1

Item 3Report to the East of England Regional Assembly

Environment and Resources Panel 6th June 2007

Subject: Transport – Development of Alternative Fuels

Report by: EERA Secretariat and Natural England

PurposeTo inform the Panel on the current status of the biofuel industry in the East of England and make recommendations for future action by the Panel.

RecommendationIt is recommended that the panel:1. Note the report on biofuels in Annex 1 prepared by Natural England with

other regional partners.2. Agree to the recommended actions to promote the industry and use of

biofuels in the region.

1. Introduction

1.1 In December 2006 the Environment and Resources Panel (ERP) considered a series of recommendations on priority areas for further work to look at environmental aspects of transport. Three areas were agreed where it was felt there were long-term opportunities to influence the transport agenda. Natural England has agreed to lead on one of these three areas: Development of alternative fuels1, and has worked closely with Renewables East and EERA to produce the report in Annex 1.

1.2 The aims of this report are: To provide information on the current status of the biofuel industry at an

international, European, national and regional level; To advise EERA on the scope for the use of biofuels in the East of

England region; To discuss the benefits and impacts of biofuels on carbon emissions,

natural resources, biodiversity, landscape, and to show how their use cancontribute to the forthcoming review of the Regional Spatial Strategy,Regional Economic Strategy and the emerging regional Climate ChangeAction Plan ;

To support EERA’s contribution to future regional work on the appropriate role of biofuels in the East of England; and

Provide recommendations on what role the Panel and EERA might playwith regards to biofuels and transport.

1 The others being (1) more efficient use of the current inter-urban network (including need for travel, use of road pricing/taxation and the need for inclusive policies) and (2) freight use of the rail network (including current capacity and barriers/impediments to future growth).

2

1.3 The full biofuel report is in Annex 1 and the main points have beensummarised in Section 2 of this cover paper. The summary is followed bythree recommended actions for the pane in Section 3.

1.4 The draft report was discussed at the RETAG meeting on 23rd April 2007, andhas since circulated to a number of key partners including Renewables East,the National Farmers Union, East of England Energy Group, British Sugar fortheir comments before submission to the Panel on 6th. A number of theseorganisations responded, with their comments have been incorporated in themain report where appropriate.

2. Key points from the biofuel report

2.1 CO2 emissions from transport are likely to increase due to the scale of proposed growth in the region and nationally. Road transport is estimated to be responsible for a greater percentage of CO2 emissions in the East of England compared to the national average.

2.2 There are four principal methods for reducing our dependency on fossil fuels and reducing CO2 emissions from transport:

i. a shift towards vehicles that are more efficient; ii. replacement of fossil fuels with alternative fuels including biofuels; iii. to make the transport system as a whole more efficient by ensuring

that people and goods are transported in a way that minimises fuel use; and

iv. reducing the need to travel.

2.3 Biofuels (biomethane, biodiesel and bioethanol) are an alternative to conventional oil-based fuels (petrol, diesel, CNG and LNG), and could play a major role in replacing fossil fuels with alternative fuels and reducing transport CO2 emissions by up to 50%. However, the extent that this is practical is complex and to some extent debatable. There are potential costs as well as benefits in broader environmental terms both in the UK and overseas.

2.4 The major rationale for biofuels is their potential reduction of CO2 emissions. The savings in CO2 emissions depends upon the crop, where and how it is grown, and to some extent the distance between where the crop is processed into biofuel and used. A key measure for this is Net Energy Balance (NEB) which will take into account energy consumption from the use of agrochemicals and transport during production. The best NEB is obtained from biomethane produced from waste; bioethanol from sugar beet in Brazil produces the best NEB from crop derived biofuel. There is concern that some biofuels, e.g. from soy production in the US, can have a negative NEB due to the high levels of agrochemical inputs and fuel used.

2.5 Other serious concerns come with potential loss of major habitats and biodiversity in a number of African, Asian and South American countries as crops for biofuel production are intensified to meet the increased demands as a result of policy shifts in the EU and US. There are also concerns that a major expansion in world biofuel production could increase world food prices, as competition for land use increases commodity prices. Closer to home, there is apprehension over biofuel crops being grown at the expense of food crops, and the potential risks to landscape and biodiversity. However, the crops grown for biofuels in the UK (wheat, oilseed rape and sugar beet) are already common, so impacts on biodiversity, landscape, the historic environment or on natural resources are unlikely to differ greatly from existing

3

production of these crops for food production. Moreover, where biomethane is produced from waste, impacts on landscape and biodiversity are negligible.

2.6 Establishing sustainability standards for biofuel production would help ensure that any negative implications were addressed. The Government has been heavily criticised by environmental groups, however, for not implementing minimum sustainability standards with the implementation of the Renewable Transport Fuel Obligation (RTFO) in 2008. The UK Government have, however, been pushing for the development of EU-wide standards by the European Commission, but these are unlikely to be implemented until the second phase of the RTFO in 2010.

2.7 In the UK, standard petrol and diesel vehicles can run on fuel with up to 5% biodiesel or bioethanol content, the maximum allowed by the EU Biofuel Directive. It is hoped that this will be increased to 10% with the improvement of biofuel quality standards and the agreement of the automotive industry. New Flexi-Fuel Vehicles can use any mix up to 85% bioethanol and existing LNG and CNG cars could use biomethane. By the end of 2005, the UK use of biofuels was only 0.3% by volume. The most common biofuel in use is biodiesel, with some bioethanol as E85 (85% bioethanol 15% petrol mix), however biomethane is not yet commercially available in the UK.

2.8 Although biofuel crops are already being grown in the UK, a current major constraint on biofuel production is the lack of refining plants. This is slowly changing and the East of England will be the first to produce bioethanol from UK grown sugar beet at the Wissington British Sugar plant later this year.

2.9 UK production of biodiesel utilises a combination of imported and home grown crops (10% of the UK oilseed rape crop), plus a small quantity of recycled products. Elsewhere in Europe biodiesel is commonly used, making the EU the world’s largest producer.

2.10 Biogas is produced by anaerobic digestion of organic animal and food wastes and sewage. It can be upgraded to biomethane for use in vehicles. This is well established on the continent, but has not taken off in the UK. Biogen UK is the only commercial biogas plant in the East of England based in Bedfordshire. It utilises pig slurry and food waste and convert the biogas into electricity. Biofertiliser is a useable by-product.

2.11 Technical constraints of biofuels include: the relative lack of vehicles capable of operating on high levels of biofuels

(e.g. being able to use E85). Although a number of vehicle manufacturers are beginning to address this, it remains a significant limiting factor.

There are relatively few filling stations offering biofuels for sale. This is due to the relatively low rates of demand, and is inextricably linked to the lack of vehicles on the market capable of using higher blend fuels.

2.12 The growth of a UK biofuel industry would offer a number of economic benefits including positive impacts on UK job security and creation as new refineries come on stream (an EEDA study estimated that one 100ktonne bioethanol plant processing wheat and sugar beet could create 970 jobs), and the creation of alternative markets for agricultural crops in the UK could provide a positive stimulus to a generally depressed price regime. As biofuels are generally more expensive to produce than fossil fuels, the industry is dependent on public subsidy for economic viability. Biofuel production is

4

predicted to become more competitive in the future as oil costs rise due to diminishing resources.

2.13 Fiscal and policy incentives are used to compensate for the current higher production cost of biofuels compared to fossil fuels. In the UK there is a 20ppl rebate on duty biofuels compared to fossil fuels; although there is a debate as to whether this has been enough to kick-start the UK biofuels industry. Elsewhere in Europe, the relatively high level of production and use of biofuels is due to higher level of available incentives and other policy instruments. The Renewable Transport Fuel Obligation (RTFO) will be introduced in 2008 as the UK’s mechanism for implementing the European Fuel Directive (target of 8% by volume biofuel use by 2010), and will ensure a market for UK biofuels as long as prices are competitive with the global market. As the obligation increases to higher percentages of biofuels, the reduction in fuel duty will be phased out. In addition to these measures to encourage a market for biofuels, Defra offers funding support for growing wheat and oilseed rape for biofuels (The Single Farm Payment and Energy Aid).

2.14 Biofuel production would be more cost-effective if the whole plant could be used, which would also increase the range of feedstock that could be processed. This second generation of biofuels is under research and development including at research centres in this region.

2.15 In the East of England, there are a number of significant factors which could potentially favour a push towards greater biofuel production and use: existing agricultural production systems in the region can be used to grow

biofuel crops, the location of major research facilities within the region with the potential

to focus on further development of 1st and 2nd generation biofuels, existence of emerging biofuel refineries at e.g. Wissington proximity to major conventional refineries e.g. in Thames Estuary major vehicle manufacturer (Lotus) located in the region and active in

exploring biofuel use Renewables East is well established and actively promoting biofuels.

2.16 ConclusionsBiofuels can make a significant contribution to reducing CO2 emissions from transport, but only as part of an integrated strategy that addresses other transport issues, notably congestion. Suitable sustainability standards to ensure reductions in CO2 emissions are achieved without compromising the landscape, historical environment and biodiversity both in the UK and internationally. A further factor is the potential effect that increased biofuel crop production would have on world food prices.

2.17 From the report, a number of areas that require further work influence and support were identified which are classified under 3 outcomes:

i. Better understanding of the theoretical capacity and limitations of biofuel production within the East of England;

ii. Raise the profile of biofuels in the region by influencing policy and increasing public awareness; and

iii. Support for academic and commercial R&D to further improve and advance biofuels.

3. Recommendations for the Panel.It is recommended that the work of the Panel focus on the following areas:

5

i. Greater recognition and support for the existing expertise within theregion’s research institutes and automotive sector which if harnessedtogether could provide significant advances in biofuel development andutilisation as well as realising economic benefit for the East of England.

