Consultation outcome

Supporting recycled carbon fuels through the renewable transport fuel obligation: government response

Updated 16 February 2024

Executive summary

Introduction

In July 2021, the government confirmed its commitment to support recycled carbon fuels (RCFs) under the Renewable Transport Fuel Obligation (RTFO) following a previous consultation and further reiterated this support in the transport decarbonisation plan and benefits of Brexit paper. This consultation sought views on how to ensure that RCFs are sustainable, have suitable eligibility criteria and have an appropriate level of reward.

Supporting RCFs through the RTFO will help to maximise the greenhouse gas (GHG) savings that can be achieved under the RTFO. Since its introduction in 2008, the RTFO has set volume-based targets for the supply of renewable fuels for use in UK transport. These targets are met through a certificate trading scheme. In 2021, renewable fuels supplied under the RTFO saved 5.07 million tonnes of carbon dioxide (CO2), equivalent to 58 million car journeys from London to Glasgow. RCFs can help to meet ambitious and growing RTFO targets, ensuring that the RTFO can continue to make an important contribution to future UK carbon budgets.

Transport is the largest emitting sector of GHG emissions, producing 26% of the UK’s total emissions in 2021. Therefore, transport decarbonisation is central to the UK’s pathway to reduce the economy’s wider GHG emissions and achieve net zero by 2050. RCFs can play a critical role as a source of low carbon fuel for sectors that cannot be easily electrified such as heavy goods vehicles and aviation. This will complement other policy initiatives set out in the transport decarbonisation plan and net zero strategy.

The need for intervention

To date, the RTFO has only supported fuels from renewable sources. RCFs are not classified as renewable fuels as they are made from fossil-derived wastes that would otherwise be landfilled or incinerated (for example, non-recyclable plastic waste or industrial waste gases). However, RCFs can provide significant carbon savings compared to traditional fossil fuels like petrol, diesel and kerosene.

RCFs will have an important part to play in future carbon budgets as they are a key potential source of sustainable aviation fuel (SAF). However, high costs are associated with the advanced fuel technologies required for their production and, therefore, are not currently delivered at scale to the UK market.

Supporting RCFs under the RTFO will increase the range of feedstocks eligible for support and encourage the innovation needed to increase the deployment of low-carbon fuels in transport sectors that are more challenging to decarbonise, such as aviation and heavy goods vehicles. This will complement our forthcoming SAF mandate.

UK industry is an early mover in developing and deploying RCF production capacity. This has been supported by grant funding, such as the advanced fuels fund (AFF), from the Department for Transport (DfT). Revenue support through the RTFO and the SAF mandate (from 2025) will help to grow this sector, delivering benefits for the UK economy and supporting the government’s levelling-up goals. This domestic production capacity will also support the UK’s long-term energy security.

To introduce support for RCFs into the RTFO, DfT tabled an amendment through the Energy Security Bill to amend the Energy Act and allow RCFs to be supported. The bill achieved Royal Assent on 26 October 2023. Secondary legislation will subsequently be laid as soon as parliamentary time allows to amend the RTFO Order 2007.

Government response

The government consulted on the proposed approach for supporting RCFs through the RTFO in a 2022 consultation. This consultation built on a previous 2021 consultation and government response.

The consultation focused on 3 aspects of RCF policy:

• criteria for eligibility
• ensuring sustainability
• level of reward

This response outlines the government’s position on each aspect.

Criteria for eligibility

In the 2022 consultation, it was proposed that RCF feedstocks be subject to a principles-based approach while redeeming the eligibility of the 2 previously eligible feedstocks – refuse-derived fuel (RDF) and industrial waste gases (IWGs).

The consultation set out criteria that RCFs would be assessed against to be deemed eligible for reward, including feedstock eligibility and biogenic content requirements.

A similar method of assessing how to judge biologically derived waste feedstock as double counting wastes, like the one currently used by the RTFO Administrator, was suggested. Following positive feedback to the consultation, this response confirms these approaches to eligibility.

