RTFO statutory review and future of the scheme

Q: Data protection

The Department for Transport ( DfT ) is carrying out this call for evidence on the current Renewable Transport Fuel Obligation ( RTFO ) and how it could be improved, including the treatment of crops and wastes. View our DfT online form and survey privacy notice [opens in a new window] for more information on how your personal data is processed in relation to this survey. In addition to the information given we are asking all organisations their area of work, to ascertain their relationship to the topic. DfT ’s privacy policy has more information about your rights in relation to your personal data, how to complain and how to contact the Data Protection Officer. To receive this information by telephone or post, contact us on 0300 330 3000 or write to: Data Protection Officer Department for Transport 3rd Floor One Priory Square Hastings East Sussex TN34 1EA Your information will be kept securely on secure IT systems within DfT and will be destroyed within 24 months after the consultation has been completed.

Question 1

Executive summary

Accepted Answer

In 2022, the transport sector remained the UK’s largest emitting sector, responsible for 28% of domestic UK emissions, rising to 34% when accounting for emissions from international aviation and shipping^{[footnote 1]}. The government is committed to delivering greener transport, which will support the missions to kickstart economic growth and make Britain a clean energy superpower.

The majority of these emissions are from road transport, where traditional liquid fuels like petrol and diesel are still the main forms of energy.

Government policies – in particular, the zero emission vehicle (ZEV) mandate – are helping drive the transition to electric vehicles. However, those already on the road are still largely reliant on traditional liquid fuels and liquid fuels will still be needed for conventional vehicles over the coming years.

Their carbon emissions can be reduced through the use of low carbon alternatives including:

biofuels like biodiesel and bioethanol
novel low carbon fuels like hydrogen and synthetic alternatives to petrol and diesel and e-fuels

These fuels reduce the greenhouse gas (GHG) emissions of the vehicle fleet, while the roll out of zero-emission vehicles continues.

The Renewable Transport Fuel Obligation (RTFO) is the government’s main policy for encouraging the use of low carbon fuels in road vehicles, non-road mobile machinery (NRMM) and other surface transport modes. It works by setting annual obligations for fuel suppliers to require a certain percentage of their fuel comprises sustainable low carbon fuel.

The primary objective of using low carbon fuels in transport is to reduce GHG emissions within the sector. In 2022, the low carbon fuels supported under the RTFO achieved lifecycle GHG savings of over 7 million tonnes of carbon dioxide equivalent (MtCO2e) as a result of displacing fossil fuels^{[footnote 2]}^{[footnote 3]}.

This is because the carbon dioxide (CO2) emitted as a result of biofuel combustion is part of the short-term carbon cycle, rather than the long-term carbon cycle associated with fossil fuels. Low carbon fuels can provide a flexible option that can be ‘dropped in’ to replace existing fuels or blended with fossil transport fuels to reduce their overall GHG emissions contribution.

The Climate Change Act 2008 sets the regulatory framework for achieving net zero, requiring that the UK reduces its GHG emissions to reach a UK-wide target of net zero GHG emissions by 2050. The pathway to 2050 is defined by interim targets called ‘carbon budgets’: 5-yearly caps on economy-wide GHG emissions. The RTFO was responsible for 54% of the overall transport emissions savings in carbon budget 3 (2018 to 2022) relative to a 1990 base year and will likely continue to play a significant role in future carbon budgets^{[footnote 4]}^{[footnote 5]}.

Since it was introduced in 2008, the operation of the RTFO has been reviewed and adapted to ensure the policy has continued to achieve significant GHG emissions savings. This has included:

increasing the targets within the obligation
widening the scope of eligible fuels and end uses (NRMM, maritime and aviation)
updating sustainability criteria so the scheme discourages adverse environmental impacts
introducing a crop cap

The scheme now operates 2 obligations:

the main obligation which supports the supply of traditional biofuels
(the development fuel obligation) which supports the development of novel strategic fuels of the future

Figure 1 presents how the RTFO targets and crop cap have changed since its introduction and shows the future trajectory currently set.

Figure 1: a chart showing the changes to the RTFO obligations and crop cap over time

Year	Main Obligation as share of total relevant fuel by volume (%)	Development Obligation as share of total relevant fuel by volume (%)	Total
2008	2.5	0	2.5
2009	3.25	0	3.25
2010	3.5	0	3.5
2011	4	0	4
2012	4.5	0	4.5
2013	4.75	0	4.75
2014	4.75	0	4.75
2015	4.75	0	4.75
2016	4.75	0	4.75
2017	4.75	0	4.75
2018	7.25	0	7.25
2019	8.4	0.1	8.5
2020	9.6	0.15	9.75
2021	9.6	0.5	10.1
2022	11.1	0.8	11.9
2023	11.45	1	12.45
2024	11.8	1.2	13
2025	12.15	1.4	13.55
2026	12.5	1.6	14.1
2027	12.85	1.8	14.65
2028	13.2	2	15.2
2029	13.55	2.2	15.75
2030	13.9	2.4	16.3
2031	14.25	2.6	16.85
2032	14.6	2.8	17.4
2033	14.6	2.8	17.4
2034	14.6	2.8	17.4
2035+	14.6	2.8	17.4

Figure 1 shows the trajectory of the RTFO main obligation, the development fuel obligation and the crop cap from 2008-2035. The obligations increase up to 2032, before levelling off, whilst the crop cap, starting in 2018 gradually decreases until 2032.