There is a potential to generate biogas/biomethane from grown crops as well as regional domestic, commercial and agricultural residues. As quantities are not precise more work needs to be done to predict the full capacity for gas recovery from waste and the economic ‘tipping points’ for its use in transport rather than power production.

Both areas could also provide indicators as to the best use of land in providing biofuels and improved crop yields achieved by targeted breeding.

Renewables East is already considering mechanisms and potential research by which the opportunities might be achieved

The Panel should endorse support for maximising such potential and offer to help promote and implement any recommendations that are made as a result.

ii. To raise the profile of biofuels by encouraging the Public Sector in theregion to use and promote the use of alternative fuels. In this respect, consideration should be given to developing an information package explaining the opportunities available to local authorities to encourage the use of fuel efficient vehicles and the use of alternative fuels in public sector fleet vehicles. The Panel can also provide regional representation to the Government for assistance in overcoming barriers that are encountered when trying to convert to alternative fuels (eg BSOG).

iii. To encourage the development and implementation of appropriate sustainability standards for biofuels. A recent and current consultationhave addressed this issue: DfT consultation on the Renewable Transport Fuel Obligation Order,

to which EERA recently submitted a response (deadline 17th May); and

European Commission consultation on biofuel issues in the new legislation on the promotion of renewable energy: http://ec.europa.eu/energy/res/consultation/biofuels_en.htm. The deadline of this consultation was recently extended to 18th June, so comments from the Panels discussion on biofuels can be used to form a response.

Although the UK Government has been campaigning for EU-wide standards, the Panel should engage in the process of developing these standards to ensure they are appropriate to protect against adverse environmental and social impacts, and that the standards are used to increase the awareness about the real facts and potential benefits of biofuels.

Contact: Jo Worley 01284 729 431 joanna.worley@eera.gov.uk

1

Annex 1:

Biofuels Report for the EERA Environment and Resources Panel

April 2007

Report written by Dr Mary Dimambro (Natural England)

With input from Joanna Worley (EERA) Richard Parker (Renewables East) David Vose (Natural England)Jane Sellers (EERA)

2

Contents

Contents .................................................................................................................. 21. Introduction ......................................................................................................... 42. Biofuels and the environment ............................................................................ 4

2.1 Biofuels and carbon emissions .................................................................... 42.2 Environmental benefits of biofuels ............................................................... 5Box 1: Potential advantages of biofuels ........................................................ 5Table 1. Net energy balance of biofuels from selected crops ...................... 6

3. Biofuel types........................................................................................................ 6Box 2: Biodiesel............................................................................................... 6Box 3: Bioethanol ............................................................................................ 7Box 4: Biogas and biomethane ...................................................................... 8

4. Biofuel regulatory policy .................................................................................... 94.1 Policy........................................................................................................... 94.11 EU Policy................................................................................................... 94.12 UK Policy................................................................................................ 10Box 5: Fuel duty incentives – biofuel rebate debate ................................... 11Table 2. Comparison of biofuel content by volume and by energy content........................................................................................................................ 124.13 Regional Policy ...................................................................................... 12

5 Biofuel crops ...................................................................................................... 135.1 Agriculture ............................................................................................... 135.2 Environmental impacts of UK biofuel crops................................................ 14Box 6: Oilseed rape ....................................................................................... 15Box 7. Wheat.................................................................................................. 16Box 8. Sugar beet .......................................................................................... 16Market price of biofuel crops........................................................................ 17Box 9. EU Sugar reforms .............................................................................. 17Other biofuel crops ....................................................................................... 17Box 10: Environmental impacts of biofuel production from soy and palm oil .................................................................................................................... 18

6 Biofuel production ............................................................................................ 186.1 Biodiesel Production in the EU .................................................................. 186.2 Biodiesel production in the UK............................................................... 19Box 11. Cooking oil recycling regulations................................................... 206.4 Bioethanol production ................................................................................ 206.6 Biomethane production.............................................................................. 21Box 12. Gas fuels for vehicles ...................................................................... 22

7 Biofuel use.......................................................................................................... 237.1 Blending with petrochemicals .................................................................... 237.2 Filling stations ............................................................................................. 237.3 Vehicles........................................................................................................ 24

8 Research............................................................................................................. 259. Conclusion......................................................................................................... 25

Table 3. Summary biofuel issues ................................................................. 2510. Outcomes and recommended actions for the EERA Environment andResources Panel ................................................................................................... 26

3

Abbreviations

AD Anaerobic digestion

BBSRC Biological Sciences Research Council

CAP Common Agricultural Policy

CEN European Committee for Standardization

CHP Combined heat and power

CNG Compressed Natural Gas

CO2 Carbon dioxide

CONCAWE Conservation of Clean Air and Water in Europe

DfT Department for Transport

DTI Department of Trade and Industry

E85 Mix of 85% bioethanol and 15% petrol – can be used in FFVs

EEDA East of England Development Agency

EERA East of England Regional Assembly

ERP Environment and Resources Panel

EUCAR European Council for Automotive Research and Development

FFV Flexi-fuel vehicle

HGCA Home Grown Cereals Authority

HGV Heavy goods vehicle

HMRC Her Majesty’s Revenue and Customs

LNG Liquefied Natural Gas

LPG Liquefied Petroleum Gas

NEB Net Energy Balance

NFU National Farmers Union

NNFCC National Non-Food Crops Centre

ppkg pence per kilogram

ppl pence per litre

RES Regional Economic Strategy

RETAG Regional Environmental Technical Advisory Group

RSS Regional Spatial Strategy

RTFO Renewable Transport Fuels Obligation

WTO World Trade Organisation

4

1. Introduction

This report focuses on biofuels and the environment; policy, biofuel crops and production, and biofuel research. The aim of the report is to identify and recommend ways in which the East of England Regional Assembly (EERA) Environment and Resources Panel (ERP) can engage in direct lobbying and influencing activity and where they might endorse the work of other groups. It is also intended to support the development of a regional consensus on the subject and ERP contribution to future regional work on the appropriate role of biofuels in the East of England.

The aims of this report are: To provide information on the current status of the biofuel industry at an

international, European, national and regional level To advise EERA on the scope for the use of biofuels in the East of

England region To discuss the benefits and impacts of biofuels on carbon emissions,

natural resources, biodiversity, landscape, and to show how their use cancontribute to the forthcoming review of the Regional Spatial Strategy, andthe emerging regional Climate Change Action Plan

To support EERA’s contribution to future regional work on the appropriate role of biofuels in the East of England

Provide recommendations on what role the Panel and EERA might playwith regards to biofuels and transport

2. Biofuels and the environment

2.1 Biofuels and carbon emissions

There are four principal methods for reducing our dependency on fossil fuels and reducing CO2 emissions from transport2:

Shift towards vehicles that are more efficient; Replacement of fossil fuels with alternative fuels e.g. biofuels, hybrid vehicles,

electric vehicles, hydrogen; To make the transport system as a whole (buses, trains, cars etc) more

efficient by ensuring that people and goods are transported in a way that minimises fuel use; and

Reducing the need to travel.

Biofuels are an alternative to conventional oil-based fuels (petrol, diesel and natural gas), and will play a major role in replacing fossil fuels with alternative fuels.

Biomass is fuel in which at least 90% of the energy content comes from plant oranimal matter3. Biomass can be used to generate electricity, heat, gas or to producebiofuels. Biomass includes energy crops, agricultural, forestry or wood waste,sewage and organic residues. Some forms of biomass can be used to producebiofuels for transport.

Any transport strategy should include all four methods. Road transport is responsiblefor 28% of UK carbon emissions, and 34% in the East of England4. In the UKdemand for road transport is growing, although the total consumption of road fuels

2 Greenpeace. Over a Barrel: Reducing the UK and Europe’s Oil Dependency3 ROC order 20064 http://www.defra.gov.uk/environment/statistics/globatmos/galocalghg.htm

5

has remained virtually static since 1997, due to more efficient engines and anincreased proportion of diesel vehicles5.

There will be a huge expansion in housing in this region as the East of England Plan proposes the construction of more than half a million new houses by 2021. This will result in a significant increase in fuel demand in the region, both directly in terms of domestic fuel requirements and indirectly through an inevitable expansion of vehicle numbers and movements within the transport network.

Expansion of UK biofuel production will safeguard existing jobs and create new jobs at each stage of the production process: from growing the crop to processing and distribution. More details can be found a recent EEDA report6.

Bioenergy currently supplies 10% of the world primary energy demand7. In the next20 years the expected growth of the world economy will increase the demand for oilfor transport from 85 million barrels a day to 330 million barrels a day.

2.2 Environmental benefits of biofuels

Biofuels have significant potential to deliver carbon savings, because the CO2

emitted when they are burned is offset by the amount the crop absorbed as it grew. The carbon saving from biofuels is offset by the energy that is needed for cultivation, harvesting, processing and transportation. In general, nitrogen fertiliser (agrochemical production uses energy) and fuel represent the most significant energy inputs, so reducing inputs or increasing efficiency of crop nitrogen utilisation can significantly reduce total energy requirements. Thus, the best biofuels are those produced using the least energy (e.g. low inputs of fertiliser and processed in an energy-efficient way); and biogas which does not always require a crop to be grown. The advantages of biofuels are summarised in Box 1.

Box 1: Potential advantages of biofuels Biofuels can cut CO2 emissions by up to 50%, compared to fossil fuels8. This

takes into account the whole process, from well (or field) to wheels9. Biomethane can improve air quality, especially in congested areas (compared

to conventional fuels). Biofuels are renewable and can be sustainable.