Draft guidance (Annex B) for RCFs has been published alongside this government response. A call for feedstocks has been communicated to stakeholders. If you have not received this, contact: rtfo-compliance@dft.gov.uk.

This is to provide further clarity on how these criteria will be applied in practice.

Ensuring that recycled carbon fuels are sustainable

The RTFO includes significant safeguards to ensure the sustainability of renewable fuel supported under the scheme. It is unanimously agreed that RCFs should also be required to meet similar sustainability and environmental standards and this response reaffirms this position.

The 2022 consultation provided the following proposals:

• a tailored GHG emissions methodology that follows a counterfactual approach, comparing the GHG emissions from RCF production to the most likely alternative fate

• an ambitious GHG emission savings threshold that ensures that RCFs deliver substantial GHG reductions and remains stringent as the electricity grid decarbonises

• reporting and verification requirements, including additional sustainability criteria, which will give confidence that RCFs are supplied sustainably

These proposals were well received. Due to the practicality of implementing 2 of the additional sustainability criteria, highlighted by engagement with other regulators, only one of the proposed criteria will be required:

No adverse local environmental impacts have been caused as a result of sourcing or processing the feedstock.

The other 2 criteria still apply but instead of being sustainability criteria, they will be incorporated into the principles-based feedstock assessment.

Rewarding the supply of recycled carbon fuels

In the 2022 consultation, the reward rate of gaseous and solid feedstocks was proposed to be aligned at a level of reward of 0.5 development renewable transport fuel certificates (dRTFCs) per litre, while inviting evidence as to whether a higher reward rate may be required.

Based on consultation feedback, the reward rate level is being confirmed as 1 dRTFC per litre, for both gaseous and solid feedstocks. This is to balance the need to encourage investment into the RCF industry, without disincentivising good waste management practices.

Next steps

The government already has the required primary powers through the Energy and Security Act that reached Royal Assent in October 2023. The policies outlined in this government response will be implemented through secondary legislation as soon as parliamentary time allows. This legislation will include the date from which RCFs will begin to be rewarded under the RTFO.

Introduction

Overview

RCFs are fuels produced from fossil wastes that cannot be prevented, prepared for reuse, or recycled. Feedstocks used to produce RCFs include the fossil fraction of municipal solid waste (MSW) (for example, non-recyclable plastic) and industrial waste gases. Such feedstocks may be mixed with biogenic material (for example, food-contaminated packaging, sanitary waste, polycotton). RCFs have the potential to reduce GHG emissions relative to petrol or diesel.

RCFs are not currently supported under the RTFO, only renewable fuels are eligible for support. This includes biofuels and renewable fuels of non-biological origin (RFNBOs), for example, hydrogen and renewable power to liquid (PtL). However, evidence suggests that if the government were to provide support to RCFs this might encourage greater private investment in advanced waste processing technologies to bring a higher quantity of renewable fuels,^{[footnote 1]} including sustainable aviation fuel, to market.

In the 2021 consultation, the government proposed that 2 types of RCF feedstock would be eligible to claim dRTFCs under the RTFO scheme. The 2 feedstocks were RDF^{[footnote 2]} and industrial waste gases^{[footnote 3]}. Various other proposals, including a minimum biogenic content and categorising RCFs as development fuels, were made which can be seen in the 2021 consultation.

A wide variety of responses to the consultation were received however a significant number of respondents argued that the proposals for eligibility were too narrow. Some respondents also suggested that the additional requirements were unnecessarily restrictive, may disincentivise the separation of waste, and could promote deliberate commingling of wastes.

The government recognised the considerable level of concern about some of the existing proposals and, therefore, committed to look again at the feedstock eligibility requirements, considering the suggestions provided by respondents. Following additional research and stakeholder engagement, 3 aspects of RCF policy were consulted on:

• criteria for eligibility
• ensuring sustainability
• level of reward

The 2022 consultation explored:

• the implementation of a principles-based approach
• the removal of a minimum biogenic content
• the introduction of a counterfactual methodology
• additional sustainability criteria
• a revised reward rate for RCFs

This response is published alongside draft guidance for RCFs. This is to provide further clarity on how these criteria will be applied in practice.