The RTFO will need to:

adapt to ensure it continues to achieve cost effective carbon savings
aligns with the UK’s overall progress towards future carbon budgets
interacts effectively with other low carbon fuel support mechanisms

This call for evidence, therefore, aims to seek stakeholder feedback on important areas of the RTFO. These areas include:

future RTFO targets
how low carbon fuels are rewarded under the RTFO
the treatment of crops and wastes
the development fuel sub-target
the administration of the RTFO

Call for evidence themes

RTFO targets

The main RTFO obligation makes up the majority of the overall obligation and is generally met through supplying established low carbon and renewable fuels, like bioethanol, biodiesel and biomethane.

In 2024, this obligation is set at 11.8% as a share of total liquid fuel by volume and is set to increase to 12.15% in 2025 and 14.6% by 2032^{[footnote 6]} .

While the RTFO main obligation target is currently set to increase until 2032 – which is the end of carbon budget 5 (2028 to 2032). From 2032 onwards, as the scheme technically operates in perpetuity, the targets are set to remain flat. The targets were set in 2021 to give industry a decade of certainty for investment.

It is now important we consider whether the current trajectory is appropriate and how it should be reflected beyond 2032 to achieve effective GHG emissions savings in subsequent carbon budgets.

This call for evidence, therefore, seeks feedback on how effective the RTFO target levels have been to-date in terms of maximising the GHG savings which can be achieved by the scheme, as well as incentivising investments in the low carbon fuels (LCF) industry.

The targets section also asks how stakeholders view the future challenges and opportunities for the use of low carbon fuels to decarbonise surface transport. This will help inform the development of different policy options and scenarios for the RTFO’s future trajectory.

Any changes proposed to the RTFO following this call for evidence will be subject to further consultation.

How low carbon fuels are rewarded under the RTFO

Since 2008, the RTFO has operated as a volume-based scheme. This means certificates are awarded based on the volume of low carbon fuel supplied, rather than the specific GHG savings those fuels achieve, provided the fuel meets sustainability and minimum GHG emissions savings criteria. Additional support is provided to gaseous fuels in recognition of their higher energy density.

The sustainable aviation fuel (SAF) mandate will reward low carbon fuels in proportion to GHG savings achieved. This means that fuels that achieve greater GHG savings, compared to the fossil fuel alternative, will receive more certificates^{[footnote 7]} than fuels that achieve lesser GHG savings.

Some stakeholders have argued that the RTFO could achieve more cost-effective carbon savings by rewarding low carbon fuels according to their GHG savings in line with the SAF mandate. If there might be limited future feedstock availability, there is increased need to use resources as effectively as possible.

However, the broader feedstock eligibility within the RTFO could make switching to a GHG scheme more complex and real world increases in GHG emissions savings may not be realised. This is largely due to the relative performance of crop versus waste derived biofuels, particularly when indirect land use change impacts (ILUC)^{[footnote 8]} are considered.

Moving the RTFO from a volume-based scheme to a GHG-based scheme would be a major change, requiring significant detailed policy development and implementation. We are, therefore, asking for stakeholder views on the risks and opportunities associated with such a change, to help inform whether a change is justified and would make significant differences in terms of the cost-effective emissions savings the scheme seeks to achieve.

Crops

In 2018, measures to limit the use of crop-based biofuels were introduced into the RTFO via a ‘crop cap’. This defined the maximum contribution that biofuels made from agricultural crops can make towards meeting suppliers’ obligations. This was introduced to encourage the supply of waste derived fuels over those produced from crops, given their potentially negative implications related to ILUC, land availability and food security.

We are seeking stakeholder views on the effectiveness of the crop cap in achieving its aims and whether it remains appropriate for the future of the RTFO.

Wastes

The RTFO double counts the majority of sustainable wastes for the purposes of discharging a supplier’s obligation. This was introduced to encourage suppliers to increase their supply of waste derived biofuels, which deliver some of the highest GHG savings, and pose reduced risk of wider environmental impacts such as land use change.

When referring to ‘wastes’ in this call for evidence, this includes all of the feedstocks which are double-counted under the RTFO, including agricultural, forestry and processing residues as well as other waste materials. There are also a small number of feedstocks that are classified as ‘single counting wastes’ – see RTFO feedstock materials used for creating renewable fuels for more information.

We are seeking feedback on the current classification of wastes, how they are rewarded and whether this remains appropriate for RTFO.

RTFO development fuel obligation

In 2018, the RTFO was amended to include a new development fuel obligation to encourage the supply of novel emerging technologies for fuel production.

Like the main obligation, the development fuel obligation has been set to increase each year until 2032, after which it continues at that level indefinitely.

In the years since the development fuel obligation began, there has been a significant shortfall in the supply of development fuel compared to the obligation level. Much of the development fuel obligation to date has been met via ‘buy-out’.

The intention of the development fuel obligation was to drive the growth of innovative, emerging technologies whilst delivering GHG reductions. We are therefore seeking stakeholder views on how the development fuel policy has operated to date and how it could evolve to better achieve its goals.

RTFO administration

The RTFO is administered by the low carbon fuel delivery unit in Department for Transport (DfT). We are seeking stakeholder feedback on the effectiveness of the day-to-day running of the scheme and whether there are any areas that could be improved.

Question 2

Introduction and context

Accepted Answer

Background

The Renewable Transport Fuel Obligations Order 2007 (RTFO) is the government’s main policy for reducing GHG emissions from fuel supplied for use in road vehicles. It also supports the use of low carbon fuels in NRMM, such as:

trains
mobile generators
certain type of vessels
other mobile equipment

The scheme also supports certain low carbon fuels supplied to aviation and maritime, though support for the aviation sector will end when the SAF mandate begins in 2025.

The RTFO achieves reductions in GHG emissions from fuel used for transport purposes by encouraging the supply of sustainable low carbon fuels. The RTFO has been amended multiple times since its introduction.