There have been some reports of biofuels either offering no carbon saving at all or being carbon negative (especially soy production in USA), with a net release of CO2. This occurs where very high agrochemical inputs and large amounts of fuel are used in production.

Net energy balance (NEB) is used to demonstrate that biofuels have a positive fossil energy balance, when the whole process (from well (or field) to wheel) is taken into account. Some examples are shown in Table 1. Friends of the Earth have a web-based Global Biofuels Database, where more NEBs and other information on biofuels can be obtained10.

5 http://www.hie.co.uk/HIE-economic-reports-2005/sac-biodiesel-executive-summary.pdf6 EEDA. The Impacts of Creating a Domestic UK Bioethanol Industry7 REN21 2006 – fromhttp://www.lowcvp.org.uk/uploaded/documents/OEKO%20(2006)%20WWF_Sustainable_Bioenergy_final_version.pdf8 http://www.dft.gov.uk/pgr/roads/environment/rtfo/biofuelsbenefits9 Figures from the UK government's Central Science Laboratories10 http://www.foe.org/globalbiofuelsdatabase/start1.php

6

Biomass can be used as a transport biofuel and to substitute fossil fuels in thegeneration of electricity and heat. Some biomass types may be suited to bothapplications. There will be differences the carbon and cost saving for each biomasstype and in different uses. More research is needed to understand which uses offerthe greatest reduction in CO2.

Table 1. Net energy balance of biofuels from selected cropsFuel Net energy balance ReferenceBiodiesel from oilseed rape 2.5 11

Biodiesel from cooking oil 5-6 “Bioethanol from wheat 2 “Bioethanol from sugar cane in Brazil 8.3 12

Diesel and petrol <1 13

3. Biofuel types

There are three main types of biofuels currently available: biodiesel, bioethanol and biomethane, which are known as first generation biofuels. A summary of the production and usage of these fuels are provided in boxes 2, 3 and 4, respectively.

Box 2: Biodiesel

Oilseed Rape to Biodiesel

1 tonne of Oilseed Rape

Crushing & solvent extraction

Esterification

470 Litres Biodiesel

(EN14214)

570 kg Rape meal (£85/t)

Hexane

Methanol+ catalyst 40 kg Glycerol

Produced from soybean oil in the USA and palm oil in tropical countries In Europe the main source of biodiesel is rapeseed oil, with recycled

vegetable oils, tallow and fats from the food chain also being used Biodiesel can be used in existing diesel engines without modification or it can

be blended with diesel in varying quantities, although the EU Fuel Directivehas set a limit of 5% biodiesel.

Rape meal can be used for animal feed, and can replace imported soy feed. Glycerol is a bi-product, which can be used in the production of soap.

11 http://www.lowcvp.org.uk/uploaded/documents/Biofuels%20global%2006.pdf12 http://www.bioenergytrade.org/downloads/kruglianskasnovdec05.pdf13 http://www.lowcvp.org.uk/uploaded/documents/Biofuels%20global%2006.pdf

7

Box 3: Bioethanol

In Europe and the UK, well to wheel carbon emissions from bioethanol are 40%to 60% less than the emissions from petrol. If bioethanol is blended with petrolthe saving will be comparative to the percentage blend. So a 5% blend ofbioethanol in petrol should result in a 2.5% cut in CO2 emissions, and isequivalent to removing 1 million cars from the roads.

Wheat to Bioethanol

1 tonne of Wheat Grain

Fermentation

Distillation

380 Litres Ethanol

300 kgBrewer’s grains

300 kg CO2

WaterEnzymesYeast

Bioethanol is one of a series of bioalcohols, with others including biomethanol and biobutanol

Made from cereals, sugar beet, sugar cane and fodder beet Energy content 30% less than petrol Tendency to absorb water A more costly alternative is biobutanol – which is closer to petrol for fuel

efficiency than bioethanol, and does not absorb water, but is not yet produced commercially

Bioethanol can be mixed with petrol at up to 5% by volume without anyengine modification and the manufacturer's warranty still holds

8

Box 4: Biogas and biomethane

Biogas is produced by the process of anaerobic digestion (AD) frombiodegradable organic residues including agricultural slurries, food, vegetableand garden wastes, sewage and source-segregated municipal waste

Normally produced as a mix of 60% methane and 40% CO2

Biogas can be used to generate electricity with some surplus heat, Biogas can be upgraded, by removing the CO2, to produce biomethane (at

least 95% methane) and can power gas vehicles14 or could be injected intothe national gas grid

Anaerobic digestion

AD is a process in which biodegradable waste is decomposed in the absence ofoxygen in a sealed environment over a period of 25-30 days (rather than 20+years if in landfill). This prevents methane (24 times more polluting than CO2)from escaping into the atmosphere. AD produces:• Biogas (mainly methane plus CO2);• A digestate which can be liquid or solid. This can be used as a nutrient-rich

soil conditioner.

Refined tobiomethane

Vehicles

Sewage

Kitchen & garden waste

Manure & slurry

Food waste

Anaerobicdigestion

Biogas

Gas CHP

Digestate Land

Refined tobiomethane

Vehicles

Sewage

Kitchen & garden waste

Manure & slurry

Food waste

Anaerobicdigestion

Biogas

Gas CHP

Digestate Land

Sewage

Kitchen & garden waste

Manure & slurry

Food waste

Anaerobicdigestion

Biogas

Gas CHP

Digestate Land

There are many benefits to biogas and biomethane production including:• Reduction of organic waste entering landfill• Reduction in greenhouse gas emissions of 75-200% compared to fossil fuels• Prevention of methane emissions• Reduction of waste transportation, when the AD plant is located near the site

of waste production• Stops effluent (e.g. from intensive rearing units) from entering water courses -

helping to meet the Water Framework Directive.

David Milliband has just requested that the Environment Agency and Defra develop an AD protocol and digestate standard for the digestate. This will deregulate the digestate from being classed as a waste, making it easier to apply to land, provided it conforms to a preset standard. Renewables East have been lobbying for this digestate protocol.

14 http://www.ngva.co.uk/index/fuseaction/site.home/con_id/5083

9

4. Biofuel regulatory policy

The biofuel industry involves many stages and sectors, and is regulated by EU andUK Government policy. The following sections summarise the current regulatorypolicies and looks at each stage of biofuel production in turn, and how they arecontributing to the biofuel industry regionally, nationally, in europe and globally.

4.1 Policy

4.11 EU Policy

European Biofuels DirectiveThe EU has non-binding legislation in place, the European Biofuels Directive15, whichsets indicative targets for biofuel use of 5.75% by energy, which is equivalent to 8%by volume by 2010. Earlier this year the European Commission made proposals for anew Energy Policy for Europe which includes a binding 10% target for biofuels by2020 (and a binding 20% target for the overall share in renewable energy by 2020),to be accompanied by the introduction of a sustainability scheme for biofuels.Proposals are currently being drafted for incorporation into legislation.

One of the main barriers to achieving the EU 8% by volume target is the limitation of a maximum of 5% by volume of bioethanol in petrol and biodiesel in diesel in current vehicles (EU Biofuels Directive). This corresponds to only 3.3% energy content. A higher energy share could be achieved by increasing the volume limit to 10%. This is the subject of a current review by the European Commission. If this limit cannot be increased, the introduction of 8% biofuels into the petrol stream would depend on new pure biofuel, biomethane and E85 (85% bioethanol, 15% petrol mix) vehicles, in addition to current vehicles running on 5% biofuel blends (with no vehicle modifications required)16.

Fuel emissions The EU CEN (European Standardisations Committee) Fuel Committee is a forum of the fuel industry, the automotive sector and others, and is involved in establishing fuel standards. Ongoing discussions include warranties, proposed new fuel mixes (e.g. E10, E20, B10) and engine emissions. UK distributors are concerned that more fuel mixes will mean more pumps.

The European Commission Technical Standards committee has reviewed the European fuel quality standards, and is proposing an annual 1% cut in fuel emissions between 2011 and 2020 by improving petrol and diesel fuel quality and introducing transport fuel with a 10% biofuel content17.

The European Commission will release draft legislation later in 2007 on the proposal to cut transport emissions of new cars to less than 130g CO2 per kilometre. The member states and the European Parliament will then decide whether to accept, amend or reject the recommended policies. Biofuel sustainability standardIdeally, all biofuel used in the UK should be grown and produced in Europe. There are a range of environmental and sustainability issues surrounding biofuel production in the tropics, as detailed in box 10. There is currently no sustainability standard for biofuels. Until then the industry is bound by WTO rules, so it is not possible to determine where or how biofuels are produced in UK legislation.

15 http://europa.eu/scadplus/leg/en/lvb/l21061.htm16 http://www.parliament.uk/documents/upload/weeudbioembswe.doc17http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/120&format=HTML&aged=0&language=EN&guiLanguage=en

10

The RTFO consultation indicates that from 2008, renewable fuel producers can volunteer to provide a report detailing the sustainability and carbon savings of the fuel to establish a voluntary benchmarking scheme until an appropriate mandatory scheme can be implemented. Largely due to the influence of the UK Government, an EU standard to verify the sustainability of feedstock production for all biofuels, and also for fuel quality is being developed, but it is unlikely to be implemented until 2009. The UK Government and organisations including Bioenergy Trade and WWF have lobbied for World Trade Organisation (WTO) and EU standards to be set as soon as possible to avoid unsustainable biofuels being diverted to countries with lower or no sustainability standards. These standards would:

set clear environmental standards to ensure that bioenergy production really does bring a significant decrease in greenhouse gas emissions while preventing harmful impacts on biodiversity

create a standardised tool to assess the climate benefits and environmental sustainability of a given biofuel

make sure that we don’t address one problem while creating another provide incentives and reward improved production practices drive the research and development of efficient technologies for second

generation biofuels, such as lignocellulosic for ethanol or Fisher-Tropsch for biodiesel

It is important that all standards include the full life cycle analysis in order to calculate the carbon saving of the biofuel. This must include all aspects of production and processing – from seed to wheel.

