THE GOVERNMENT is looking more favourably on biofuels following destabilisation of the crude oil market, according to campaigners.

Price rises for crude oil have highlighted deep-seated concerns over security of fuel supply, said British Association of Biofuels and Oils chairman Peter Clery.

This has boosted the political drive for a strong UK biofuels industry, he reckoned.

“The alarm and uncertainty in the crude oil market underlines the wisdom of biofuels,” said Mr Clery. “It will certainly have sharpened government minds.”

The base crude oil price has reached the $35-40 a barrel range, he pointed out – a price that will “make the government sit up and listen”.

Although the forecourt price for fuel has risen sharply, the base production price for road fuel – around 18p/litre – is still almost half that of biodiesel.

“The differential has not moved much, so the case for an increased tax break is as strong as ever,” he said.

“The rapeseed price has also rocketed,” pointed out Alex Lewis, head of communications at Greenergy, which supplies biodiesel to Tesco and Sainsbury‘s.

“But I think there has been a change of focus following recent events.

“To have road fuels sourced from land in your own country is becoming increasingly important.”

Meanwhile bioethanol industry leaders have warned that recent EU Commission moves to free up trade could kill off chances of establishing a bioethanol production base in the UK.

Malcolm Shepherd, managing director of Wessex Grain, which is a partner in a planned 100,000t a year bioethanol plant in Dorset, said a recent deal tabled to free up trade between the EU and South American countries will bring 1m tonnes a year of bioethanol into Europe.

“It‘s a very shallow deal that will kill off the European bioethanol industry and do nothing for South America,” Mr Shepherd warned.

Biofuel imports have very questionable environmental credentials in terms of the amount of fuel burnt in transporting the green fuel to market and in terms of stocks coming from fragile resources, such as palm oil, he added.

There are many in Whitehall who favour the deal, however, pointed out Mr Clery.

“Imports will come in even cheaper than petrol and contribute towards renewable energy targets. It sounds the death knell for a viable UK industry.”

A Treasury spokesman said that the government was aware of the benefits of a strong UK biofuel production base, but imports would also play a role.

Campaigners are hoping biofuels will get an increase in the current tax break or that the proposed renewable fuel obligation will come in.

This will force petrol companies to include biodiesel and bioethanol in all road fuels.