It works by setting annual obligations on suppliers to require a certain percentage of their fuel supply to comprise of sustainable low carbon fuel. This obligation can be met in 3 ways by:

supplying sustainable low carbon fuel and claiming renewable fuel transport fuel certificates (RTFCs)
purchasing RTFCs from other suppliers
‘buying out’ of any proportion of the obligation

For low carbon fuel to qualify for RTFCs, it must meet minimum GHG emissions saving thresholds compared to fossil fuels and comply with wider sustainability criteria.

In 2022^{[footnote 9]}, over 3 billion litres (equivalent) of sustainable low carbon fuel were supplied under the RTFO, constituting almost 7% of road transport and NRMM fuel^{[footnote 2]}. Each litre provided an average of 82% GHG emissions saving compared to the fossil fuels they replaced (77% if you include ILUC assumptions)^{[footnote 10]}. This resulted in an overall saving of over 7 MtCO2e^{[footnote 2]}^{[footnote 3]}. The RTFO was responsible for 54% of the overall transport emissions savings in carbon budget 3 (2018 to 2022), when compared to the 1990 baseline^{[footnote 4]}^{[footnote 5]}.

Since its introduction, over 27 billion litres (equivalent) of sustainable low carbon fuel have been supplied under the RTFO. Since 2008, this has resulted in GHG savings of almost 54 MtCO2e, compared to the fossil fuels they replaced^{[footnote 11]}^{[footnote 12]}.

The operation of the RTFO has been regularly reviewed and adapted to ensure the policy has continued to deliver substantive GHG emissions savings.

Figure 2 provides an overview of some of the changes made over the years. It shows how the RTFO’s scope has expanded to include a wider set of fuels and end uses alongside target increases, reflecting the development of the market and the innovation within it. It also highlights how the RTFO’s approach has been fine-tuned to ensure the scheme supports more sustainable low carbon fuels, which achieves greater emission reductions.

Figure 2: Changes made to the RTFO from 2008 to 2024

Changes made to RTFO	Year
RTFO begins	2008
inclusion of sustainability criteria, introduction of double reward for waste-derived biofuels, provisions for renewable gaseous fuels	2011
introduction of NRMM, changes to definitions of relevant fuels and civil penalties	2013
increases to main obligation targets, introduction of a crop cap and development fuel sub-target, inclusion of support for RNFBOs, introduction of aviation as a use case, updates to NRMM definition to include inland waterways and rail	2018
increase to the level of RTFO buy-out price	2021
increase to the scope to include non-road vehicles with fuel cells, introduction of support for RFNBOs in maritime, introduction of new forest and land sustainability criteria, update to references following UK’s exit from the EU, increases to main obligation targets	2022
introduction of recycled carbon fuels into the RTFO, call for evidence on operation and future of the RTFO published	2024

The need for this call for evidence

The most recent significant review of the RTFO was conducted in 2021. This committed to:

increasing RTFO targets until 2032
supporting recycled carbon fuels
widening the scope of the RTFO to include more end uses for renewable fuels of non-biological origin (RFNBOs) like hydrogen
implementing additional sustainability criteria

Since 2021, the low carbon fuels landscape has continued to evolve. The SAF mandate comes into force from 2025 and the government is also developing a maritime decarbonisation strategy which will set decarbonisation goals for the UK maritime sector. This will include policies on the use of low carbon fuels.

In light of these developments, the RTFO will need to adapt to ensure it continues to achieve cost effective carbon savings, aligns with future carbon budgets and interacts effectively with other low carbon fuel support mechanisms.

This call for evidence begins the process of reviewing the RTFO and will inform both a statutory review and the government’s next steps for the scheme. The statutory review will assess of the scheme’s performance and will help inform the need and direction of future changes to the RTFO, which would be subject to further consultation.

Scope of the call for evidence

This call for evidence seeks feedback on important areas of the RTFO, to help understand stakeholder’s views on:

the operation of the scheme
the policies that underpin it
how it could be improved in the future

The call for evidence is split into 6 sections, 1 for each main area. Each section includes guiding questions for stakeholders to respond to, however, we welcome feedback on any aspect of the scheme and these questions should not be seen as exhaustive. The sections are:

RTFO main obligation target
how low carbon fuels are rewarded under the RTFO
the treatment of fuels derived from crops
the treatment of fuels derived from wastes
the development fuel sub-target
the administration of the RTFO

Question 3

RTFO main obligation targets

Accepted Answer

Background

The RTFO consists of 2 obligations – the main obligation and the development fuel obligation.

The 2 obligations work together to provide support for different types of low carbon fuel, as summarised in table 1. See also a list of feedstocks and a summary of feedstocks used for each RTFO year.

Table 1: RTFO fuel types and feedstocks supported under main and development fuel obligation

	Main obligation	Development fuel obligation
Fuel types	Traditional biofuels such as: - biodiesel (FAME and HVO) - bioethanol - biomethane and propane - biomethanol	Novel and strategically important fuels, limited to: - hydrogen - aviation fuel - substitute natural gas (renewable methane produced from gasification or pyrolysis) - ‘drop-in’ petrol or diesel which can be blended to at least 25% while still meeting relevant fuel standards
Feedstocks	Fuels produced from traditional crops such as wheat, corn and soy Energy crops like miscanthus	Fuels produced from double counting wastes – provided they are not a segregated oil or fat. As of 2024 also includes fuels produced from ‘recycled carbon fuel’ feedstocks
Feedstocks	Fuels produced from wastes and residues including segregated oils and fats, such as used cooking oil	Renewable fuels of non-biological origin (RFNBO). These are generally hydrogen or fuels using hydrogen, produced from renewable electricity.