EU ReportsThe Biofuels Research Advisory Council (BIOFRAC) was established as the first step to create a European Biofuels Technology Platform. They have produced a report on EU biofuel production by 2030, highlighting potential opportunities in the EU for the biofuel industry18.

The European Environment Agency (EEA) report: “How much bioenergy can Europe produce without harming the environment?”19 reports on European land available for energy crop production, including biofuels for transport.

4.12 UK PolicyThe UK biofuels industry is entering an important phase and needs clear policy signals that will provide long term confidence in the market and encourage sufficient investment in biofuel plants and infrastructure to develop the domestic market.

Four Government departments are responsible for developing UK biofuels policy: Treasury and HM Customs and Excise – Taxation and fiscal issues; Defra – Sustainable development, climate change, air quality, rural issues,

promotion of agricultural feedstocks to biofuel products; DfT – Use of low carbon fuels for transport; and DTI – Renewable energy policy and overall application.

Fuel dutySince 26th July 2002 the fuel duty rate has been 20p per litre (ppl) lower for biodiesel than for ultra-low sulphur diesel (announced in 2002 Budget). The same reduction for bioethanol, compared to ultra-low sulphur petrol came into effect on 1st January

18 http://www.biomatnet.org/publications/1919rep.pdf19 http://reports.eea.europa.eu/eea_report_2006_7/en

11

2005. The arguments for and against increasing the fuel duty rebate are discussed in Box 5. In Budget 2004 there was a commitment to consider the potential of fuel duty incentives to support refining vegetable oils at oil refineries and to consider the application of enhanced capital allowances20 to biofuel processing plants.

Box 5: Fuel duty incentives – biofuel rebate debate

For a rebate:It costs more to produce biofuels than fossil fuels. In a ‘voluntary’ market, biofuels need a fuel rebate to stimulate their growth. The EU Biofuels Directive is not yetmandatory and hence the UK initially went down the fuel rebate route, but precise support is difficult to judge given fluctuations in oil, crop and biofuel production costs.

Many believe the UK rebate is not sufficient for biofuels to compete with conventional fuels; compared to many other EU countries, such as Germany, where there has been full fuel tax rebate to encourage the establishment of a sustainable biofuel industry21. In addition, industry has consistently called for higher duty incentives than the current, typically of the order of 25ppl to 30ppl. Depending on other market factors at a given point in time, duty incentives at these levels could substantially increase the penetration of renewable fuels in the UK, and consequently increase carbon savings in the transport sector, albeit at a cost to the general taxpayer.

Against a rebate: The treasury claims that the 20ppl rebate currently costs the Exchequer £59 million per year. Increasing this further would create additional, ongoing costs to the Exchequer. At 5% biofuel sales, a 25ppl duty incentive would cost £600 million. A 30ppl incentive would cost £720 million. Is this politically acceptable? No rebate would inevitably mean an increase in price at the pumps to the public. However it is arguable that this may be the correct approach following the idea that ‘the polluter (the car driver) pays’.

A number of measures relating to biofuels were also announced in the 2007 Budget Report22:

The extension of the 20ppl biofuels duty incentive until 2009-10. In addition, the RTFO buy-out price (the price paid by fuel suppliers who fail to meet their obligation for the first year of the RTFO) will be set at 15ppl in 2009-10.

Following consultation, HMRC (HM Revenues and Customs) will relax requirements for small biofuels producers to register and submit returns and reduce the requirement for all but the largest producers from monthly to quarterly returns.

The Government will extend the duty incentive for biogas at least at its current level until 2011-12, providing certainty to the industry.

A 2% company car tax discount for company vehicles capable of using high-blend bioethanol E85 will start in April 2008.

The Government intends to permanently reduce the current duty rate for biofuel/rebated gas oil mixtures.

Subject to obtaining State aid clearance, the Government will introduce a 100% first-year allowance for biofuel plants that meet certain qualifying criteria, and which make good carbon balance inherent.

20 Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. This can deliver a helpful cash flow boost and a shortened payback period.21 http://www.hie.co.uk/HIE-economic-reports-2005/sac-biodiesel-executive-summary.pdf22 Budget 2007 report Chapter 7: Protecting the Environment, paragraphs 7.44 - 7.56: http://www.hm-treasury.gov.uk/media/73B/74/bud07_chapter7_273.pdf

12

The Government will introduce a payable enhanced capital allowance for companies not in taxable profit to ensure both profit and loss making firms have an incentive to invest in the cleanest biofuel plants.

The Government will propose the establishment of an EU-US taskforce to facilitate the exchange of skills, knowledge and research and development on biofuels, including the development of ‘second generation’ biofuels.

The Government will maintain the CNG differential with main road fuels in 2009-10, and will decrease the LPG differential by a further 1ppl.

Renewable Transport Fuel ObligationThe Renewable Transport Fuels Obligation (RTFO) was announced in November 2005 as the UK mechanism for introducing the Biofuel Directive, and will be introduced in April 2008. This will force oil companies to ensure that a certain percentage (2.5% by 2008, 3.75% by 2009 and 5% by 2010) of their fuel sales is from a renewable source i.e. biofuels. These targets are on total sales in the UK. Initially the targets will be achieved predominantly from biodiesel, with bioethanol coming into play by the end of 2009. Companies will be required to report on the level of carbon savings achieved and the sustainability of their supplies.

Biofuel targets are generally quoted in terms of energy in EU legislation but volume in the UK. For clarity, the main targets are summarised in the table 2. This difference could lead to confusion on whether EU targets are being reached in the UK.

Table 2. Comparison of biofuel content by volume and by energy contentTarget By Volume % By Energy %RTFO 2008 2.5 1.7RTFO 2009 3.75 2.5RTFO 2010 5 3.3EU target 2010 8 5.75

By the end of 2005 UK use of biofuels had reached only 0.3%23. The Government has estimated that once the level of the RTFO reaches 5% in 2010/11, it will save around a million tonnes of carbon per annum, which is roughly equivalent to taking a million cars off the road. Not all biofuel in the UK will be produced here, but Eastern European countries will have a large part to play in biofuel crop production.

The Government has recently consulted on the implementation of the RTFO, and looks beyond 2010 by proposing various criteria for whether the RTFO will be increased towards 2020, including setting sustainability standards for biofuels. It is intended that the RTFO will eventually replace the fuel duty incentive.

Government publications and reportsThe Government intends to publish a Biomass Strategy in June 2007, which will include the implementation of the action plan set out in the Government’s response to the Biomass Task Force Report (published April 2006)24. The response focussed mainly on biomass for heat and electricity, however there are a number of actions including a promise to review the Government’s approach to anaerobic digestion (AD) and produce a quality protocol for AD digestate, similar to that already produced in Scotland, which will be published in the Waste and Resources Action Plan.

4.13 Regional Policy

23http://www.nfuonline.com/documents/Bioenergy/Biofuels%20Policy%20Statement%20new%20redraft%20November%2010th%202006.pdf24 http://www.dti.gov.uk/energy/sources/renewables/renewables-explained/biomass/government-response/page28196.html

13

East of England Regional Spatial StrategyBiofuels are not specifically addressed in the current draft RSS. The Secretary of State's Proposed Modifications contains two relevant Chapters: Chapter 9 “CO2

Emissions and Renewable Energy” and Chapter 7 “Regional Transport Strategy”.

Chapter 9 contains a clear statement that 'carbon reduction is particularly urgent and challenging' in this region due to the combination of the vulnerability of the region to the effects of climate change and the level of development proposed. Chapter 9 contains two draft policies, ENG1 (CO2 Emissions and Energy Performance) and ENG2 Renewable Energy Targets. ENG1 is essentially concerned with the energy efficiency of new residential and commercial development and ENG2, contains renewable energy targets. Both policies reflect the recommendations of the Inspector following the Examination in Public, in referring to the need for revision and development through the review of the RSS.

Chapter 7 contains 15 policies; Policy T1 describes objectives including 'ensuring {that} the transport sector makes an appropriate contribution to the required reduction in greenhouse gas emissions' and defines outcomes including "reduced greenhouse gas emissions". The current strategy however, does not explain how this will be achieved.

The RSS is due to be published later in 2007 with its first review commencing at about the same time. There is a clear requirement for the review to address CO2

emissions and renewable energy in a much more comprehensive manner than at present and for the role of the transport sector to be fully incorporated. EERA have recently commissioned consultants to undertake research to inform the review ("Placing Renewables in the East of England"). This work focuses on electricity generation from RE technologies. It is recommended that further research be undertaken by EERA focussing on 'biofuels, CO2 reduction and the transport sector', for the RSS review.

East of England Regional Economic StrategyBiofuels were recognised as an important growth area for the region's rural areas supported in the current RES under Goal 8: An exemplar for the efficient use of resources, with actions to “influence the fiscal and delivery landscape by promoting policies such as biofuels taxation, grants and CAP reform for the benefits of the renewable energy sector”; and to “assist in the development of sites and markets for economically viable biofuel production and associated technologies”. These actions have been delivered through Renewables East, initially solely funded by EEDA, who were praised in a recent review of Goal 8 by EERA for their role in developing the biofuels market in the region. The RES is currently being reviewed and will undergo a formal consultation period from Sept-Nov 2007, which is an opportunity to ensure biofuels remain a priority work area for EEDA to support.

