RTFO double counts the majority of sustainable wastes, which have achieved a new, highly valued state due to legislation which favours these products over crops.
The DfT has acknowledged concerns that double counting of waste-derived low carbon fuels has driven competition between waste-derived fuels and those crop-derived fuels associated with lower indirect land use change impacts.
The crop cap has a significant impact on the perception of crop-derived fuels. Namely, the binary view that crops are bad, and wastes are good. This removes the nuance that is required in the conversation surrounding feedstocks, including that bioethanol producers are creating fuel and feed together.
Rewarding of fuels
The DfT has confirmed that it will consult on how low carbon fuels are rewarded under the RTFO. This could include a switch to greenhouse gas-based reporting. This alternative model would mean that fuels are rewarded based on the emissions savings they achieve compared to fossil fuels, with better performing fuels receiving more certificates, and no additional incentive for waste-derived fuels. The SAF mandate, which began in 2025, operates on this basis. In the call for evidence, the majority of stakeholders favoured this approach.
The DfT has said that rewarding fuels based on the emissions reductions they achieve would seem to better align with overall policy objectives. However, understanding the greenhouse gas emissions associated with different fuels is not straightforward. There remains a risk that a greenhouse gas scheme could inadvertently incentivise fuels which have higher indirect land use change risk associated with them.
Should a greenhouse gas scheme be introduced in the RTFO, there would be no need for a crop cap. This would allow crops to be used but only if they have significant greenhouse gas savings and low land use impact. It would therefore encourage suppliers to employ best practice in the cultivation of crops.
Next steps
The government will continue to engage with stakeholders on changes to the RTFO, building its evidence base through workshops before consulting on any potential changes. It aims to introduce any necessary legislation in 2026 and implement any changes to the RTFO in time for the start of the 2027 reporting year.
The NFU will remain engaged with government on this important policy area. READ MORE
- RTFO statutory review and future of the scheme (UK Department for Transport)
- Closure of bioethanol plant in Hull is ‘huge blow’ (NFU)
- Preserving the British bioethanol market (NFU)
- NFU pushes ministers to scrap biofuel crop cap (Farming UK)
Excerpt from UK Department for Transport: In 2022, the transport sector remained the UK’s largest emitting sector, responsible for 28% of domestic UK emissions, rising to 34% when accounting for emissions from international aviation and shipping[footnote 1]. The government is committed to delivering greener transport, which will support the missions to kickstart economic growth and make Britain a clean energy superpower.
The majority of these emissions are from road transport, where traditional liquid fuels like petrol and diesel are still the main forms of energy.
Government policies – in particular, the zero emission vehicle (ZEV) mandate – are helping drive the transition to electric vehicles. However, those already on the road are still largely reliant on traditional liquid fuels and liquid fuels will still be needed for conventional vehicles over the coming years.
Their carbon emissions can be reduced through the use of low carbon alternatives including:
- biofuels like biodiesel and bioethanol
- novel low carbon fuels like hydrogen and synthetic alternatives to petrol and diesel and e-fuels
These fuels reduce the greenhouse gas (GHG) emissions of the vehicle fleet, while the roll out of zero-emission vehicles continues.
The Renewable Transport Fuel Obligation (RTFO) is the government’s main policy for encouraging the use of low carbon fuels in road vehicles, non-road mobile machinery (NRMM) and other surface transport modes. It works by setting annual obligations for fuel suppliers to require a certain percentage of their fuel comprises sustainable low carbon fuel.
The primary objective of using low carbon fuels in transport is to reduce GHG emissions within the sector. In 2022, the low carbon fuels supported under the RTFO achieved lifecycle GHG savings of over 7 million tonnes of carbon dioxide equivalent (MtCO2e) as a result of displacing fossil fuels[footnote 2][footnote 3].
This is because the carbon dioxide (CO2) emitted as a result of biofuel combustion is part of the short-term carbon cycle, rather than the long-term carbon cycle associated with fossil fuels. Low carbon fuels can provide a flexible option that can be ‘dropped in’ to replace existing fuels or blended with fossil transport fuels to reduce their overall GHG emissions contribution.
The Climate Change Act 2008 sets the regulatory framework for achieving net zero, requiring that the UK reduces its GHG emissions to reach a UK-wide target of net zero GHG emissions by 2050. The pathway to 2050 is defined by interim targets called ‘carbon budgets’: 5-yearly caps on economy-wide GHG emissions. The RTFO was responsible for 54% of the overall transport emissions savings in carbon budget 3 (2018 to 2022) relative to a 1990 base year and will likely continue to play a significant role in future carbon budgets[footnote 4][footnote 5].
