Biomass action plan for Scotland

7. TRANSPORT BIOFUELS

INTRODUCTION

7.1 The Scottish Climate Change Programme and National Transport Strategy provide the context for reducing emissions in the transport sector in Scotland. The Executive is committed to this reduction and transport biofuels are considered a realistic component in the range of sustainable transport measures being developed - from SMART measures, through to use of low carbon vehicles and alternative transport fuels.

7.2 The biofuel industry in the UK as a whole is still very young, but large scale production is already established and increasing as more producers are gearing toward future production. The main types of biofuels in use in the transport sector are liquid biodiesel and liquid bioethanol, with a much smaller market for biogas. The key driver for biofuels in Scotland and the UK as a whole is the Renewables Transport Fuels Obligation ( RTFO) and the UK-wide target for transport biofuel sales of 5% by 2010.

7.3 The largest proportion of vehicle sales is the second hand market and the average age for all licensed vehicles in Scotland is 13 years. Manufacturers are therefore reluctant to warrant engines beyond a 5% biofuel level and biofuels will primarily appear as a blended fuel with conventional fossil and mineral fuels for sale at forecourts. The UK Government has nevertheless signalled that the target may be reviewed post 2010 with the aim of increasing the target beyond 5%.

RENEWABLE TRANSPORT FUEL OBLIGATION ( RTFO)

7.4 EU Directive 2003/30/EC aims to reduce transport emissions across Europe and provided the catalyst for action by the UK Government and devolved administrations. In response to the Directive, the UK Government undertook a feasibility study and consultation on the proposal for an RTFO as a mechanism to meet the biofuels target and promote the biofuels market. The study set out to establish the cost-effectiveness, administrative feasibility, regulatory burdens and compatibility of the RTFO with other UK Government objectives.

7.5 The RTFO Scheme is reserved, and the Department for Transport has lead responsibility for overseeing the establishment of the scheme. This is in consultation with devolved administrations and other key stakeholders, and the Executive is a member of the RTFO Project Board.

7.6 The UK-wide target for biofuel sales has been set at 5% by 2010 and the Executive has adopted this target and supports the introduction of the RTFO. The UK Government has committed to meet the 2010 target and to introduce the RTFO Scheme and administrator of the obligation from April 2008. The primary legislation for the RTFO scheme is in chapter 5, part 2 of the Energy Act 2004.

7.7 The Executive supports the aims of the RTFO which will require transport fuel suppliers to ensure that a percentage of their sales are from a renewable source, intended to deliver carbon savings in the transport sector, and provide a sound platform for private sector investment in renewable fuels infrastructure and technology.

PROCUREMENT

7.8 The public transport fleet is leading the way in procurement of biofuels through the Forestry Commission's biofuels programme which now has 120 vehicles running on biofuel blends. In Scotland, trials are being carried out with 100% biofuel blends from biodiesel and processed used cooking oil ( UCO). The EU are looking to bring forward recommendations on the proportion of the public transport fleet running on green fuels in summer 2007.

SECOND GENERATION BIOFUELS

7.9 Second generation biofuels can be derived from a number of sources including non-food biomass, dedicated energy crops and biomass resources currently viewed as residue such as straw and forestry thinnings. Advantages include the potential for significant "well to wheel" reductions in greenhouse gas ( GHG) emissions and reduced land use requirements as most biomass can be used as a feedstock. Second generation biofuels should also avoid some of the technical problems associated with first generation biofuels such as degradation and material incompatibility associated with first generation biofuels. The first demonstration plants are now beginning to appear in Europe. In the EU Biomass Action Plan, the Commission commits to substantially increasing its support for the development of second generation biofuels through its research budgets.

FINANCIAL SUPPORT

Support for biofuels plants

7.10 The Executive supports the aims of the RTFO and in Scotland, Regional Selective Assistance ( RSA) grant has been offered to create and safeguard jobs in biofuel production. £1.2 million of RSA was provided to Argent Energy which established the UK's first large scale biodiesel production facility using vegetable oils and animal tallow. A £9 million RSA grant has been offered to INEOS Enterprises, who will establish Europe's largest single biodiesel production facility at its Grangemouth site in 2008 and will have capacity to meet 35% of the UK biodiesel needs.

Support for biomass production for biofuel

7.11 Proposals for supporting investment in small scale renewable energy capacity, including biofuel, are included under Land Management Contracts ( LMCs). These will be implemented as part of the new Rural Development Plan for Scotland to be approved by the European Commission in 2007. Support for production of biomass is discussed further in Section 8.

SUMMARY

The biofuel industry in the UK is still relatively young. The key driver for developing the market is the RTFO and the Executive supports its aims. In Scotland support is available through RSA grant for biofuel plant and the new Land Management Contracts will support biofuel crops.

ACTION TABLE