5 Biofuel crops

5.1 AgricultureThe agricultural sector contributes 7% of the UK’s total greenhouse gas emissions (47% of the UK’s methane emissions and 67% of nitrous oxide) and farmers are on the frontline both in terms of adapting to climate change and in mitigating its effects25.

25Sustainable Farming & Food Strategy Forward Look 2006: http://www.defra.gov.uk/farm/policy/sustain/pdf/sffs-fwd-060718.pdf

14

The National Farmers' Union (NFU) wishes to see a thriving domestic UK biofuelindustry develop, comprising biodiesel from oil seed rape and bioethanol from sugarbeet and wheat26. Some UK growers are already producing crops for biofuels,including wheat for bioethanol production in Spain and oilseed rape for Germanbiodiesel production. A current issue is that the purchasers of biofuel crops requirelong-term contracts with farmers, whereas historically farmers prefer short-termcontracts of 1-2 years.

Biofuel crops can be grown on existing arable land or on set-aside land, as non foodcrops can be grown on set-aside. There are concerns that an increased use of setaside land for non food crops may affect biodiversity. However, set-aside wasintroduced as a production control mechanism not specifically to benefit biodiversityor threatened species. There is currently an overproduction of food cereals in Europe and 559,000 hectares of land set aside in the UK (7% of agricultural land) avoidsfurther overproduction27. Thus the UK has significant capacity to produce energyfrom biofuel crops without compromising food production.

The NFU believe that the most effective support for farmland wildlife is through viablefarm business and targeted habitat management via agri-environment schemes,including Environmental Stewardship and Environmentally Sensitive Areas. In theEast of England, over 810,000ha of land is in Entry Level Stewardship (approx 51%of agricultural land; over 4,100 farmers).

There are concerns that using set-aside land for non food crops may increaseagrochemical and water use, and increase CO2 emissions (especially due to fertiliseruse). If set-aside is reduced, farmers will use the land for crop production, withenergy crops being one of their options. It is important to consider how to reduceinputs of biofuel crops to minimise possible impacts.

In the East of England in early 2007, four farmer training events, run by NaturalEngland’s Farm Advice Unit, raised awareness of green energy, including biofuelproduction. A number of farmers expressed an interest in growing crops for biofuels,provided there was a financial incentive for doing so. The NFU have worked withRenewables East to raise awareness of how farmers can convert their waste toenergy. EERA should continue to support events which raise awareness of biofuelsto all business and public sectors.

5.2 Environmental impacts of UK biofuel crops

In the UK the crops most suitable to produce biofuels are oilseed rape (for biodiesel),wheat and sugar beet (for bioethanol). In the East of England these are alreadygrown, in amongst a range of other crops. An increase in the production of thesecrops may add to any existing environmental impacts; existing research in this areaneeds to be understood in a regional context.

The rural mosaic of arable land in the region, plus the surrounding hedges, ditches,grassland and pockets of woodland ensure that there are many diverse habitats. Anumber of rare farmland birds use arable crops and the adjacent grass buffer stripsand hedges for nesting and finding food. Details about the environmental, landscapeand biodiversity issues of oilseed rape, sugar beet and wheat can be found in Boxes6, 7 and 8, respectively. The environmental impacts of cereal and rape crops in the

26http://www.nfuonline.com/documents/Bioenergy/Biofuels%20Policy%20Statement%20new%20redraft%20November%2010th%202006.pdf27 http://www.nfuonline.com/x10124.xml

15

UK are covered in greater detail in a Home Grown Cereals Authority (HGCA) report28.

Box 6: Oilseed rape

Oilseed rape is the most productive oil bearing crop in the UK. Inputs are similar to most other combinable crops. Herbicides tend to be mainly used in the autumn and fungicides from late winter onwards with some applications at or before flowering, depending on the season. Insecticides are frequently used at early crop emergence in the autumn. An additional treatment is sometimes applied during flowering for weevil control. Farmers are advised to spray in the morning or evening to reduce impacts on other invertebrates.

Environmental benefits: In crop rotations rape enhances the yield of following wheat crops. Reduces nitrogen requirements of the following crop (so less fertiliser needed). Root structure is beneficial to soil structure.

Negative environmental impacts: Slug pellets (coloured blue so birds do not eat them) are often used during

establishment, and in the following crop. High levels of nitrogen are applied to oilseed rape.

Biodiversity benefits: Flowers are a good pollen and nectar source for many insects including bees. Insects in the crop and broad leaved weed seeds provide food for young birds. Many birds including linnet, reed buntings and corn buntings (rare farmland birds)

use the crop to nest and feed. Spilt seed and stubble are very beneficial after harvest for bird food.

Other issues that must be considered are the impacts that biofuel crops may have on the landscape, historic environment and the need for irrigation. The landscape issues for growing these biofuel crops are minimal, as they are already grown in this region. This is in contrast with the biomass crops such as miscanthus and willow, which are being introduced in this region for heat and energy production.

English Heritage has published a report looking at biomass energy and the historic environment. They highlight that the Planning Policy Statement 22 (PPS22) must be adhered to for land-based renewable energy developments29. The effects of any proposed bioenergy project on the historic environment must always be considered at the planning stage.

Sugar beet is rarely irrigated, even when grown on sandy soil. Between 4500-14000 m3/ha of water can be use per growing season30. Oilseed rape and wheat are not irrigated, so there will be no increase in water demand if there is an increase in production of these crops.

Although all three crops require agrochemical input to obtain good yields, the UK agrochemical guidelines are stringent and include nitrate vulnerable zones which restrict nitrogen inputs, and thus minimise environmental impacts.

28 www.hgca.com/publink.aspx?id=217729 English Heritage. 2006. Biomass Energy and the Historic Environment.30 John Nix. 2005. Farm Management Pocket Book. Amdersons Centre.

16

Box 7. Wheat

Input types are similar to most other combinable crops, although quantities will vary. Wheat utilises the majority of nitrogen applied, so there is minimal nitrogen leaching. Aphids are the main pest problem, and are controlled with an insecticide spray in the autumn when few non-target species are around.

Environmental benefits: Good for preventing soil erosion, as long as not drilled late Rough seedbed reduces erosion Wheat utilises nitrogen so minimal nutrient leaching

Negative environmental impacts: High levels of nitrogen are applied

Biodiversity benefits: Skylarks nest in wheat, although winter cereals can be difficult for birds to use,

hence skylark plots (in the Environmental Stewardship Scheme) can enhance nesting opportunities.

Wheat stubbles provide feeding opportunities for a range of birds

Box 8. Sugar beet

Environmental and biodiversity benefits: Inputs – low nitrogen The stubble from the previous crop is left in the field before sowing, which can

reduce run-off and erosion, and provides good winter foraging for seed-eating birds (grey partridge, skylark, sparrows, finches and buntings).

Birds including lapwing, stone-curlew and skylarks (rare farmland birds) use the crop to nest and feed.

In this region sugar beet tops are eaten by wintering geese (including pink footed geese) and wildfowl.

Negative environmental impacts: Sugar beet is vulnerable to weed competition, so a clean crop is important. This

is achieved with herbicides and some mechanical weed control between rows. Heavy rain following seed bed preparation (before sowing), when on light to

medium soils on sloping land may cause run-off. During/after harvest there may be some soil erosion and compaction with late lifted crops.

Second generation biofuelsBioethanol and biodiesel are classed as “first generation biofuels”. Over the comingdecades these may be succeeded by “second generation biofuels”, from moreadvanced processes. Second generation transport biofuels offer a number of keybenefits over both conventional fossil transport fuels and the current generation ofbiofuels. These benefits include the ability to achieve significant ‘well-to-wheel’reductions in greenhouse gas emissions, combined with dramatically reduced landrequirements compared with first generation biofuels since most biomass, includingmany organic wastes, can be used as feedstock31.

A wide range of crops and trees are also being considered for second generationbiofuels, with the whole plant being used, rather than currently e.g. just the seed of

31 DTI 2006 Global Watch Mission Report: Second Generation Transport

17

oilseed rape, or the tap root of sugar beet. These technologies are still in thedevelopment stage. More on second generation biofuel research is in section 4.7.The positive and negative environmental impacts of these existing and new crops willneed to be considered.

Market price of biofuel cropsThe market price of crops is currently a major issue for farmers, especially for sugarbeet, due to the recent EU reform on sugar beet as the amount of sugar beet grownin England is set to reduce dramatically as sugar prices go down. This is discussedfurther in Box 9.

Defra offers funding for growing biofuel crops, including wheat and oilseed rape. Farmers can receive the single farm payment for biofuel crops grown on set-aside, and energy aid (€45/ha)32 is available for crops grown on non-set-aside land. The latter is funded by the EU Energy Crop Premium, and is subjected to a maximum guaranteed area of 2 million ha throughout the EU. If the area claimed exceeds this, payment per ha will be reduced accordingly. This funding is not a major driving factor in farmers’ decisions to grow energy crops in the UK.

Box 9. EU Sugar reforms

The recent EU reform on sugar beet means that the amount of sugar beet grown inEngland will reduce as sugar prices go down. For nearly 40 years the EU hasguaranteed minimum prices for sugar as part of the Common Agricultural Policy, withEU sugar prices over four times higher than the global market rate. Brussels alsopays out export subsidies to get millions of tons of sugar a year off its market, helpingto keep EU prices high and support European farmers.

The EU sugar reform began in July 2006, cutting the prices offered to Europeansugar farmers by 36%, bringing the EU's sugar rules in line with global frameworks.The changes were demanded by the WTO, but EU farmers and sugar firms will sufferjob losses. British Sugar has announced the closure of two of its six factories, one inYork and the other at Allscott in Shropshire.