Since it was introduced in 2008, the operation of the RTFO has been reviewed and adapted to ensure the policy has continued to achieve significant GHG emissions savings. This has included:
- increasing the targets within the obligation
- widening the scope of eligible fuels and end uses (NRMM, maritime and aviation)
- updating sustainability criteria so the scheme discourages adverse environmental impacts
- introducing a crop cap
The scheme now operates 2 obligations:
- the main obligation which supports the supply of traditional biofuels
- (the development fuel obligation) which supports the development of novel strategic fuels of the future
...
The RTFO will need to:
- adapt to ensure it continues to achieve cost effective carbon savings
- aligns with the UK’s overall progress towards future carbon budgets
- interacts effectively with other low carbon fuel support mechanisms
This call for evidence, therefore, aims to seek stakeholder feedback on important areas of the RTFO. These areas include:
- future RTFO targets
- how low carbon fuels are rewarded under the RTFO
- the treatment of crops and wastes
- the development fuel sub-target
- the administration of the RTFO
Call for evidence themes
RTFO targets
The main RTFO obligation makes up the majority of the overall obligation and is generally met through supplying established low carbon and renewable fuels, like bioethanol, biodiesel and biomethane.
In 2024, this obligation is set at 11.8% as a share of total liquid fuel by volume and is set to increase to 12.15% in 2025 and 14.6% by 2032[footnote 6] .
While the RTFO main obligation target is currently set to increase until 2032 – which is the end of carbon budget 5 (2028 to 2032). From 2032 onwards, as the scheme technically operates in perpetuity, the targets are set to remain flat. The targets were set in 2021 to give industry a decade of certainty for investment.
It is now important we consider whether the current trajectory is appropriate and how it should be reflected beyond 2032 to achieve effective GHG emissions savings in subsequent carbon budgets.
This call for evidence, therefore, seeks feedback on how effective the RTFO target levels have been to-date in terms of maximising the GHG savings which can be achieved by the scheme, as well as incentivising investments in the low carbon fuels (LCF) industry.
The targets section also asks how stakeholders view the future challenges and opportunities for the use of low carbon fuels to decarbonise surface transport. This will help inform the development of different policy options and scenarios for the RTFO’s future trajectory.
Any changes proposed to the RTFO following this call for evidence will be subject to further consultation.
How low carbon fuels are rewarded under the RTFO
Since 2008, the RTFO has operated as a volume-based scheme. This means certificates are awarded based on the volume of low carbon fuel supplied, rather than the specific GHG savings those fuels achieve, provided the fuel meets sustainability and minimum GHG emissions savings criteria. Additional support is provided to gaseous fuels in recognition of their higher energy density.
The sustainable aviation fuel (SAF) mandate will reward low carbon fuels in proportion to GHG savings achieved. This means that fuels that achieve greater GHG savings, compared to the fossil fuel alternative, will receive more certificates[footnote 7] than fuels that achieve lesser GHG savings.
Some stakeholders have argued that the RTFO could achieve more cost-effective carbon savings by rewarding low carbon fuels according to their GHG savings in line with the SAF mandate. If there might be limited future feedstock availability, there is increased need to use resources as effectively as possible.
However, the broader feedstock eligibility within the RTFO could make switching to a GHG scheme more complex and real world increases in GHG emissions savings may not be realised. This is largely due to the relative performance of crop versus waste derived biofuels, particularly when indirect land use change impacts (ILUC)[footnote 8] are considered.
Moving the RTFO from a volume-based scheme to a GHG-based scheme would be a major change, requiring significant detailed policy development and implementation. We are, therefore, asking for stakeholder views on the risks and opportunities associated with such a change, to help inform whether a change is justified and would make significant differences in terms of the cost-effective emissions savings the scheme seeks to achieve.
Crops
In 2018, measures to limit the use of crop-based biofuels were introduced into the RTFO via a ‘crop cap’. This defined the maximum contribution that biofuels made from agricultural crops can make towards meeting suppliers’ obligations. This was introduced to encourage the supply of waste derived fuels over those produced from crops, given their potentially negative implications related to ILUC, land availability and food security.
We are seeking stakeholder views on the effectiveness of the crop cap in achieving its aims and whether it remains appropriate for the future of the RTFO.
Wastes
The RTFO double counts the majority of sustainable wastes for the purposes of discharging a supplier’s obligation. This was introduced to encourage suppliers to increase their supply of waste derived biofuels, which deliver some of the highest GHG savings, and pose reduced risk of wider environmental impacts such as land use change.