A list of feedstocks and a comprehensive summary of feedstocks for each RTFO year are available.

The main obligation makes up most of the overall obligation and is generally being met through the supply of established renewable fuels, such as bioethanol, biodiesel and biomethane.

The obligation target began at 2.5% in 2008, gradually increasing over time to its current level of 11.80% in 2024. The obligation is set to increase up to 14.60% in 2032^{[footnote 6]}, the end of carbon budget 5 (2028 to 2032) at which point it continues at that level – see figure 3.

Figure 3: RTFO main obligation trajectory from 2008 to 2035

Year	Main obligation as share of total liquid fuel by volume (%)
2008	2.5
2009	3.25
2010	3.5
2011	4
2012	4.5
2013	4.75
2014	4.75
2015	4.75
2016	4.75
2017	4.75
2018	7.25
2019	8.4
2020	9.6
2021	9.6
2022	11.1
2023	11.45
2024	11.8
2025	12.15
2026	12.5
2027	12.85
2028	13.2
2029	13.55
2030	13.9
2031	14.25
2032	14.6
2033	14.6
2034	14.6
2035+	14.6

Area under review

Historically, most of the obligation has been met via the supply of renewable fuels, with negligible levels of buy-out. This means the RTFO targets have been achievable and realised carbon savings. However, going forward the landscape will evolve with domestic and global demand for the fuels and feedstocks used to produce the fuels supplied under the RTFO main obligation. This is expected to rise as low carbon fuels are increasingly used in other modes and operations.

The RTFO will also need to adapt to ensure the use of low carbon fuels compliment wider policies and changes to the sector. The forthcoming SAF mandate and any future specific support for maritime fuels will create additional competition for feedstocks and fuels, while the roll out of electric vehicles will result in lower demand for liquid fuels in road transport.

This presents some challenges. For example, given a declining road fuel market, to keep low carbon fuel volumes constant, obligation percentages would need to increase. Higher obligation percentages could be more challenging to meet, as the blend limits that apply to E10 petrol and B7 biodiesel.

However, advances in both supply of waste derived ethanol and hydrotreated vegetable oil (HVO) may mitigate the impact of blend limits on the ability to meet increased obligations.

When setting future targets, there is a need to balance long term certainty with a low carbon fuel market that will be evolving significantly between now and the 2040s.

Questions for stakeholders

Q1. Are the current RTFO main obligation targets set at the right level? Consider both the current trajectory between now and 2032 and how they could be adjusted after 2032.

Q2. Do you have any evidence on the anticipated availability and cost of eligible fuels and feedstocks given likely increases in competition across modes and internationally?

Q3. Does the main RTFO obligation cover all the transport modes, fuel types and feedstocks that it needs to? If not, how should it be amended?

Q4. Should the RTFO be adapted to support wider transport decarbonisation objectives such as support for renewable electricity used by road vehicles?

Question 4

How low carbon fuels are rewarded under the RTFO

Accepted Answer

Background

Since its inception, the RTFO has operated as a volume-based scheme. This means certificates are awarded based on the volume of low carbon fuel supplied, rather than the specific GHG savings those fuels provide – if the fuel meets sustainability and minimum GHG emissions savings criteria.

This has been effective in providing significant carbon savings – the RTFO contributed to 54% of transport’s contribution to carbon budget 3^{[footnote 4]}^{[footnote 5]}.

In fuel lifecycle terms, in the last decade (2008 to 2022) the RTFO reduced emissions by 53 MtCO2e^{[footnote 2]}^{[footnote 3]}.

The RTFO was originally developed to mainly support the supply of liquid biofuels like biodiesel and ethanol, as they could be easily blended into conventional road fuels. These fuels still make up the majority of those supplied under the scheme. However, due to several factors, including technological development, increasing demand and supply constraints of biological feedstocks, the range and type of fuels supplied under the scheme is increasing.

Fuels supplied under the RTFO also have a wide range of energy densities and provide varying GHG savings compared to fossil fuels. this ranges from those just meeting the minimum eligibility thresholds in the RTFO through to near zero emissions.

The RTFO also has different minimum GHG thresholds for different types of low carbon fuels. These are set out below in table 2.

Table 2: RTFO minimum GHG thresholds per fuel type

Fuel type	GHG % threshold	Maximum carbon intensity gCO2e/MJ
Biofuels from installations built pre-5 October 2015	55%	42.3
Biofuels from installations built post-5 October 2015	65%	32.9
Renewable fuels of non-biological origin (RFNBOs)	65%	32.9
Recycled carbon fuels (RCFs)	42.1% in 2024	54.4

The SAF mandate will use a GHG-based approach to calculating how fuel is rewarded. Fuels that achieve a greater GHG saving compared to the fossil fuel alternative, will receive more certificates than fuels which achieve lower GHG savings.

As part of the first consultation on the SAF mandate, government sought SAF stakeholder’s views on a GHG-based reward scheme. There was strong industry support for this proposal. Stakeholders gave the following benefits:

incentivising the fuels which achieve the best carbon savings
being technology neutral
aligning with the UK’s decarbonisation goals
aligning with other decarbonisation schemes
reducing the need for GHG thresholds

However, the SAF mandate as implemented is different from the RTFO in other ways too. It does not support crop biofuels and is therefore less impacted by ILUC concerns than the RTFO.

The wider range of fuels and feedstocks and concerns over ILUC impacts of crop use are currently mitigated within the RTFO via policies such as the:

double counting of waste-derived fuels
the crop cap
introduction of a ‘development fuel obligation’

These have incentivised the increased supply of fuels that generally achieve higher GHG savings.