Sugar beet has been one of few genuinely profitable crops, and this new reform willmean that for some UK farmers, growing sugar beet will no longer be profitable,especially by 2009, when the minimum price will be £29/tonne. Increasing yield andreducing production costs are the main mechanisms for increasing profits. If thesugar beet crop is reduced or disappears as a result of the economics of growing thecrop, the ground nesting birds that depend on it will also decline. For example,lapwing (rare farmland bird) use sugar beet for nesting and foraging in the spring andsummer, and they feed on the winter stubble.

Other biofuel cropsIn addition to wheat, oilseed rape and sugar beet, biofuels can also be made from other crops in the UK, e.g. grasses that can be harvested 2-3 times per year. In Africa, the Americas and Asia, palm, sugar cane and soy are grown for biodiesel production, but there is concern over the negative environmental impacts caused due to the change in land use, such as deforestation for palm production. Box 10discusses the environmental impacts of biofuel production from soy and palm oil. This emphasises the importance that the EU standards being developed are clear

32 The Energy Aid Payments Scheme enables aid to be claimed in respect of crops which are grown to be used for the production of energy (for heat, electricity or transport fuels) on land which has not been set-aside.

18

that biofuels must only be produced from sustainable crops and contribute to reducing global CO2 emissions, rather than crops grown on recently cleared land.

Box 10: Environmental impacts of biofuel production from soy and palm oil

One of the main threats to the sustainability of biofuel production is the clearance of land in the tropics to increase the area of biofuel crop production. In S. America areas of bush savannah are cleared to grow soy for animal feed (currently exported to Europe and other industrialised countries), and potentially also for biodiesel. Oil palm plantations are responsible for deforestation in Indonesia, Malaysia, Columbia and Cameroon.

In 2006, the Indonesian Government announced plans to clear three million hectares of forest to create oil palm plantations dedicated to biodiesel production. Losing such large areas of precious habitat will cause a decline of threatened bird species like the Sumatran Ground-cuckoo and also threatened mammal species such as the Orang-utan33. Land conversion is spurred by fast rising palm oil prices driven by the growing global demand for biodiesel34. For example, it is estimated that Malaysia will need to open up another ten million hectares for oil palm plantations in order to meet global demand for palm oil biodiesel35.

As well as threatening biodiversity, the clearance of natural and semi-natural habitats such as forests, savannah and grasslands causes huge quantities of greenhouse gases to be emitted. This release in soil carbon may be less than what will subsequently be fixed by the cultivation of energy crops. Calculations suggest that the greenhouse gas payback time for ploughing grassland for biofuels will be 17 to 100+ years; much more for rainforests. Land-use change, particularly in the tropics, is already responsible for approximately 20% of global emissions. In addition to environmental and biodiversity impacts, changes in land use also have implications for vulnerable indigenous communities.

The import of biofuels produced from sugar cane, palm oil and soy is not inherently negative, though the costs of transport to the environment must be accounted for. Imported biofuels can make a valuable contribution to sustainable development, but only if they are produced without unacceptable environmental or social costs36.

6 Biofuel production

6.1 Biodiesel Production in the EU

The European Union is so far the world’s largest biodiesel producer, and usesconsiderably more biodiesel than bioethanol37. Biodiesel has been produced on anindustrial scale in the European Union since 1992, largely in response to positivesignals from the EU institutions. There are approximately 120 plants in the EUproducing up to 6,100,000 tonnes of biodiesel annually. Germany, France and Italyare the highest producers in the EU38.

33 http://www.birdlife.org/news/features/2006/06/biofuels.html34 http://www.planetark.com/dailynewsstory.cfm/newsid/39159/story.htm35 Stephenson, T. The Roundtable on Sustainable Palm Oil – Purpose and Progress. Symposium on Sustainable Resource Development. Institute of Directors, London May 18, 200636 http://www.rspb.org.uk/policy/bioenergy/tropics.asp37 http://www.biofuelwatch.org.uk/biofuel_paper.pdf38 http://www.ebb-eu.org/biodiesel.php#eupro

19

A 2006 study by CONCAWE, EUCAR and the European Commission’s JointResearch Council found that the EU could supply a maximum of 5% of road transportfuels from domestic production of sugar beet and oilseed rape, but that this wouldrequire some intensification of agriculture, using all set-aside land for production andincreased rotation of oilseed crops39. There is some concern that this could reducebiodiversity and affect the habitat of some rare farmland birds.

Experience in Germany has shown that a very significant duty incentive can deliverincreased sales. Since the beginning of the 1990s, oilseed rape has been cultivatedin Germany for biodiesel production. Some UK farmers have exported rape toGermany for this market. The biodiesel market developed slowly at first, producing100,000 tonnes by 199940. A 100% duty incentive on biodiesel, introduced in 2004,enabled sales to exceed 2 billion litres in 2005. This means biodiesel is exempt frommineral oil tax and therefore has a price advantage over conventional diesel fuel (upto 10 cents cheaper than conventional diesel). As a result biodiesel is more desirablefor the user both environmentally and economically41. However, the duty incentive isbeing phased out by December 2009, and replaced by an obligation, because of thecost to the Government. This domestic production in Germany created 19,000 jobs,mainly in agriculture.

6.2 Biodiesel production in the UKBiodiesel ingredients, including palm and soy oil are currently imported to the UK to produce biodiesel, hence the majority of UK production plants are on the coast. Oilseed rape and used oil are also used to produce biodiesel. Details of how biodiesel is made are in box 2.

In 2005 the first large scale UK biodiesel plant, Argent Energy, Motherwell started production of up to 25,000 tonnes of biodiesel a year42. This produces biodiesel by recycling by-products (tallow and used cooking oil), meeting the European Standard for biodiesel, EN 14214.

The new Greenergy biodiesel plant at Immingham on the east coast of North England processes 100,000 tonnes of biodiesel per year and their second 100,000t/year facility is due for completion at the end of 200743. Through the Greenergy Field to Forecourt® contract Greenergy buys oilseed rape from UK farmers to use for biodiesel production. In 2006, 10% of the UK oilseed rape crop (which equates to 160,000 tonnes rapeseed) was acquired through this contract for use at the Greenergy plants. The rapeseed is contracted from 1,500 farmers through the agricultural cooperative, Grainfarmers.

Biofuels Corporation has recently opened a biodiesel plant in Teesside. Another large scale biodiesel plant is being constructed in Grangemouth, Scotland44.

A number of small enterprises recycle used cooking oil into biodiesel45, but profitmargins are very small, if at all. There are serious issues with cost of production, what to do with the glycerine which is also produced, and varying fuel quality. Wherethe biodiesel quality is bad, the oil and fat may separate out, with solid fat blocking oilfilters, and preventing the engine from starting in cold weather. Locally producedbiodiesel from used oil is an idea that gets a lot of PR (local fuel etc) but in reality 39 http://ies.jrc.cec.eu.int/wtw.html40 http://www.biokraftstoffverband.de/vdbi/allabout/market.html41 http://www.biokraftstoffverband.de/vdbi/allabout/market.html42 http://www.argentenergy.com/43 http://www.greenergy.com/company/biodiesel_production/index.html44 http://www.scotland.gov.uk/News/Releases/2006/10/1715421145 http://www.biodieselfillingstations.co.uk/region06.htm

20

rarely leads to a huge business success. Selling the fuel to the public involvesstandards and expensive testing for quality assurance. Moreover, the RTFO mayaffect the continuity of such SME operations, and is an issue considered in the recentDfT consultation. The regulations for cooking oil recycling into biodiesel are listed inBox 11.

Recycling cooking oil is unlikely to make a commercially viable contribution toforecourt fuel supplies, but could provide an economically priced fuel forcommunities, agricultural vehicles or vehicle fleets.

Box 11. Cooking oil recycling regulations For production of over 5,000 litres of biodiesel per year an Environment Agency

operating licence is required. Used cooking oil is classed as a hazardous substance, so a waste management

licence is required to collect the oil. Used cooking oil use is regulated by the Pollution Prevention and Control

Regulations 2000. Storage of waste oil for all scales of production is covered by Waste Management

Licensing regulations . To obtain the 20ppl rebate the biofuel must be produced to criteria set by

Customs & Excise (different to the EU Fuel Standard), based on a chemical target of > 96.5% esters.

To sell biodiesel the EU Fuel Standard must be complied with.

6.3 Biodiesel consumption in the UKIn 2006, 169 million litres of biodiesel were sold in the UK, with total diesel sales of around 24,286 million litres. Thus biodiesel made up less than 0.7% of total diesel sales, due to cost, lack of production and availability. An increase in biodiesel production in the UK and the EU is necessary to raise this to the 5% RTFO target by 2010.

In summary, the main reasons why biodiesel is not used more widely are: No incentive for use Very limited infrastructure for high blends Very limited availability of vehicles able to use blends of more than 5%

biodiesel No fiscal or monetary advantage Lack of awareness / knowledge of biodiesel

6.4 Bioethanol production

There is currently no commercial production of bioethanol in the UK – it is allimported. Details of how bioethanol is made are in box 3.

EEDA commissioned a major study on the impacts of creating a domestic UK bioethanol industry46. They calculated that a 100kt bioethanol/year facility processing wheat (from 22,718ha) and sugar beet (from 15,578 ha) would create 970 jobs. They estimated that 12 plants would be required to achieve a 5% blend in all UK petrol.

