Updated Jan 2012 - HM Treasury propose tax hike on biodiesel made from used cooking oil in April 2012.

A nationwide campaign, Save Our Sustainable Biodiesel - www.sos-biodiesel.co.uk - is fighting the proposal by Chancellor George Osborne to add 20 pence to the cost of a litre of biodiesel made from used cooking oil from 1 April 2012.

Campaigners claim the Treasury’s alternative to promote the use of biodiesel – double certificates under the Renewable Transport Fuels Obligation – will make the cost of biodiesel too unstable and will fail to prevent job a return to fossil fuels.

Tracey O’Keefe, Director of the UK Sustainable Biodiesel Alliance, which is co-ordinating the SOS Biodiesel campaign, said: “George Osborne and the Treasury are attempting to fix something that isn’t broken. The 20 pence tax differential for Used Cooking Oil (UCO) biodiesel has been incredibly successful in promoting business growth and the use of sustainable fuel. Getting rid of it makes no sense and will only undermine the Government’s efforts to achieve economic growth whilst ensuring business and individual users are forced back to fossil fuels, increasing our greenhouse gas emissions rather than reducing them. It will also lead to business closures and job losses in industrial areas across the UK when the Government is supposed to be supporting growth and job creation.”

Used cooking oil is the primary fuel source for biofuels used in road transport in the UK, recycling more than 99 million litres of used cooking oil that would otherwise be poured down drains across the country each year. The utility companies spend £15m p/a clearing the drains of fat and grease – a cost handed on to the consumer through increased utility prices."

Green Government.

The Government has expressed its desire to be the “greenest government ever” and to facilitate the growth of the low carbon economy, however, according to official figures, in 2008 the UK ranked 25th of the 27 EU member states in the production of renewable energy. In a November 2010 speech to the Guardian’s Cleantech Summit, Chris Huhne MP, Energy Minister said of that statistic: “We are certainly playing in Europe’s amateur league when we ought to be in the Premiership”.

The sustainable biodiesel industry, which has been driven by the market certainty and stability of the duty differential, has helped the Government to exceed its greenhouse gas savings target in road transport by 8% and has “made a valuable contribution to the Government’s renewable energy targets and waste strategy and to the growth of the low carbon economy” (Chris Huhne MP,Energy Secretary). 

The Secretary of State anticipates that sustainable bioenergy, including UCO based biodiesel, could contribute up to half of the UK’s target of 15% renewable energy by 2020. He also states that sustainable bioenergy is vital to the UK’s security of supply, as bioenergy is one of the few renewables that can generate energy on demand.

83% Greenhouse Gas Saving.

There are around 250 million litres of used cooking oil (UCO) produced in the UK every year and a high proportion of this oil is disposed of down the drain or sent to landfill. Defra estimates that 150,000 blockages per year are caused by fat, oil and grease being poured into the drains, at a cost to the utility companies of £15m per annum.

Biodiesel produced from UCO is one of the most sustainable fuels available for transport and heat and power systems.  It delivers an 83% greenhouse gas saving versus fossil fuels and saves approx 99 million litres - the equivalent of 39 Olympic sized swimming pools - of UK used cooking oil from going down our drains and into landfill.

What will happen if the duty differential is abolished?

More virgin crops will be used to produce biodiesel; the price of UCO based biodiesel will rise, forcing current biodiesel users to revert to the use of fossil fuels; and the resulting drop in demand will force producers to close, causing significant job losses.

Industry estimates fear that up to 3,000 direct and indirect jobs could be lost over a five year period. The loss of these green collar and low carbon skills would seriously impede the development of the renewable energy sector in the UK, and consequently the growth of the green economy, which will be worth an estimated £4 trillion by 2015.

In addition, we estimate that business closures resulting from the removal of the duty differential could result in an annual loss to HM Treasury of £36 million.  Taking into account planned increases to production in the coming years, this amount could increase three-fold, meaning the taxpayer stands to lose out on £108 million of taxable revenue if the sustainable biodiesel industry falters.

The Environmental Audit Committee’s recent report on Environmental Taxes and Budget 2011 highlight the benefits of the duty differential in promoting the use of waste derived bioliquids while describing the Government’s decision to remove the incentive as a “strategically retrograde act”.

SOS Biodiesel Campaign - Update January 2012.

The campaign has been successful in securing a meeting with Transport Minister Norman Baker at the end of last year. Encouragingly, Baker was sympathetic to SOS's concerns and agreed that the original extension of the duty differential back in 2009, which was meant to act as a safety net whilst the revised Renewable Transport Fuel Obligation (RTFO) was implemented, has been eroded as a result of ongoing delays to RTFO reform. The Minister also accepted the need to ensure the Department for Transport has access to more up to date brokerage data and his officials have agreed to liaise with the industry to evaluate the impact of the revised RTFO on certificate prices over the coming weeks.

Whist this progress is encouraging, with less than three months to go until the abolition of the duty differential, the SOS campaign will continue to work to highlight the detrimental impact this move will have on the sector, with the loss of green jobs and growth to the economy, and they would appreciate any support you are able to offer to the campaign.

If you are able, SOS Biodiesel would be very grateful if you could write to your local MP, asking if they would be willing to write to the Chancellor on this issue – a template letter can be downloaded below;

Template letter for your local MP

You can find out who your local MP is and how to contact them here.

 

To find out more about the Save Our Sustainable Biodiesel campaign, including ways you can get involved, visit their website at www.sos-biodiesel.co.uk