The introduction of double counting for wastes has seen a significant increase in waste derived fuels supplied under the RTFO (Figure 6). Certain types of gaseous fuels already receive a multiplier under the RTFO, bringing the reward they receive in line with the energy content of the fuel. For example, hydrogen, is equivalent to 4.58 litres of eligible fuel. However, the differing energy content of some liquid fuels is not accounted for.

Area under review

Stakeholders have previously suggested the RTFO may be more effective if it adjusted from the current volume-based model to a GHG scheme like the SAF mandate.

Previously, the RTFO ran in parallel to a GHG reporting scheme for motor fuel. This was designed to meet the requirements of the EU fuel quality directive. The scheme had binding targets in 2019 and 2020 that were largely met via the fuels supplied under the RTFO. However, as suppliers needed to ensure they met the GHG reporting scheme’s targets, it may have incentivised fuel suppliers to supply low carbon fuels that provided higher GHG savings.

A GHG scheme would broadly provide higher reward, in terms of number of certificates, to fuels which achieve higher GHG emissions savings. This means a fuel that saves 90% GHG emissions compared to a fossil fuel comparator would receive more certificates than the same volume of a fuel that saved 70%.

Current drop-in fuels are generally not carbon neutral, as they only need to meet the minimum GHG saving thresholds within the RTFO. Switching to a GHG-based scheme could provide an incentive for producers of road fuel to invest in production efficiencies, possibly reducing the GHG emissions of the fuels already supplied. It could also create an incentive to supply carbon neutral or even carbon negative fuels, for example by investing in carbon capture, utilisation and storage (CCUS) technologies.

However, the RTFO is different to the SAF mandate in some important areas, which could mitigate many of the benefits listed above. Currently the RTFO supports waste-based fuels above crop-based fuels. Waste-based fuels are ‘double-counted’ receiving 2 certificates per litre, while crop-based fuels receive 1. There is also a cap on the contribution of crops to the overall obligation.

These policies have successfully incentivised the use of low carbon fuels that have lower ILUC impacts. In 2022, 66% of feedstocks used for fuel production under the RTFO were from sustainable wastes and residues[^23], with the majority of the remainder coming from crops associated with ethanol production that have lower ILUC impacts.

In moving to a GHG scheme, it may not be possible to maintain the incentive to supply waste-based fuels. Also, developing a system to take account of ILUC impacts is complex. The crop cap adds another level of complexity to any transition between scheme designs, with the possibility of perverse incentives and less desirable outcomes in terms of the mix of fuels and feedstocks supplied.

Additionally, biofuels are zero rated within carbon budget accounting (with upstream emissions accounted for elsewhere in the carbon accounting system). This is because upstream emissions are generally accounted for in the sector and country of production and the RTFO has historically seen the majority of fuels imported. In 2022, 89% of the feedstocks used under the RTFO were from non UK-origin^{[footnote 11]}.

The SAF mandate avoids many of these issues as it does not support crop-based fuels and only supports biofuels produced from sustainable wastes and residues or low carbon energy. This means the GHG scheme is more direct in encouraging efficiency of production across a more focused range of low carbon fuels.

There may be administrative benefits from aligning the SAF mandate and RTFO for both suppliers and the scheme administrator. Many of the fuels supplied under the SAF mandate may be produced alongside fuels used in road transport. Administration for both schemes could be simplified if operated under an aligned approach. However, changing the RTFO would also be a significant undertaking in terms of the steps needed to implement a different mechanism, both for government and fuel suppliers.

Another option for increasing GHG emissions savings from the fuels supplied under the RTFO could be to increase the minimum GHG emissions saving thresholds that eligible fuels need to meet to qualify for support. These thresholds are set out in table 2. Increasing these thresholds could be a simpler way to ensure higher GHG emissions savings for a given volume of low carbon fuel, while maintaining the current treatment of crops and wastes.

Questions for stakeholders

Q5. Should the RTFO continue to reward fuels on the volume supplied or on a different basis, such as the GHG savings delivered by a fuel, in line with the SAF mandate?

Q6. Do you think increasing the RTFO GHG emissions savings thresholds would be appropriate and why. Would you have any concerns?

Q7. Did the GHG Reporting scheme that ran alongside the RTFO encourage a greater supply of low carbon fuels in the UK with higher GHG savings? If so, which fuels?

Question 5

Treatment of fuels derived from crops

Accepted Answer

Crop cap

In 2018, measures to limit the use of crop-based biofuels were introduced into the RTFO via a ‘crop cap’. This defined the maximum contribution that biofuels made from agricultural crops can make towards meeting suppliers’ obligations.

This policy was part of a range of measures to encourage the supply of waste derived fuels over those produced from crops given the potentially negative implications of crops for ILUC, land availability and food security. The maximum level for crop derived fuels was set as a % of total fuel (fossil and renewable) supplied. The maximum level for crop derived fuels was set at 4% in 2018. From 2021, this level reduces linearly year on year to reach 3% in 2026 and 2% in 2032^{[footnote 6]}. It is currently set to remain at the 2% level in subsequent years (Table 2).

The crop cap applies to ‘relevant crop’ feedstocks which are defined in the RTFO order as starch-rich crops, sugars, oil crops and main crops where ‘starch-rich crops’ include:

cereals (regardless of whether only the grains are used or the whole plant)
tubers and root crops, including potatoes, Jerusalem artichokes, sweet potatoes, cassava and yams
corm crops, including taro and cocoyam

The crop cap does not apply to dedicated energy crops. Dedicated energy crops are crops that consist of non-food cellulosic material or ligno-cellulosic material, except saw logs and veneer logs that:

are grown for the purpose of being used as fuel or energy
are not a residue or a waste
would not normally be used for food or feed

Biofuels derived from dedicated energy crops are double rewarded and are required to comply with the RTFO land criteria, which can be found in chapter 9 of the RTFO Compliance Guidance. Biofuels produced from dedicated energy crops only count towards the main obligation. To date, the RTFO has seen very limited supply from this type of feedstock.

