GORDON BROWN must give the renewable fuels industry a bigger tax break on biodiesel if production from virgin rapeseed oil is to be economically viable.

Dominic Vincent of NEBiofuels said that a further 8p/litre duty rebate was needed, but admitted it was an uphill battle.

He said the cost at the forecourt of biodiesel  from oilseed rape is 86.2p/litre based on a rapeseed price of £140/t, compared with the fossil fuel equivalent over the past 12 months of 78.4p/litre.

“We‘re doing what the Government wants: looking at new markets and creating environmental benefits and economic benefits for the north east,” he said.

“But when you mention more subsidy and farmers in the same breath, ministers ask ‘why?‘.”
 
Construction will soon begin on Teesside of a new 250,000t biodiesel plant, but without the tax rebate, the plant would look to used cooking oil and imported palm oil for feedstock, as opposed to oilseed rape.
 
The only alternative, said Mr Vincent, was for ministers to adopt a clause in the Energy Act 2004 forcing fuel companies to include a proportion of renewable fuel in their supplies.

Biodiesel cost p/litre

 Refined virgin rape oil  29.5
 Esterification  10.3
 Duty  27.1
 Distribution  6.5
 VAT  12.8
 Total  86.2