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Biofuels in the United Kingdom

General
The Renewables Obligation (RO) is the main support scheme for renewable electricity projects in the UK. It places an obligation on UK suppliers of electricity to source an increasing proportion of their electricity from renewable sources. A Renewables Obligation Certificate (ROC) is a green certificate issued to an accredited generator for eligible renewable electricity generated within the United Kingdom and supplied to customers within the United Kingdom by a licensed electricity supplier. One ROC is issued for each megawatt hour (MWh) of eligible renewable output generated. The Renewables Obligation Order came into effect in April 2002, as did the Renewables Obligation
(Scotland) Order. The Renewables Obligation (Northern Ireland) Order came into effect in April 2005.  These Orders have been and are subject to regular review. The Orders place an obligation on licensed electricity suppliers in England and Wales, Scotland and Northern Ireland to source an increasing proportion of electricity from renewable sources. In 2005 - 2006 it was 5.5 per cent (2.5 per cent in Northern Ireland). In 2006 - 2007 the obligation is set at 6.7 per cent (2.6 per cent in Northern Ireland). It was 7.9% for 2007/2008, and it will be up to 14.5% in 2015. Suppliers meet their obligations by presenting sufficient Renewables Obligation Certificates (ROCs). Where suppliers do not have sufficient ROCs to meet their obligations, they must pay an equivalent amount into a fund, the proceeds of which are paid back on a pro-rated basis to those suppliers that have presented ROCs. The value of ROCs is paid to the producer in addition to the market price of electricity.

In August 2008 the Energy regulator Ofgem has published interim information on the size of the Renewables Obligation for the 2007-08 obligation period, which finished in March 2008. According to this statement, the total Renewables Obligation on electricity supplied to customers across the UK is 25,477,265 MWh. On electricity supplied in England & Wales it is 22,784,988 MWh, on electricity supplied in Scotland it is 2,456,216 MWh and on electricity supplied in Northern Ireland it is 236,061 MWh. Electricity suppliers must comply with their Renewables Obligations for 2007-2008 before 1st September 2008. They can do this by either presenting Ofgem with Renewables Obligation Certificates (ROCs) to the value of 7.9 per cent of electricity supplied to customers, by using a buy-out clause which allows them to pay 34.30 per MWh for any shortfall or by using a combination of ROCs and buy-out.

According to the Directive 2009/28/EC of the European Parliament and of the Council on the promotion of the use of energy from renewable sources the target for the share of energy from renewable sources in gross final consumption of energy in the year 2020 for the United Kingdom is 15% (in the year 2005 the share was 1.3%). The Directive has a mandatory 10 % target for transport to be achieved by all Member States, which refers to renewable sources as a whole, not biofuels alone.

From 1 April 2010 householders and communities who install low carbon electricity technology such as solar photovoltaic (pv) panels and wind turbines up to 5 megawatts will be paid for the electricity they generate, even if they use it themselves. The level of payment depends on the technology and is linked to inflation.

Renewable energy projections according to the National Renewable Energy Action Plan for the United Kingdom
The National Renewable Energy Action Plan (NREAP) for the United Kingdom was submitted in July 2010. The target according to Annex I of Directive 2009/28/EC is 15% for the year 2020 and the projected NREAP share in that year exactly matches the target.  According to the projection, the most important contribution in the year 2020 is expected from wind power (78.3 TWh or 6730 ktoe, 33% of all renewable energy). Second important contribution is expected from biomass (renewable heating and cooling) (3914 ktoe, 19% of all renewable energy). The third largest contribution is from biodiesel (renewable transport) (2462 ktoe, 12% of all renewable energy). Wind power contributes in the year 2020 with onshore wind (14.9 GW and 34.2 TWh) and offshore wind (13.0 GW and 44.1 TWh). For solar photovoltaic the 2020 contribution is projected to be 2.7 GW (2.2 TWh). For solar thermal the 2020 contribution is projected to be 34 ktoe. The two most important biofuels are projected to contribute 2462 ktoe (biodiesel) and 1743 ktoe (bioethanol / bio-ETBE) by 2020. The renewable electricity production from solid biomass amounts to 20.6 TWh (1770 ktoe) and for biogas it is expected to be 5.6 TWh (479 ktoe). The consumption of renewable heat is expected to amount to 3612 ktoe for solid biomass and 302 ktoe for biogas.

Renewable transport fuels (biofuel)
The British government has set up the RTFO (Rene Renewable Transport Fuel Obligation), a mechanism to develop the market of biofuels for transport. This mechanism provides for the obligation of distributors to ensure that a proportion of the road transport fuel that they deliver at the pump comes from a renewable source. If the distributors do not fulfil their obligation, they have to pay a 15 pence fine for each litre that’s missing and this during the first two years of the obligation. The incorporation levels are defined at 2.5% of sales in 2008/2009, 3.75% in 2009/2010 and 5% in 2010/2011. This incorporation rate expressed in volume is intentionally lower than the 5.75% incorporation in energy equivalent defined by the directive. The UK government explains this choice in that it considers that a high biofuel incorporation level can not be reached in a sustainable ecological manner. Furthermore, the European standard on fuels still limits, for the time being, the incorporation rate at 5% in terms of volume.

The RTFO (2007 no 3072) has entered into force on 15 April 2008. In January 2008 a report has been released containing the final version of the Government Recommendation, which documents the precise conditions for Carbon and Sustainability reporting under the RTFO. In July 2008 the Renewable Fuels Agency (RFA) published the Gallagher review about the indirect effects of biofuels. In this report the RFA proposes that the current RTFO target for 2008/09 (2.5% by volume) should be retained, but the proposed rate of increase in biofuels be reduced to 0.5% (by volume) per annum rising to a maximum of 5% by volume by 2013/14. This compares with the RTFO’s current target trajectory of 5% by 2010. RFA recommends that the RTFO is further reviewed in 2011/12 to complement and coincide with the 2011/12 EU review of member states’ progress on biofuels targets. During the period to 2011/12, RFA states that comprehensive, mandatory sustainability criteria within the EU Renewable Energy Directive should be implemented for biofuels and bio-energy, including requiring feedstock that avoids indirect land-use change.

The table below lists the main biofuel-related measures in the United Kingdom. The table has been taken from the ELOBIO project.

 

 

Valid until

 

Tax incentives / mandates

 

2002

20 pence per litre (0.30 €/litre) duty incentive on biodiesel

 

2005

20 pence per litre (0.30 €/litre) duty incentive on bioethanol

 

2008

Renewable Transport Fuel Obligation (RTFO) in force from April 2008

 

Future programme changes expected
No information on future policy. 

Sources
http://www.dft.gov.uk/pgr/roads/environment/rtfo (sourced May 2008)

ELOBIO, Inventory of biofuel policy measures and their impact on the market, September 2008,  http://www.elobio.eu/publications

Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Entry into force on June 25th, 2009), download from http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0028:EN:NOT

The National Renewable Energy Action Plans (NREAPs) are all published on the Transparency Platform on Renewable Energy: http://ec.europa.eu/energy/renewables/transparency_platform/action_plan_en.htm (sourced July - December 2010)

Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States, http://www.ecn.nl/nreap (sourced December 2010)

Interactive EurObserv’ER Database
http://www.eurobserv-er.org
Last update: December 2010


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The EurObserv'ER barometer is a project supported by the European Commission within the DG ENER 'Intelligent Energy Europe' programme and by Ademe, the French Environment and Energy management Agency. The EurObserv'ER Barometer is the result of the investigation and research work of its authors. The European Commission is not responsible for any use that may be made of the information contained therein.