At the end of January, ADBA submitted a response to the DfT call for evidence on the future of the Renewable Transport Fuels Obligation (RTFO). This policy ensures a rising fraction of surface fuels are from renewable sources; it has been in place for over 15 years.
The RTFO is relevant to the AD sector as a growing fraction of the fuel used to comply with the RTFO is biomethane, exceeding 4% in the last full year of data. With the introduction of the sustainable aviation fuel (SAF) mandates in the UK and the EU, availability of affordable biodiesel will decline. This will likely drive demand for biomethane to supplement the heavy transport segment.
The current RTFO targets are insufficient for achieving decarbonisation goals, requiring a more ambitious trajectory towards 100% obligation by 2040.
With sufficient notice provided to the industry for adaptation, even very high targets can be met; lack of visibility and ambition on targets is holding back surface fleet decarbonisation and renewable fuel industry investment.
The current method of obligation and reward is based on volume and is a holdover from a world where all the renewable fuels were liquids. The basis for the policy calculations should shift to an energy basis; this makes dealing with dissimilar fuels easier and more consistent. Changing to an energy basis would make the RTFO consistent with the SAF mandate and easier for fuel suppliers to cross-supply and calculate obligations. The reward basis for certificates should focus on carbon intensity; this will ensure that the most decarbonising fuels are encouraged the most. Increasing GHG emissions savings thresholds over time is crucial for meeting statutory carbon budgets.
The crop cap in the RTFO is outdated and ineffective. The current definitions of relevant and dedicated energy crops are inappropriate and encourage the use of low-quality feedstocks and inefficient pathways. A shift towards a GHG-based reward mechanism for development fuels is would encourage investment and focus on decarbonisation outcomes, this would tend to favour exactly the types of feedstocks the previous waste based methodology was designed to encourage within the blunt volume based system.
Because of the complex history of the policy, there are odd omissions from the eligibility, so the RTFO should be expanded to include inshore vessels, ferries, and rail-mounted equipment.
We know that several other member organisations agree with our broad position, so we hope that the department can take this chance to make the RTFO fit for the next 15 years.
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