When referring to ‘wastes’ in this call for evidence, this includes all of the feedstocks which are double-counted under the RTFO, including agricultural, forestry and processing residues as well as other waste materials. There are also a small number of feedstocks that are classified as ‘single counting wastes’ – see RTFO feedstock materials used for creating renewable fuels for more information.
We are seeking feedback on the current classification of wastes, how they are rewarded and whether this remains appropriate for RTFO.
RTFO development fuel obligation
In 2018, the RTFO was amended to include a new development fuel obligation to encourage the supply of novel emerging technologies for fuel production.
Like the main obligation, the development fuel obligation has been set to increase each year until 2032, after which it continues at that level indefinitely.
In the years since the development fuel obligation began, there has been a significant shortfall in the supply of development fuel compared to the obligation level. Much of the development fuel obligation to date has been met via ‘buy-out’.
The intention of the development fuel obligation was to drive the growth of innovative, emerging technologies whilst delivering GHG reductions. We are therefore seeking stakeholder views on how the development fuel policy has operated to date and how it could evolve to better achieve its goals.
RTFO administration
The RTFO is administered by the low carbon fuel delivery unit in Department for Transport (DfT). We are seeking stakeholder feedback on the effectiveness of the day-to-day running of the scheme and whether there are any areas that could be improved.
...
The call for evidence began on 25 November 2024 and (ran) until 11:59pm on 27 January 2025. READ MORE
Excerpt from NFU: One of the two UK bioethanol plants, Vivergo, will close after discussions with the government failed to reach a regulatory and financial solution to enable the plant to continue operating.
The plant’s closure, attributed to the ongoing uncertainty surrounding the US-UK trade deal after the government announced it would remove tariffs on US bioethanol imports, is expected to have an impact on local wheat growers and the broader agricultural industry.
Owned by ABF (Associated British Foods), the Vivergo plant has been a vital market for domestic wheat, purchasing up to one million tonnes annually from more than 4,000 UK farms, primarily in Yorkshire and Northern Lincolnshire.
In a statement ABF said: “The decision to close the plant follows extensive discussions with the Government to find a regulatory and financial solution that would enable Vivergo to operate on a profitable and sustainable basis.”
“Not only is it terrible news for those hundreds of workers who will lose their jobs but also for the thousands of people whose livelihoods depend on that supply chain.”
NFU Combinable Crops Board Chair Jamie Burrows
It said that the way regulations were being applied to “favour foreign producers" in addition to removing the tariffs on US bioethanol coming to the UK undermined Vivergo's commercial viability, later adding that “the government has decided not to offer either short-term financial support or the long-term regulatory certainty we sought”.
Government must recognise value of market
Responding to the news, NFU Combinable Crops Board Chair Jamie Burrows said: "The closure of the Vivergo plant is a huge blow. Not only is it terrible news for those hundreds of workers who will lose their jobs but also for the thousands of people whose livelihoods depend on that supply chain – that includes local farmers who have lost a vital market for their product.
“Bioethanol production in the UK is such an important industry. The volume of wheat entering the supply chain has been as high as 1.2m tonnes. It also plays a key role in producing a vital source of animal feed as a by-product and CO2 used by the wider food supply chain.
“We need government to recognise the potential economic growth and value of this market by ensuring crops grown for biofuels are used increasingly in road transport and aviation. This will open up further market opportunities to incentivise growers to support the country’s biofuel plants.”
ABF has said Vivergo will cease all production of bioethanol and animal feed by 31 August 2025. READ MORE
Excerpt from NFU: Since its inception, the UK’s bioethanol sector has become an important customer and supplier to UK agriculture. Adding value to basic commodities, creating supply chain jobs and reducing the UK’s reliance on fossil fuels.
AHDB analysis indicates that the volume of UK wheat entering the bioethanol supply chain has been as high as 1.2m tonnes (in 2017 which was approx. 8% of the UK crop), prior to changes to the Renewable Transport Fuel Obligation which artificially capped the UK bioethanol market.
Despite the value that this industry delivers across the marketplace and within our own cereals supply chain, it has been overlooked and potentially irreparably put at risk by the recent UK US trade agreement.
While the agreement sets out to lower costs for manufacturing sectors which use ethanol as a raw material, it could cut off an important market for our members. For that reason, we have reached out to the DBT Secretary of State to call for policy changes which enable more UK wheat to be able to enter the market, and underpin the ethanol supply chain. READ MORE
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