It is recognised that some respondents fundamentally disagreed with the inclusion of RCFs under the RTFO. The government’s position remains the same since its response to the first consultation – that the advantages of rewarding RCFs outweigh the risks. For further information on the government’s rationale for this, see the government’s response to the first consultation.

Feedback was also received regarding general policy details of the RTFO. The government keeps the RTFO under constant review to ensure it continues to achieve the best overall GHG savings. The points raised by respondents have been recorded, however, are not all addressed in this response, as they were out of scope of this consultation.

The government is aware that many stakeholders have an interest in the forthcoming SAF mandate, as the government has confirmed RCFs will be eligible under the scheme. The government recently consulted on the detailed design of the SAF mandate with a general principle to mirror the RTFO where it makes sense to do so, for example, around the submission of claims, reporting the required data and compliance procedures. This will simplify processes for both the industry and the administrator.

Regarding the eligibility criteria of RCFs, it is intended to implement the same rules confirmed in this response under the SAF mandate unless otherwise stated in the SAF mandate consultation.

Responses received

A total of 32 responses were received from a range of organisations concerning the government’s proposals. The following table provides a breakdown of the responses.

Table 1: responses received

Organisation Type	Number of respondents
Research institution	1
Chemical research	1
Fossil fuel supplier/producer	3
Equipment manufacturer	3
Power producer	1
Renewable fuel supplier/producer	10
Commercial delivery company	1
Trade association	9
Energy trading company	1
Waste management company	2

Criteria for eligibility

Feedstock eligibility

The government proposed that a principles-based approach should be taken to assessing feedstocks, similar to the approach taken by the RTFO Administrator about biogenic wastes. However, as RCFs are produced from non-renewable feedstocks, to be eligible for support as an RCF under the RTFO, the feedstock would be required to meet the RTFO definition of waste and must be a waste that cannot be prevented, reused, or recycled – in accordance with Department for Environment, Food and Rural Affairs (Defra) waste hierarchy.

If the RTFO Administrator has established that the material in question meets the definition of waste, it was then proposed that the RTFO Administrator would consider the same factors used for biogenic wastes. However, unlike for biogenic wastes, the decision taken by the RTFO Administrator would be an absolute one concerning whether the feedstock is eligible, rather than whether it would count as a single or double.

The principles are:

The effects of the feedstock on the following (as set out in the Energy Act 2004):

• carbon emissions
• agriculture
• other economic activities
• sustainable development
• the environment generally

Consideration of any alternative uses and alternative disposal outcomes that could have been adopted or used for the relevant residue or waste.

Further detail was provided in the July 2022 consultation.

Question 1

Do you agree or disagree that a principles-based approach should be taken to determining RCF feedstock eligibility?

Table 2: summary of responses for question 1

Answer	Number of respondents
Agree	24
Disagree	2
Other	1
Total	27

Among the stakeholders who agreed with a principles-based approach were:

• fossil fuel suppliers/producers
• chemical research companies
• renewable fuel suppliers/producers
• trade associations
• equipment manufacturers
• waste management companies
• research institutions
• an energy trading company

The main advantages highlighted included the ability for future flexibility, the alignment with biologically derived waste feedstocks, transparency, and the ability for RCF eligibility to be assessed on a level playing field.

Several respondents who supported the proposals also made further suggestions or requests for clarification, such as:

• grandfathering
• alignment with REDII (the regulatory approach in the European Union).
• clarity over RDF and IWG treatment

Some renewable fuel suppliers and trade associations expressed concern over investment risk, suggesting that a grandfathering^{[footnote 4]} approach should be taken to assess feedstocks as well as requests to make the feedstock assessment before financial close on prospective RCF plants. There were various requests for more detail on the principals involved in the approach.

Five respondents requested clarity over the status of RDFs and IWGs, with a common question over whether they would be automatically eligible for support under the RTFO, without needing to go through the additional assessment.

Those who disagreed with the principles-based approach included a commercial delivery company that had a fundamental disagreement with including RCFs in the RTFO but did not comment further on the question. The other disagreement came from an equipment manufacturer who stated that the fossil component of an RDF should be automatically eligible and this should be grandfathered.