Figure 4 shows the percentage of crop-based fuel supplied under the RTFO since the crop cap was introduced in 2018 up to 2022 when compared to the crop cap. This shows the actual percentage of crop-based renewable fuels supplied was significantly below the cap for these years. Figure 4 also shows the future trajectory of the crop cap compared to the main obligation, up to 2035.

Figure 4: RTFO annual crop cap level compared to the crop-based fuel actually supplied

Year	Actual crop based fuel supplied	Obligation	Percentage of total relevant fuel supplied
2018	1.3	7.25	5.95
2019	1.6	8.4	6.8
2020	1.4	9.6	8.2
2021	1.3	9.6	8.3
2022	2.3	11.1	8.8
2023	0	11.45	11.45
2024	0	11.8	11.8
2025	0	12.15	12.15
2026	0	12.5	12.5
2027	0	12.85	12.85
2028	0	13.2	13.2
2029	0	13.55	13.55
2030	0	13.9	13.9
2031	0	14.25	14.25
2032	0	14.6	14.6
2033	0	14.6	14.6
2034	0	14.6	14.6
2035	0	14.6	14.6

Figure 4 shows the RTFO crop cap as a proportion of the main obligation from 2018-2032. It also shows the proportion of crop-based fuel actually supplied under the RTFO from 2018-2022. The actual supply of crops stays relatively steady for the first 4 years, before an increase in 2022.

Area under review

Figure 4 above suggests that the crop cap has not constrained the supply of crop-based biofuels within the RTFO to date. This is likely due to the existence of other policy mechanisms in the RTFO, namely the double counting of wastes which has incentivised the supply of non-crop based low-carbon fuels.

E10 petrol was introduced in Great Britain in September 2021 and in Northern Ireland in November 2022. This has roughly doubled the available volume for ethanol blending in UK petrol. The impact of this was felt in 2022, where the proportion of UK fuel supply from crop derived fuels moved over 2% for the first time since the cap was introduced. This proportion is higher than the crop cap in 2032.

Questions for stakeholders

Q8. Is the RTFO crop cap trajectory set at the right level?

Q9. Has the RTFO crop cap impacted UK biofuel producers, suppliers, or other operators and if so, how?

Q10. Are the definitions of ‘relevant crops’ and ‘dedicated energy crops’ still appropriate?

Question 6

Treatment of fuels derived from wastes

Accepted Answer

Background

In 2011, amendments to the RTFO introduced double counting for fuels produced from the majority of biological wastes and residues. This means that biofuel attributable to sustainable wastes is issued with double certificates relative to crop derived biofuels. This is known as double and single counting feedstocks.

Waste derived biofuels, therefore, double counts for the purposes of discharging a supplier’s obligation. It was introduced to encourage suppliers to increase their supply of waste derived biofuels, which produce some of the highest GHG savings and have lower risk of wider environmental impacts including ILUC when compared to crop derived biofuels.

The RTFO allows double counting of certain waste feedstocks where the administrator is satisfied that using the feedstock for fuel is unlikely to have a detrimental impact on any of the following effects set out in the energy act:

GHG emissions
agriculture
other economic activities
sustainable development
the environment generally

Prior to the introduction of the RTFO, other policy mechanisms had been explored to incentivise the supply of low carbon fuels (Figure 5). This included duty incentives on biodiesel and bioethanol, which were removed as the RTFO became established. The RTFO is now the lead lever for incentivising low carbon fuels in transport.

Figure 5: incentives provided by DfT for low carbon fuel production

Incentives provided by DfT for low carbon fuel production	Year
20 pence biodiesel incentive introduced	2002
RTFO policy announced, 20 pence bioethanol incentive introduced	2005
RTFO order came into effect, 15 pence buy-out introduced	2008
20 pence incentive removed (excluding for UCO), buy-out increased to 30 pence	2010
RED sustainability criteria update, introduction of double counting for waste feedstocks	2011
20 pence UCO incentive removed	2012
increases to main target obligation, introduction of a crop cap	2018 to 2019

Since the introduction of double counting, the percentage of biofuel sourced from wastes increased significantly within the RTFO (Figure 6) to 76% in 2021. In 2022, this proportion fell back to 66% following the introduction of E10 petrol as ethanol is predominantly derived from crop feedstocks^{[footnote 11]}.

Figure 6: proportion of waste and non-waste feedstocks supplied under the RTFO

Obligiation period	Non-waste feedstocks	Waste feedstocks	Total
2008 to 2009	88%	12%	100%
2009 to 2010	85%	15%	100%
2010 to 2011	65%	35%	100%
2011 to 2012	50%	50%	100%
2012 to 2013	60%	40%	100%
2013 to 2014	53%	47%	100%
2014 to 2015	50%	50%	100%
2015 to 2016	41%	59%	100%
2016 to 2017	34%	66%	100%
2017 to 2018	34%	66%	100%
2018	31%	69%	100%
2019	31%	69%	100%
2020	24%	76%	100%
2021	24%	76%	100%
2022	34%	66%	100%

Area under review

We are keen to hear stakeholder views on how effective double counting for wastes has been to date and if any other policy mechanisms within the scope of the RTFO could be a more effective way to stimulate the production of waste-based fuels going forward.

