THE 20 pence per litre tax differential for biodiesel produced from used cooking oil comes to an end next month. This will mean more oil ends up in landfill or down the plughole as operators and distributors abandon their environmental fuel policies, says Keystone Distribution Europe VP Paul Pegg.
It was back in December 2009 when the Government announced plans to extend the 20 pence per litre tax differential for biodiesel produced from used cooking oil (UCO) to April 2012. Though welcome news at the time, it was hard to avoid a sense of impending doom. For biodiesel users and producers alike, this felt like little more than a stay of execution.
Confirmation of the withdrawal of the differential came in last years budget announcement. Whilst not unexpected, the news was received with grim resignation by a UK transport sector all too aware of its challenging carbon management targets and responsibilities.
Initially, the decision to remove the differential was driven not by economic consideration, but by a fear that incentivising biodiesel production and use in this way was creating environmental conflicts of interest. And herein lies the problem. Deforestation, changing land use and rising third world food prices, though impossible to ignore, are clearly not attributable to the production of biodiesel sourced from a waste product such as UCO. The distinction between sustainable and unsustainable sources clearly hasnt been made.
This is a tax relief that has not only served to encourage carbon and waste management initiatives, but also to drive green innovation, skills growth and employment opportunities in a flourishing sector of the UK's renewable energy industry. The withdrawal of the differential will inevitably dent the short and long- term growth prospects of the UK biodiesel industry as fleet operators, faced with the bleak prospect of a 20% increase in high-blend biodiesel prices, are forced to abandon environmental policies and considerations and switch attentions to more commercially viable fossil-based fuels.
Meanwhile, as the storm clouds continue to gather, the UK Sustainable Biodiesel Alliance (UKSBA), the representative body of the sustainable biodiesel industry in the UK, continues to lobby for the retention of the tax differential beyond 2012. According to UKSBA calculations, the UK produces around 250 million litres of UCO per annum. By comparison, a paltry 34 million litres of UCO was estimated to have been used in the manufacture of biodiesel last year. A step in the right direction, admittedly, though you cant avoid the conclusion that this figure represents a missed opportunity. Surely, with a more coordinated, long-term approach to UCO waste management at both regional and national level, more could be done to utilise the untapped 216 million litres of UCO presumably destined for landfill or the plug hole each year.
Now is the time for the Government to establish its green credentials with a show of long-term vision and understanding. Distinctions need to be made between sustainable biofuels and those that present broader, more far-reaching, environmental and sustainability concerns. There simply isnt a one-size fits all solution to this dilemma. With UK transport emissions continuing to rise, everything should be done to encourage and incentivise fleet operators to opt for more environmentally- friendly high-blend biodiesels.
There is little doubt that the transport sector understands and acknowledges the necessity of a positive environmental contribution. But in the real world such good intentions require encouragement and support if the appropriate plans and measures are to be implemented. The silver bullet solution to the sectors carbon management woes may remain as elusive as ever, but few would dispute the potential contribution of biodiesel in addressing the daunting carbon emission targets that we face. In such trying economic times, a 20 pence per litre incentive may well determine who, and how many, are prepared to go that extra environmental mile.