Government response

The responses to questions 1 and 2 have been considered together – see the government response below.

Question 2

Do you agree or disagree with the proposed criteria? Are there any additional criteria we should consider?

Table 3: summary of responses to question 2

Answer	Number of respondents
Agree	22
Disagree	4
Other	0
Total	26

Respondents who agreed with the proposed criteria included:

• renewable fuel suppliers/producers
• trade associations
• fossil fuel suppliers/producers
• chemical research companies
• equipment manufacturers
• research institutions
• an energy trading company

Those agreeing emphasised the consistency with the Energy Act and the robust frameworks in place.

There were similar requests to the answer in question 1, especially about:

• grandfathering
• quantitative transparent criteria for assessing feedstocks.
• alignment with other national systems, especially the EU

It was noted by a renewable fuel supplier/producer that technological advances should be assessed in the short term and feedstocks should not be disqualified due to unproven chemical recycling methods. A chemical research company added that the waste hierarchy should be added as a principle, and there was a comment from a renewable fuel supplier that feedstocks available in other sectors should not be disqualified as RCFs.

It was argued by a fossil fuel producer/supplier and a renewable fuel producer/supplier that as data from non-UK/EU wastes being imported is less available for assessment, or the waste may have different uses in different locations, extra thought may have to go into the assessment to determine the end-of-life fate and, therefore, how a feedstock would be rewarded.

Of those who disagreed with the proposed criteria, a waste management company and a commercial delivery company had concerns that the criteria would incentivise the diversion of waste away from recycling and disrupt the waste hierarchy, as recyclable material can be recovered from residual waste and the policy risks disincentivising this separation.

The waste management company expanded that all technically recyclable materials should be excluded to discourage more plastics from entering residual waste streams and that testing frequencies should be monthly due to seasonal variations.

The other 2 responses that disagreed came from a trade association and a renewable fuel producer/supplier. They argued that the criteria were not clearly defined with the scope of some overlapping, as well as emphasising the points above about the imported feedstock and a lack of arbitration or appeals process.

Government response: questions 1 and 2

The government welcomes the detailed responses received to these questions. Although a range of responses was received, there was a strong consensus in favour of the consultation proposals. The government plans to take forward the proposed principles-based approach to determining feedstock eligibility.

Given that the proposed criteria have been used successfully for many years to determine whether a biogenic feedstock is eligible to double count, the government is committing to these criteria for RCFs, while recognising the need to provide further clarity on how these criteria will be applied in practice.

To this end, draft guidance for RCFs has been published alongside this government response, as well as a call for new feedstock applications. The request for an explicit appeals process has also been noted. This would have a wider-ranging scope than solely RCFs but is something the government will continue to consider.

It is the government’s view that it is inappropriate to grandfather decisions regarding feedstocks because:

• the RTFO Administrator has a mandate to ensure that only sustainable materials are rewarded under the RTFO and consider wider impacts – grandfathering would undermine the administrator’s ability to do this

• the core technologies likely to be employed to produce RCFs are platform technologies (for example, gasification and pyrolysis) and so have some flexibility to be adapted to utilise different feedstocks and produce products for different end-markets

However, it is important to note that the administrator will keep an open dialogue with stakeholders on their feedstock assessments, and the administrator will engage with impacted stakeholders if feedstocks currently eligible under the RTFO could change.

As set out in the 2022 consultation, RDF and IWGs will be eligible feedstocks from the introduction of the policy and will not be subject to an initial assessment. However, they will still be subject to reassessment under the proposed criteria where necessary.

As outlined above, feedstocks that are approved would only change in status if significant evidence came to light, which demonstrated that future use of the feedstock to produce transport fuel has become contrary to the eligibility criteria.

With regards to imported feedstocks, they will have to meet the same set of criteria as feedstocks sourced in the UK. Existing waste assessments under the RTFO are global, so assessments for RCFs will also be global.