In 2006, work commenced on the UK’s first bioethanol plant at Wissington nearDownham Market, Norfolk. Planned to come on stream in July 2007, the plant willproduce 55,000 tonnes (70 million litres) of bioethanol from locally grown sugar

46http://www.eastofenglandobservatory.org.uk/observatory/reports/environment/BioethanolFinalReportJune2003.pdf

21

beet47, and has a forward contract to supply Greenenergy. British Sugar have saidthey are collaborating with BP and DuPont to convert production to biobutanol, which is easier to blend with petrol at higher concentrations than bioethanol and has a higher energy content, closer to that of conventional petrol.

Green Spirit Fuels Ltd is constructing a plant at Henstridge, Somerset which is expected to produce 130 million litres of bioethanol per year from 340,000 tonnes of wheat by 2008, enough for one billion miles of motoring48. Ensus is constructing a bioethanol plant in Teesside49.

6.5 Bioethanol consumption in the UK

In 2006, 95 million litres of bioethanol were sold in the UK, with total petrol sales of around 24,629 million litres. Thus bioethanol made up less than 0.4% of total petrol sales. At a 5% inclusion level about 3 million tonnes of CO2 per year could be saved in the UK, being 20%-40% of the Government's total CO2 emissions targets for the transport sector by 2020.

In summary, the main reasons why bioethanol is not used more widely are: No incentive for use Not produced in the UK Very limited availability of vehicles able to use blends of more than 5%

bioethanol No fiscal or monetary advantage Lack of awareness / knowledge of bioethanol

In addition, the main reasons why bioethanol E85 is not used more widely are: No incentive for use Very limited infrastructure Very limited availability of FFVs No fiscal or monetary advantage Lack of awareness / knowledge of E85

6.6 Biomethane production

Details of how biomethane is made via AD are in box 4. There are less than 20 AD plants in the UK but over 3000 in Germany. AD is a proven technology on thecontinent, where biomethane is used to run cars, buses and even trains (e.g. SvenskBiogas in Sweden). Vehicles using liquid and compressed natural gas can also use biomethane, for more information see box 12.

The beauty of biomethane is that no crop necessarily needs to be grown, instead organic residues can be used; either from agricultural or commercial mixed waste, source-segregated municipal waste, or sewage. Thus AD reduces waste to landfill without the need for incineration.

Biogas can be used for heat and electricity by nearby housing or local businesses, or refined to biomethane to power vehicles. The digestate (biofertiliser) will save farmers money by reducing the need for mineral fertiliser (produced by a carbon intensive process) and acting as a soil conditioner. Moreover, if a farmer or group of farmers set up an AD plant for animal effluent, and also take in municipal green and food waste, they can charge a gate fee, which makes AD a more economic business 47 http://www.renewableseast.org.uk/ProjectSummary.aspx?q=a0L1ukLlORcHrUej+aIXJQ==48 http://www.greenspiritfuels.com/index.htm49 http://www.ensusgroup.com

22

proposition. Farm AD plants on slurry alone are not economic given the low energy content of slurries.

Box 12. Gas fuels for vehicles

There are three main gas fossil fuels for vehicles: Liquefied Natural Gas (LNG) Compressed Natural Gas (CNG). Liquefied Petroleum Gas (LPG)50

LPG is best suited to light vehicles such as cars and small vans which normally run on petrol. LNG and CNG are more suitable for HGV vehicles and are widely used on the continent. Diesel engines can be modified to substitute up to 70% of the diesel by LNG or CNG which are 50% of the cost of diesel. Biomethane can replace LNG and CNG. Engine conversion kits have a payback of <2 years.

In Denmark, glycerine (a by-product from biofuel production) is added to AD plants as it has a good energy profile. In Germany crops such as maize are grown as a feedstock for AD plants to produce power and heat. Methane from sewage plants is currently used to generate electricity but could be upgraded to vehicle quality, although more research is needed.

Biogen UK (previously called Bedfordia) is the most recent and modern commercial AD plant in the East of England, located on a farm in Bedfordshire. Slurry from the pig unit (10,000 tonnes) is mixed with local food waste (30,000 tonnes). The company is paid a gate fee for receiving the latter making the project economically viable. Biogas is used to generate 1Megawatt of electricity and the digestate is applied as a biofertiliser to 800ha of adjacent land owned by Bedfordia Farms.

Other UK AD plants include Holsworthy in Devon and Greenfinch in Ludlow and several smaller plants in Scotland.

Biomethane may be best suited to captive fleets e.g. buses, waste and recycling carts, taxis, farm vehicles. This would reduce the required distribution infrastructure.If a council waste management site includes an AD plant for the organic waste fraction, this gas could be stored on site and used for council vehicles. Sheffield are considering building a biogas plant using garden and kitchen waste to produce biomethane to power its fleet of 300 council vans.

6.7 Biomethane consumption in the UK

Cars that run on CNG or LNG could also run on biomethane. However, less than 0.4% of the nearly 33 million vehicles licensed in the UK run on LPG or bi-fuel (LPG in combination with petrol or diesel), with only 500 running on CNG51. The UK is alone in having a reducing number of vehicles operating on CNG and LNG.

In summary, the main reasons why gaseous fuels are not used more widely are: Little inclination to use in spite of fuel costs being 50% that of diesel Very limited distribution infrastructure

50 LPG is propane and butane, with a 20% saving on CO2 over petrol and a 1.8% saving compared with

diesel. It costs £1,500-£2,000 to convert a car or a light van for LPG use. There are more than 1,200 LPG refuelling stations in the UK, with around 140 in the East of England. http://www.boostlpg.co.uk/driver_industry/why_LPG.htm has a list of LPG refuelling stations.

51 http://www.dft.gov.uk/pgr/roads/environment/rtfo/notesbiodiesel

23

Very limited availability of gas-fuelled vehicles in the UK with support facilities Lack of awareness and experience of gaseous fuels – a culture amongst fleet

operators that liquid fuels are the only option No fiscal or monetary advantage**

** The BSOG (Bus Service Operators Grant) reduces the fuel duty payable by operators by 80% and hence there is little financial advantage to adopt alternative fuels.

The main incentives for using biomethane are: Greatly reduced carbon footprint compared to all other fuels HGVs that run on gas are quieter, which could present logistical advantages Reduced emissions of diesel particulates which can affect health Many environmental benefits - see box 4

7 Biofuel use

7.1 Blending with petrochemicals

Biodiesel has to be mixed at the refinery whilst bioethanol can be mixed at distribution depots e.g. the Essex terminal. Greenenergy, who supply Tesco fillingstations, blend imported bioethanol from Brazil with petrol at their Thames EstuaryPlant before distribution.

UK refiners supply most of the fossil fuel sold in the UK. The implementation of theRTFO will force refiners to source biofuels from the global market, and they willfavour long-term contracts with large biofuel suppliers.

7.2 Filling stations

There are a number of implications for filling stations in supplying biofuel blends oftransport fuels, including:

Sufficient demand for higher blend fuels (such as E85). Additional pumps as more blends come onto the market. Specialist distribution areas for biomethane Cleaning of storage tanks - required before bioethanol blends can be stored.

As all cars can run on a mix of up to 5% biofuel + 95% fossil fuel, no extra pumps will be required for 5% biofuel blends (pumps currently used for diesel and petrol can be used). However, an extra pump is needed for E85.

5% biodiesel blends are already available in some UK petrol stations. Morrison’s and Tesco have taken the lead in providing biofuels to the public. In the East of Englandbiodiesel can be purchased in at least 33 fuelling stations (in some cases this is 5%biodiesel + 95% diesel), but no biomethane is available.

Renewables East worked with the Energy Saving Trust, Saab, Morrisons and Harvest Energy Petroleum to introduce the first Harvest Bioethanol E85 pump in Norwich in March 2006. E85 (85% bioethanol, 15% petrol) is currently only available at Morrisons petrol stations, with five in the East region: Norwich, East Dereham, Lowestoft, Diss and Ipswich. Morrisons intend to expand E85 availability as they modernise forecourts, provided there is a government investment in supporting E85. Lobbying is required for biofuel blends (e.g. E85).

24

Tesco, who have a 25% stake in Greenenergy, sells 5% bioethanol blendedunleaded petrol in 185 forecourts in London, South East and North West, and 5%biodiesel is being rolled out in London and the South East.

7.3 Vehicles

The Bus Services Operator Grant (BSOG) is a grant paid by the DfT to reimburse bus operators for some of the excise duty paid on the fuel consumed in operating eligible local bus services52. This varies according to fuel type, with the rates currently (May 2007) as follows: diesel and 5% biodiesel 39.21ppl, petrol 36.83ppl, LPG and CNG 10.81ppkg. Thus there is no incentive for bus operators to use biofuels.

Car manufacturers are starting to address the issue of new biofuels coming into the market place, with flexi-fuel vehicles (FFV). The Saab 9-5 BioPower FFV and the Ford Focus FFV can both run on BioEthanol E85 or on petrol, with no adjustment required by the driver. The 1.8-litre Focus FFV offers a 70% reduction in CO2

emissions compared to the same petrol-only model, when run on bioethanol53.

E85 gives reduced mpg (miles per gallon) than petrol, due to bioethanol having lower energy content than petrol. Thus the price for bioethanol should be lower than petrol, in order to pay a comparable amount per mile. True, some people and companies will pay more for a “greener” fuel, but the majority will buy whichever fuel gives the best mpg.

Lotus is developing the Biofuel Supercar Exige 265E, which will run on E85. They are also developing a variable compression, two-stroke car engine which will also be able to run on varying biofuel/fossil fuel mixes. They are seeking funding for this research.

