Every time you fill up your car at the pump, you are paying for the UK’s biofuels mandate – a green levy with pretty questionable ‘green’ credentials.
Although almost nobody seems aware of it, the E10 and B7 grades at the forecourt require a certain percentage of biofuels to be blended into petrol and diesel respectively. This programme was brought in by the last Labour government (as part of an EU-wide policy) in a bid to lower carbon emissions, and has lumbered on quietly in the background for the last 15 years.
The Renewable Transport Fuel Obligation (RTFO) dates from the pre-electric vehicle (EV) era. At the time biofuels seemed like a promising solution to decarbonising road transport. After all, why bother with replacing the vehicle when you can just replace the fuel? Fast forward to 2023, however, and it has become abundantly clear that Zero Emissions Vehicles like EVs will be the way forward (at least for cars). And unlike decarbonisation policies that will ultimately save consumers money over the longer term (EVs, insulation, offshore wind), biofuels genuinely do make life more expensive.
Moreover, it has become increasingly clear that producing biofuels from crops is a bad idea. The original logic seemed sound: crops absorb CO2 from the atmosphere when they grow, and so when they’re burned in a car (displacing petrol or diesel), overall emissions will be reduced, even if they do still emit CO2 like fossil fuels. In the real world, however, a whole host of issues soon began to crop up (sorry).
Incentivising farmers to grow crops for fuel meant that more land needed to be found to grow food. And yet chopping down a tropical forest to plant palm trees is terrible for the environment and biodiversity, as well as potentially destroying any theoretical emissions savings. A plethora of scientific studies have shown that this kind of ‘indirect land use change’ can fatally undermine the CO2 rationale for crop-based biofuels.
Then there is the impact on food security and prices. Although there has been much discussion recently about the need for the UK to improve its food security, few seem to realise that almost 36,000 hectares of British farmland is being used to grow crops for biofuels, according to the latest government estimates. This land should be used to feed people. Indeed, the Green Alliance has calculated that 3.5 million people could be fed every year if the UK ceased to use crop-based bioethanol. Creating such a large source of (artificial) demand for these crops also drives up prices, hitting the world’s poor hardest.
Even if the Government decided this land was best used for environmental purposes, biofuels would not be the first choice from a CO2 perspective. The emissions savings would likely be far higher from rewilding or solar panels, for example. Biofuels are also a very inefficient use of land: a study by the IFEU institute calculated that using solar panels to generate the same amount of energy produced by crop-based biofuels would require only 2.5% of the land.
The UK government does recognise the negatives of crop-based biofuels and has introduced measures into the programme to discourage crops, if not ban them outright. But what the RTFO really needs now is a post-Brexit, post-Ukraine refresh. That is why a new Centre for Policy Studies report calls on the Government to phase out the use of food crops for biofuels, as soon as possible. We should also work with our allies and partners around the world on this issue to improve food security, benefitting the world’s poor.
On the other hand, almost all of our current biodiesel supply comes from wastes, primarily used cooking oil. Provided these are sourced sustainably they can have much more substantial emissions savings, and can be particularly valuable in transport modes and sectors where Zero Emissions options are further off, such as trucking, aviation and shipping. The same is true of other more advanced fuels such as hydrogen and e-fuels.
However there are issues here to be aware of as well. Creating such strong economic incentives for substances that are meant to be waste can create opportunities for bad actors, as well as unintended consequences. Cases of outright fraud have occurred in the past, such as suppliers trying to pass off virgin oil as used due to the price premium.
Yet more subtle are the potential distortions created by artificially driving up demand for wastes. To give a simple example, a restaurant may be tempted to go through more cooking oil than they otherwise would. If either of these were happening on a large scale this would increase demand for virgin oil, potentially driving more deforestation, and eating into any supposed emissions savings. While there are safeguards in place designed to prevent such outcomes, in our report we recommend ways in which the Government can tighten up this regime, such as with rigorous database tracking.
Overall the Government needs to be vigilant regarding the unintended consequences of this policy – phasing out biofuels made with food crops, while helping to sustainably scale up waste-based biofuels and other advanced fuels in the sectors that need them most. That way our net zero policies will achieve minimum environmental damage with maximum environmental benefits.
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