The concern that introducing RCFs for support under the RTFO could disincentivise recycling has been noted. However, stakeholders can be reassured that the RTFO waste assessment process has worked reliably for many years.

Furthermore, the principles include consideration of alternative uses and alternative disposal outcomes which, in practice, requires the RTFO Administrator to consider impacts on the waste hierarchy in making their assessment, and in any reassessments. This is further expanded in the draft guidance.

Process for determining eligibility

If a principles-based approach is taken forward, there were different options proposed for determining the eligibility of feedstocks based on the criteria:

1. A rolling assessment (preferred approach) – a flexible timetable whereby prospective RCF suppliers can submit applications at any time for assessment.

2. Annual assessment – RCF suppliers would submit applications by a specified date which can then be assessed.

Further detail on each of these options is set out in the consultation document.

Question 3

What is your preferred option for determining feedstock eligibility? Please justify your answer and provide supporting evidence where appropriate/available. We also welcome feedback from stakeholders concerning how to best structure an annual assessment process.

Table 4: summary of responses to question 3

Choice	Number of respondents
Option 1	18
Option 2	2
Other	4
Total	24

Respondents who agreed with option 1 included:

• trade associations
• renewable fuel suppliers/producers
• fossil fuel suppliers/producers
• equipment manufacturers
• waste management companies
• an energy trading company

They highlighted the consistency with the RTFO approach, the lack of a delay in having to wait up to a year to submit for approval, and flexibility in project timelines allowing for more investment certainty.

Those agreeing with option 1 did raise additional points. There were similar themes to questions 1 and 2:

• requests for grandfathering of feedstock and counterfactual assessments
• request for harmonisation with EU rules
• a request that commercial sensitivities between project developers and feedstock suppliers should be respected in the assessment
• a request that the assessment should be complemented by a clear, predictable and transparent process

Two renewable fuel suppliers supported option 2. It was argued this would be easier to administer, keeping costs low. A further respondent requested option 2, with no reassessment over a timeframe of less than 5 years to provide certainty for this period, and that this was unlikely to curtail waste management practices due to timeframes of developing these facilities.

Government response

Reflecting the general stakeholder consensus for option 1, the preferred approach, the government is confirming it will move ahead with a rolling assessment of feedstocks in line with the current approach for biogenic wastes and residues under the RTFO.

The concerns raised over the periodic reassessment of previously approved feedstocks are noted. As mentioned in the response to questions 1 and 2, the government will not be implementing a grandfathering policy. Stakeholders can be reassured by the fact that over many years of biogenic wastes and residues being eligible under the RTFO, classifications have only been changed in a small number of cases, usually to clarify definitions rather than remove eligibility, and in all cases after significant engagement with impacted stakeholders.

There will be transparency with stakeholders throughout any reassessments and the Administrator will engage with impacted stakeholders if feedstocks currently eligible under the RTFO are being reviewed.^{[footnote 5]} Commercial sensitivities throughout the assessment will of course be respected.

More details of the assessment process are outlined in the accompanying guidance.

Minimum biogenic content requirements

The government took on board feedback from the previous 2021 consultation that the requirement for solid RCF feedstocks to contain at least 25% biogenic content by energy might disincentivise the segregation of waste and promote the commingling of biogenic and fossil wastes. The consultation proposals were therefore reviewed and revised in the second consultation.

These issues and other measures in place to prevent the locking-in of waste streams or undermining efforts to increase rates of material and chemical recycling were discussed in more detail in the 2022 consultation. This resulted in 2 options:

1. Removing (with caveats) the explicit minimum biogenic content requirement.

2. Reducing the biogenic content threshold to a lower level of 10%.

Question 4

What is your preferred option for the minimum biogenic content requirement? Please justify your answer and provide supporting evidence where available.

Table 5: summary of responses to question 4

Choice	Number of respondents
Option 1	19
Option 2	1
Neither	3
Other	1
Total	24

Respondents agreeing with removing the minimum biogenic content included:

• renewable fuel suppliers/producers
• fossil fuel suppliers/producers
• trade associations
• equipment manufacturers
• research institutions
• an energy trading company

Overall, 7 stakeholders emphasised that there were enough assurances from the principles-based approach without needing a minimum biogenic content. A renewable fuel supplier and trade association explained that removing the limit would reduce regulatory complexity.