In Brazil, 60% of all new cars can run on a fuel mix made up of 85% bioethanol. Sweden is the European forerunner with approximately 23,000 flexifuel vehicles (in 2005). Ford has pioneered the Swedish market offering its Ford Focus FFV since 2001, first arriving in the UK in 2005.

In Sweden, in addition to benefiting from E85 fuel that is 25% cheaper than petrol, FFV users are also exempted from city congestion and parking charges, as well as qualifying for a 20% reduction in benefit tax if they are company car drivers. The Swedish government wants 25% of fuel stations to have an E85 pump by 2008, and to halve the current use of petrol and diesel road fuel by 2020.54 Renault suggests that 50% of new EU cars in 2009 will be flexifuel.

Under the current European Motor Fuel Standard, the maximum limit for blending biofuels is 5% by volume, with no vehicle modification required. Fuel quality standards will need to be revised before vehicles can run on blends greater than 5% without affecting the warrantees.

Renewables East are lobbying for fiscal incentives to assist niche fuels such as E85, such as changes in company car tax.

52 http://www.dft.gov.uk/pgr/regional/buses/busgrants/bsog/53 http://www.carpages.co.uk/ford/ford_focus_02_09_05.asp54http://www.telegraph.co.uk/motoring/main.jhtml?view=DETAILS&grid=A1&xml=/motoring/2006/11/25/nosplit/mfsaab25.xml

25

8 Research

Given the regional research competence and a strong East of England automotivesector, research is a very real opportunity for the region. Many researchers areoptimistic that new technologies could, in 5-10 years time, produce secondgeneration biofuels from more advanced processes. Those technologies includelingo-cellulosic technology for bioethanol and Fischer-Tropsch gasificationtechnology for biodiesel55. There is a debate as to whether gasification is economic,with some details in a recent DTI report56. In future, not just agricultural products buta wider range of feed stocks including woody material (forestry residues and fast-growing trees), grass, seeds, nuts, pulses, algae and micro-organisms could be usedto make biofuels for transport.

Research is focussed on using the whole plant to produce biofuels, rather thancurrent methods that only use certain parts, e.g. the seed of oilseed rape, or the taproot of sugar beet. Allowing these technologies to develop may offer much greatercarbon savings than first generation biofuels.

The British Bio-Alcohols Group has recently been established to investigate secondgeneration fuel production, which includes researchers from UEA, John InnesResearch Centre and the Institute of Food Research. In addition, the Biotechnologyand Biological Sciences Research Council (BBSRC) has recently announced£13million of research grants to investigate the improvement and optimisation ofcrops for use as biofuels57. The BBSRC already funds a range of bioenergy projectsat institutes in the region.

The BioREGen project being undertaken by Renewables East is aimed at diverting materials from landfill and adding value to them by the recovery of energy as renewable heat or power. Projects are provided with free technical, regulatory and planning advice. Technologies being considered are anaerobic digestion (methane production for energy), gasification and combustion.

Renewables East are very involved in seeing how research can be brought togetherwith the commercial sector – this is an area where lobbying could assist, and ERPmay wish to endorse the research into new biofuels that is taking place in the region.

9. Conclusion

This report has outlined a range of issues related to biofuels, which are summarised in the table below:

Table 3. Summary biofuel issuesLimitations to wider use of biofuels in the East of England

Opportunities for overcoming limitations

Little inclination to use biofuels Raise the profile of biofuels in the region by influencing policy and increasing public awareness

Very limited distribution infrastructure and availability of biofuels

Captive fleets are an excellent way ofusing biofuels, without the need forextensive distribution networks.Better understanding of the theoretical capacity and limitations of biofuel

55 Greenpeace 2006 Over a Barrel: Reducing the UK and Europe’s Oil Dependency56 DTI 2006 Global Watch Mission Report: Second Generation Transport57 http://www.bbsrc.ac.uk/science/initiatives/bioenergy.html

26

production within the East of England needed

Very limited availability of vehicles for E85 and biomethane

Raise the profile of biofuel vehicles in the region.Encourage further research to expand the number of vehicles able to use high concentrations of biofuels.

No fiscal or monetary advantage The RTFO will ensure a certain volume of biofuels is used.

Biofuels produced in the UK and EU offer domestic fuel security, and can make a contribution to reducing CO2 emissions from transport, but only as part of an integrated strategy that addresses other issues, such as congestion, and with suitable sustainability standards to ensure reductions in CO2 emissions are achieved without compromising the landscape, historic environment and biodiversity. This must also be balanced with the effects increased biofuel crops will have on the food crop market.

10. Outcomes and recommended actions for the EERA Environment andResources Panel

From the report a number of areas that require further work, influence and support have been identified, which have been categorised under 3 outcomes. This if followed by the three actions which RETAG recommends that the Panel focus on.

Outcome 1. Better understanding of the theoretical capacity and limitations of biofuel production within the East of England in the context of EU and UK policy.

i. It is important to know theoretical capacity and limitations for growing biofuel crops in the East of England, and where they can be processed into biofuels. Existing information needs to be reviewed and focussed for this region.

ii. There is considerable existing data on the biodiversity and landscape impacts of biofuels, including a recent report by the European Environment Agency, which need collating and summarising.

iii. To lobby for the development and implementation of sustainable biofuels certification at EU level as soon as possible and interim measures to prevent the production and use of biofuels from unsustainable sources.

Outcome 2. Raise the profile of biofuels in the region by influencing policy and increasing public awareness.

i. The EERA-led study on “Placing Renewables in the East of England” study does not consider the biofuel production potential of the region. A similar report but with a focus on 'biofuels, CO2 reduction and the transport sector' would help develop Energy and Transport related policies to inform the review of the RSS due to start in 2007.

ii. Ensure continuing support for the biofuels industry from EEDA through contributions to the RES review process, including the consultation that will start in Sept 2007; particularly to develop the infrastructure to support high-blend markets and small scale production which are less likely to benefit from the RTFO.

27

iii. To lobby for fuel rebates or other tax incentives to support higher blendedfuels and smaller local production which are less likely to benefit than lowblend mass market fuels from the RTFO.

iv. Encourage local authorities within the region to introduce exemptions orreductions for parking permits and congestion charges, if schemes areintroduced, for Flexi Fuel Vehicles and other biofuel or fuel efficient vehicles.The Greater London Authority however have not agreed to a congestioncharge waiver because Flexi Fuel Vehicles can also run on unleaded petroland only the driver knows what fuel is being used.

v. Lobby for company car tax reductions for Flexi Fuel Vehicles and otherbiofuel or fuel efficient vehicles. Having a reduced company car tax for flexifuel vehicles could work by putting the onus on companies to producereceipts to prove that a certain % of E85 fuel has been used over the year.

vi. Support for the use of biofuels within the region by encouraging Government departments, County Councils, Local Authorities and the private sector to invest in high blend biofuel vehicles fleets. In addition to lobbying government to overcome barriers that make alternative fuels economically unattractive such as the Bus Service Operators Grant.

Outcome 3. Support for academic and commercial R&D to further improve and advance biofuels.

i. Greater recognition and support for the academic and commercial researchinto new biofuels that is taking place in this region. There is a huge potential in the sector of research for biofuel crops and the biochemical aspects of producing ‘second generation’ biofuels in the region. We also have a superb automotive research sector. It should be noted that a bid by Cambridge University for BP to establish their Biosciences Institute in the UK for Biofuels was unsuccessful (it went to the US). Further efforts could be made to support Renewables East’s current drive to encourage similar R&D initiatives in order to establish ‘a virtual hub’ of research in this Region.

ii. Greater recognition and support for the work at Hethel by Lotus to develop bioethanol fuelled cars. Renewables East and Lotus are currently working together, looking to how the region can best take advantage of the opportunities mentioned above.

iii. Research into the capacity for and best use of biofuels from waste in the region, be it electricity, heating or vehicles.

Recommendations for the EERA Environment and Resources PanelAs the Panel does not have the capacity to address all of the above, it is recommended that the work of Panel focus on the following areas:

iv. Greater recognition and support for the existing expertise within theregion’s research institutes and automotive sector which if harnessedtogether could provide significant advances in biofuel development andutilisation as well as realising economic benefit for the East of England.

There is a potential to generate biogas/biomethane from grown crops as well as regional domestic, commercial and agricultural residues. As quantities are not precise more work needs to be done to predict the full capacity for gas recovery from waste and the economic ‘tipping points’ for its use in transport rather than power production.

28

Both areas could also provide indicators as to the best use of land in providing biofuels and improved crop yields achieved by targeted breeding.

Renewables East is already considering mechanisms and potential research by which the opportunities might be achieved

The Panel should endorse support for maximising such potential and offer to help promote and implement any recommendations that are made as a result.

v. To raise the profile of biofuels by encouraging the Public Sector in theregion to use and promote the use of alternative fuels. In this respect, consideration should be given to developing an information package explaining the opportunities available to local authorities to encourage the use of fuel efficient vehicles and the use of alternative fuels in public sector fleet vehicles. The Panel can also provide regional representation to the Government for assistance in overcoming barriers that are encountered when trying to convert to alternative fuels (eg BSOG).

vi. To encourage the development and implementation of appropriate sustainability standards for biofuels. A recent and current consultationhave addressed this issue: DfT consultation on the Renewable Transport Fuel Obligation Order;

and European Commission consultation on biofuel issues in the new

legislation on the promotion of renewable energy.

Although the UK Government has been campaigning for EU-wide standards, the Panel should engage in the process of developing these standards to ensure they are appropriate to protect against adverse environmental and social impacts, and that the standards are used to increase the awareness about the real facts and potential benefits of biofuels.

Thanks to the NFU, the Highway Agency and colleagues in Natural England, EEDAand RETAG for comments.