We would welcome stakeholder views on whether there should be more flexibility to address different types of waste, for example rewarding certain feedstocks with more certificates than others. At present, the development fuel obligation excludes fuels produced from certain types of waste (oils and segregated fats). Similar provisions could be extended to the treatment of different types of waste in other areas of the scheme.

Questions for stakeholders

Q11. Has the double rewarding of waste-based fuels relative to single rewarding for crop-based fuels been effective in achieving maximum carbon savings?

Q12. Should double reward continue going forwards or is there an alternative way within the RTFO to incentivise the supply of waste-based fuels?

Question 7

RTFO development fuel obligation

Accepted Answer

The 2018 amendment to the RTFO included the creation of a new development fuel obligation to encourage the supply of novel emerging technologies for fuel production. The first obligated year was 2019, however certificates gained in 2018 and 2019 could be carried into 2019.

In April 2019 the scheme switched from operating on a financial year basis to a calendar year basis – as such, 2019 was a short year operating from April to end of December.

The intention of the development fuel obligation was to:

stimulate the production and supply of strategically important, advanced low carbon fuels, avoiding the need for vehicle adaptation and driving decarbonisation in sectors where there are fewer alternatives
reduce the reliance on ’traditional’ biofuels, where feedstocks are limited and may become more so as demand increases
increase the supply of drop-in fuels (low carbon fuels that avoided the blend walls^{[footnote 13]} that limit conventional biodiesel (FAME) and ethanol)
increase the use of feedstocks that do not have land use change risks or compete with existing fuel pathways
encourage development of strategic fuel pathways by accessing feedstocks that are otherwise not used in the main obligation because the technology is new and expensive

To qualify for development fuel certificates, a fuel must be made from one of the following:

sustainable wastes or residues that the administrator considers are eligible for double RTFCs, but exclude fuels produced from segregated oils and fats such as used cooking oil and tallow, as these feedstocks are already widely used
a renewable fuel of non-biological origin (RFNBO), for example hydrogen made from renewable energy

In addition, a development fuel must also be one of the following fuel types:

hydrogen
aviation fuel (avtur or avgas) – note this fuel type will be removed as the SAF mandate comes into force in 2025
substitute natural gas – low carbon methane produced from the product of gasification or pyrolysis
a fuel that can be blended so that the final blend has a low carbon fraction by volume of at least 25% whilst still meeting BS EN: 228 (for petrol) or BS EN: 590 (for diesel)

The development fuel obligation created an additional incentive to supply these fuels in 2 ways.

First, the obligation could only be met by low carbon fuels satisfying the tighter eligibility criteria.

Second, the buy-out price of these certificates was set at 80 pence per certificate, rather than the 50 pence currently set for main obligation buy-out.

As all development fuels receive double certificates for each litre of fuel this effectively results in a buy-out of £1.60 per litre of development fuel not supplied. This means producers should be able to command a significantly higher market price for their low carbon fuel compared to if that fuel were only eligible for main obligation certificates.

The development fuel obligation trajectory can be seen in Figure 7. The obligation was implemented in 2019 and increased up to its current level of 1.2% in 2024^{[footnote 6]}. Like the main obligation, the development fuel obligation has been set to increase each year until 2032 where it will reach 2.8%, after which it continues at that level indefinitely.

Figure 7: development fuel obligation from 2024 to 2032 as a share of total liquid fuel by volume

Year	Development fuel obligation as a percentage of overall fuel supply
2018	0
2019	0.1
2020	0.15
2021	0.5
2022	0.8
2023	1
2024	1.2
2025	1.4
2026	1.6
2027	1.8
2028	2
2029	2.2
2030	2.4
2031	2.6
2032	2.8
2033	2.8
2034	2.8
2035+	2.8

Area under review

When the policy was introduced, it was recognised that there may not initially have been a sufficient supply of relevant fuels to meet even modest development fuel obligation levels. Instead, the policy was designed to incentivise investment in suitable production facilities to encourage the growth in novel fuel supply. The original cost benefit analysis highlighted the availability of eligible fuels as a significant uncertainty and reflected the risk that high levels of buy-out may be the main route to compliance.

Since the development fuel obligation was introduced, there has not been significant quantities of development fuel supplied compared to the obligation level. Most suppliers have met their obligation via ‘buy-out’. Figure 8 shows this shortfall.

Figure 8: dRTFCs redeemed from 2017 through to a forecast in 2023

Year	dRTFCs redeemed	dRTFC buyout	Development fuel obligation
2019	0	54	54
2020	0	67	67
2021	48	201	249
2022	60	351	411

Figure 8 shows the RTFO development fuel supply and buy-out, as a proportion of the overall development fuel obligation, from 2019 to 2022. There is an increase in all 3 variables over this time period.

With increased competition for feedstocks, reducing the reliance on ‘traditional’ biofuels remains important, given increased competition for feedstocks.

The main barriers to investment in development fuels identified by industry are:

technology: development of the novel production pathways has been slower than expected
feedstocks: there is likely to be significant competition for feedstocks used to produce development fuels as some fuels (those produced from recycled carbon feedstocks) have not been confirmed in law as eligible until recently
construction: risk during construction that can cause delays
revenue certainty: uncertainty regarding the future value of development fuels

Many of the plants that plan to produce SAF will also produce development fuels suitable for road. Investment in the SAF industry can, therefore, present an opportunity for an increased supply of road fuel.

It is recognised that a change to the development fuel obligation could impact investments that have been made with the current mechanism in place. At the current trajectory, significant buy-out would persist in future years, however, we are also aware of some plants that may begin producing greater volumes of development fuels in the near future.