Another renewable fuel producer argued that numerous single-composition waste streams that could be intercepted and used as feedstocks end up in landfill or incineration in the UK anyway, and that non-recyclables that do contain biogenic material will likely be at a level below 10%. A research institution emphasised that there are enough financial incentives in place for good recycling practices that this would not disincentivise recycling.

There were concerns from a renewable fuel supplier that a minimum requirement would add unnecessary cost in terms of testing and regulatory burden on a project, due to the difficulty in testing for biogenic content, and that auditing pre-treatment processes could prevent diversion from recycling.

A renewable fuel supplier/producer and equipment manufacturer built on this, explaining that introducing an arbitrary 10% threshold would encourage poorer segregation processes earlier in the supply chain, such as adding additional biogenic material into feedstocks to meet the threshold. A fossil fuel supplier/producer requested clarity on the rules and methodologies that would determine the option for the RTFO Administrator to include a minimum biogenic content for specific feedstocks.

One renewable fuel supplier suggested biogenic content is not the right metric, suggesting limiting solid feedstocks to RDF would achieve the same aim.

A renewable fuel supplier/producer supported option 2: a defined minimum biogenic content of 10% for simplicity and to give clarity on the requirements.

Three stakeholders, a trade association, a waste management company and a fossil fuel supplier/producer disagreed with both options presented in the consultation. The primary concern was that the proposals would over-incentivise RCF production, contradicting the waste hierarchy.

The fossil fuel producer/supplier suggested basing the assessment on the specific technological set-up of the production process, as this would allow specific RCF feedstocks to be made eligible only when the process produces petrochemical feedstocks as the main product with fuels as a secondary coproduct.

The waste management company argued that a minimum biogenic content of 50% should be introduced in line with the hydrogen incentive support mechanism, as emerging chemical recycling technologies would be undermined by a threshold of anything less than this.

Government response

The majority of responses supported option 1, to remove the minimum biogenic content threshold. This approach will be taken forward.

While aware of concerns that this approach could disrupt the waste hierarchy, the principles-based approach should mitigate this. Any feedstocks that could be recycled or used more efficiently elsewhere will likely fail to meet the eligibility criteria when assessed by the RTFO administrator.

It is important to note that by going forward with option 1, the RTFO Administrator would still have the option to include a minimum biogenic content requirement in the definition of specific feedstock types if deemed appropriate to ensure that only the most problematic wastes are made eligible for RTFO support. This would be employed similarly to how dry matter content and particle sizes are currently used to distinguish waste and regular starch slurry in the RTFO feedstock list.

It is important to emphasise that this would not preclude feedstocks that do not meet that definition from being assessed for eligibility, but they would need to be assessed separately. For example, when assessing feedstock eligibility, pure and contaminated plastic waste streams would likely be assessed separately.

Ensuring that recycled carbon fuels are sustainable

The consultation set out the rationale for introducing support for RCFs under the RTFO based on the environmental benefits they can deliver in comparison to existing end-of-life (EoL) fates for typical RCF feedstocks. The consultation also set out proposals to ensure that RCFs are produced sustainably, focusing on a refined GHG emissions methodology, alternative proposals for setting the emission savings threshold and new provisions for supply-chain assurance.

The proposal uses a counterfactual method for calculating the emission savings of RCFs. The responses received to these proposals, and the corresponding government responses, are set out in this next section.

Choice of counterfactual

In the 2021 consultation, a GHG emissions methodology for RCFs, which calculates emissions relative to the alternative ‘counterfactual’ use, was proposed. This is distinct from the attributional methodology currently used to account for the GHG emissions associated with renewable fuels under the RTFO.

This difference reflects the fundamentally different nature of RCFs, which embody fossil rather than biogenic carbon. When RCFs are burned, fossil carbon is released. As a result, an attributional methodology for calculating the GHG emissions of RCFs would demonstrate minimal environmental benefits compared to conventional fossil fuels – the environmental benefits of RCFs are realised when the conversion of feedstock to RCFs delivers greater carbon savings compared to the counterfactual use (for example, incineration).

