The Department for Transport has strongly denied it is being leant on by the major petrochemical companies to amend the Renewable Transport Fuels Obligation to prevent obligation buy-out funds being recycled among businesses meeting the ReTFO targets.
The DfT has applied to the European Commission to agree the inclusion of the recycled fund element of the ReTFO under State Aid rules. But the National Farmers Union is concerned the department had also applied for parliamentary time in the next session to remove it.
“They’ve applied for time to amend the Energy Bill with the idea of removing the recycled fund from the ReTFO which would have recycled money to encourage biofuels production,” the union’s Matt Ware told Farmers Weekly.
But the DfT said it was just being pragmatic. “Applying for parliamentary time is to ensure all contingencies are covered. If we need legislation [because the fund falls foul of the State Aid rules] by bidding for the time now we’ll be able to explore it, however we are confident and hopeful that we will get state aid clearance from the Commission,” a spokesman said.
Under the ReTFO, companies not meeting their obligation to include 5% biofuels in road fuels are required to buy their way out of it. The buy-out funds currently would be shared among those meeting their obligation, to provide a financial incentive for others to comply, giving them a competitive advantage.
The NFU believes the petrochemical companies want the funds to be returned to the Treasury. “The oil companies are dead against the recycled fund as that would give money to renewable fuel competitors, potentially farmer co-operatives,” Mr Ware said.
The union is also worried that the Low-Carbon Vehicles Partnership is looking at a completely separate scheme to carbon-accredit biofuels.