From July 2024, recycled carbon fuels have been eligible for support for the first time under both the RTFO and – from 1 January 2025 – the SAF mandate will help incentivise investment in SAF production and supply. This could unlock a wider pool of fuels that would be count towards a supplier’s development fuel obligation.

We are keen to understand the part the RTFO should play in driving the growth of innovative, emerging technologies whilst delivering GHG reductions. As global demand for low carbon fuels increases and different technologies are developed, we need to ensure the scheme supports its strategic aims of delivering sustainable advanced fuels while also diversifying the feedstocks and production processes required for their deployment. Following a consultation process and the gaining of the necessary primary powers, recycled carbon fuels became eligible for development fuel certificates in July 2024. Those new primary powers have also allowed the SAF mandate to support fuels derived from nuclear energy, something which could be mirrored in the RTFO (subject to formal consultation).

Feedback to the second SAF mandate consultation also suggested that a number of stakeholders are keen for both the SAF mandate and RTFO to broaden support to include other technology pathways, including carbon capture usage and storage enabled hydrogen (blue hydrogen). Stakeholders suggested blue hydrogen may have the lowest levelized cost of the various low carbon hydrogen options, meaning its deployment as a transport fuel or chemical precursor may be more cost effective. Such a change would also further align DfT’s schemes with the Government’s Low Carbon Hydrogen Standard (LCHS). Such a change would require additional new primary powers (as blue hydrogen is not renewable). We would welcome further detail from industry on the anticipated role of blue hydrogen and other hydrogen production pathways, in transport decarbonisation, and the rationale for further support under the RTFO and SAF Mandate.

We are therefore seeking stakeholder views on all areas of the development fuel obligation policy to help shape the next steps and ensure it can best meet its aims.

Questions for stakeholders

Q13. Do you have any evidence on why there has been a lack of supply of development fuels or how the obligation has stimulated the production of development fuels?

Q14. Do you expect development fuel supply to increase relative to the obligation in the short and medium term such that levels of buy-out are minimised?

Q15. How important will SAF plants currently in development be in supporting deployment of drop-in low carbon road fuels under the RTFO?

Q16. Are eligible fuels defined appropriately to meet the development fuel obligation goals? Should a broader or narrower range of fuels, feedstocks and production processes be considered?

Q17. If the development fuel obligation was to switch to a GHG-based reward mechanism, how could this impact supply of development fuels, including investment in production?

Question 8

RTFO administrator

Accepted Answer

The RTFO is currently organised by an administrator within DfT. This team is responsible for the day to day running of the scheme, which includes:

managing accounts
issuing or revoking certificates
liaising with suppliers and other stakeholders
assessing feedstocks
reviewing sustainability claims
administering the RTFO Order regarding obligation redemption, buy out, revocation and civil penalties
ensuring scheme compliance via applications checks and chain of custody investigations
maintaining and updating detailed guidance on how both obligated fuel suppliers and low carbon fuel producers can comply with the eligibility criteria of the scheme
updating regular statistics related to RTFO compliance and an annual report on scheme outcomes

The administrator assesses low carbon fuels applications and issues certificates to the supplier if they believe the fuel meets the carbon and sustainability criteria.

In 2023, the RTFO upgraded its online reporting portal to provide numerous efficiency improvements for both the administrator and external stakeholders. The new RTFO platform, ROSlite, has also provided flexibility to the time frames associated with certificates being issued and suppliers can claim their certificates as soon as they pass administrator checks.

The administrator verifies fuel volumes using HMRC fuel duty payment data. Data is received from HMRC to the administrator around day 20 of the month and is uploaded to ROS where it is linked to the fuel supplier’s ROS accounts. Fuel volumes can be adjusted where it may have gone to a non-obligated end use or where the obligation sits with another fuel supplier, for example lifts.

Adjustments are approved by the administrator. Evidence is requested regularly to check claims. Volumes must be reconciled in order for certificates to be issued for the related applications.

The administrator conducts a variety of checks on both the:

quantity of fuels being supplied
carbon and sustainability data provided within applications for certificates

As well as standard checks, the administrator can investigate applications to ask further questions or request additional evidence. Full chain of custody investigations can also be launched to seek evidence from all stages in the supply chain back to the point of origin of the fuel or feedstock.

The administrator can request additional evidence against any application including each stage in the supply chain.

Any new feedstock that a stakeholder wants to include within RTFO will be subject assessments. These are necessary to determine the category of feedstock in question and, therefore, the category of reward the resulting fuel will receive. It needs to be determined if a feedstock is treated as a waste, residue or a crop receiving 1 or 2 certificates per litre (or equivalent) and whether it could qualify for development fuel certificates.

These assessments are conducted according to demand and can only begin if a stakeholder submits a feedstock assessment application form.

The administrator conducts a variety of checks, including assessing the application against the RTFO Order legislation and will often seek a second opinion either internally or from and independent source before a decision is made. Once a feedstock is approved, it is added to ROSlite and to the published list of approved RTFO feedstocks.

Support is given to stakeholders and administrators aim to respond to all queries within 5 business days. Queries can include:

ROS account management
volume reconciliation
feedstock questions or feedstock assessment applications
guidance interpretation advice and statistics enquiries

See the RTFO how to respond for contact details.

Questions for stakeholders

Q18. Do you have any feedback on the effectiveness of the day to day running of the scheme and the provision of scheme guidance and statistics? Please provide suggestions for any improvements.

Q19. Do you have any further comments on the operation of the scheme to date?

Question 9

Full list of questions

Accepted Answer

For organisations only

Describe the work of your organisation.

Consultation questions

For all questions, please supply evidence where possible.