Therefore, when assessing RCFs to determine whether or not they deliver environmental benefits, it was proposed to compare the emissions resulting from the production and use of the RCF to the emissions resulting from the otherwise expected or ‘counterfactual’ treatment of the feedstock (for example, incineration). More details can be found in the consultation document (PDF).

Given that different waste disposal methods can have markedly different carbon intensities, the choice of the counterfactual scenario can have a significant bearing on the overall carbon intensity of an RCF.

In response to feedback from the 2021 consultation, the available approaches for determining the counterfactual were reviewed. A GHG methodology was sought that:

• reflected the real carbon implications of producing RCFs as accurately as possible
• relied on data that is both ascertainable and robust
• rewarded and promoted sustainable practice
• is as simple and clear as possible

Three potential options for selecting the counterfactual were investigated:

• option 1: single default counterfactual
• option 2: aggregate counterfactual
• option 3: plant-by-plant approach

The benefits and challenges of each of these options were explored in detail in the consultation.

The proposed position for the counterfactual choice was set out as follows:

• energy from waste (EfW) (electricity only) should be the default counterfactual for all feedstocks

• for non-gaseous feedstocks, the RTFO Administrator can define an alternative counterfactual during the feedstock assessment process, or otherwise revise the methodology following an evidence-based approach due to changes in the counterfactual, such as to take account of heat export and/or CCS if this becomes appropriate

• for gaseous feedstocks, an alternative counterfactual can be defined at a production plant level and, where necessary, will take place during the development fuel preapproval process that the RTFO Administrator already undertakes

Question 5

Do you agree or disagree with the proposed approach for determining the counterfactual to be used?

Table 6: summary of responses to question 5

Answer	Number of respondents
Agree	20
Disagree	6
Other	0
Total	26

Respondents who agreed with the use of the single default counterfactual included:

• renewable fuel suppliers/producers
• fossil fuel suppliers/producers
• chemical research companies
• trade associations
• equipment manufacturers
• research institutes
• an energy trading company

The positives highlighted were that it is straightforward and reliant on existing data, and also offers flexibility with the offer of a case-by-case assessment where data is available.

Those agreeing with the proposal did raise caveats to the approach. These mainly centred on the concerns that if an alternative counterfactual were to be determined for a feedstock during the assessment process, it could create an investment risk. There were requests to grandfather the counterfactual, only making feedstocks ineligible for new installations. It was requested that the administrator reach the assessment decision before financial close, consulting with the industry on any potential changes to feedstock eligibility.

It was also raised that if landfill was found to be an alternative counterfactual during the assessment process, carbon intensity alone should not be the evidence base for whether it is eligible or not, as this may unfairly disqualify RCFs.

Those disagreeing with the proposed approach for determining the counterfactual included trade associations, a commercial delivery company, a renewable fuel supplier/producer and a waste management company. The commercial delivery company spoke of the concern that the counterfactual method proposed would disincentivise the move towards EVs, however, did not provide any evidence to support this.

The concerns about landfill potentially becoming a counterfactual were repeated by a renewable fuel supplier/producer. However, a trade association stated that the counterfactual should always be landfill until the 2028 biogenic to landfill ban comes into force and that the abilities of gasification and pyrolysis were being overstated.

The renewable fuel supplier/producer made further arguments for a site-by-site assessment, as this would consider regional differences in the counterfactual and reward those replacing displaced electricity with renewables. The same stakeholder went on to stress the importance of a site-by-site approach with regard to the upcoming SAF mandate, which will operate on a GHG savings basis, so sites should be robustly and individually assessed. A waste management company believed a plant-by-plant approach was more suitable and disagreed with many of the base assumptions. These are addressed throughout the response.

Government response

The points raised have been noted and the concerns with using the counterfactual proposed are understood. Most stakeholders agreed with the single default counterfactual with the administrator having the option to define alternative counterfactuals where necessary and this is the approach to be taken forward.

The government understands the points raised concerning landfill as a counterfactual fate. However, as landfill becomes less common in the UK, EfW is more appropriate to use as a default counterfactual. For imported feedstock/fuel, the default counterfactual will remain as EfW because it is the most appropriate final fate of these solid waste feedstocks within the UK.

Grandfathering decisions concerning the counterfactual will not be implemented. However, the concerns raised are understood and any reassessment of feedstocks will include engagement with stakeholders.

It is important to note that for gaseous feedstocks, there will be flexibility for alternative counterfactuals to be defined at a plant level. For solid feedstocks, if evidence is provided to the Administrator (by the applicant or otherwise) showing that the feedstock may have a different ‘most likely’ EoL fate, an alternative counterfactual for that feedstock will be considered. More details on this are outlined in the accompanying draft guidance.

Use of the grid average carbon intensity for calculating counterfactual emissions

It was proposed that the carbon intensity applied to the displaced electricity in the counterfactual (Ee), should be based on the latest Department for Energy Security and Net Zero (DESNZ) published figures for a full reporting year for the average generation of that energy in the country where the feedstock and fuel is produced.

Question 6

Do you agree or disagree that grid average emissions factors for the most recent available year (for example, the year preceding the year in which the RCF is supplied) should be used as the emissions factor for the displaced energy in the counterfactual?

Table 7: summary of responses to question 6

Answer	Number of respondents
Agree	21
Disagree	2
Other	1
Total	24

Respondents who agreed with the proposal included:

• renewable fuel suppliers/producers
• fossil fuel suppliers/producers
• chemical research companies
• equipment manufacturers
• trade associations
• a waste management company
• a research institute
• an energy trading company.

The benefits highlighted were that this:

• is a simple, pragmatic approach
• has minimal administrative burden
• will reflect the decarbonisation of the grid

A renewable fuel supplier/producer suggested that companies should be able to purchase additional renewable electricity to replace displaced energy, to reduce the carbon intensity of an RCF plant. A fossil fuel producer/supplier and a renewable fuel producer/supplier suggested that it should not be required to use the official UK government figures as these can operate 2 years in arrears, and RCF producers should be able to use more up-to-date figures if they are from a credible source, such as the UK National Grid. A trade association requested clarification over whether the question refers to the year the RCF is supplied or produced, as the production year is more relevant.

Those disagreeing with the consultation were a commercial delivery company, which made the same argument related to the incentivisation of electric vehicles, and a trade association. The trade association suggested that there should be quarterly reviews and the most up-to-date information should always be used to determine the emissions factor.

Government response

Most stakeholders agree with the approach to use the grid average emissions of the most recent available year as the emissions factor. It is confirmed that this is the approach that will be taken.

Producers will be required to use the official UK government figures, as this will provide certainty to stakeholders and reduce the administrative burden of using a variety of different figures as the grid average. For fuel derived from non-UK countries, relevant figures from the competent local authorities will be required.

While the desire to use more regularly updated data (for example, quarterly reviews) is appreciated, this would create a large administrative burden for both suppliers and the administrator with little potential benefit.

As per the approach permitted currently for biofuels under the RTFO, suppliers will be permitted to zero-rate electricity consumed directly in the RCF production where they consume renewable electricity that meets the criteria for additionality outlined in the RTFO RFNBO guidance. This will not be permitted for accounting for displaced electricity for the default counterfactual. However, there is scope for the RTFO Administrator to permit this for alternative counterfactuals.

Use of the R1 standard

The consultation proposed retaining the use of the R1 standard (PDF) as a benchmark but revising the 26% figure for the efficiency of conversion in counterfactual use (Efe) down to 22%.

According to figures held by the Environment Agency, 49 of 52 energy from waste (EfW) plants currently operating now meet the R1 energy efficiency standard. All newly built EfW plants will be required to meet the R1 standard. Therefore, the R1 standard continues to be seen as an appropriate benchmark for EfW plant efficiency.

However, Tolvik’s 2020 EfW statistics, (PDF) statistics gives the figure for the parasitic load (excluding power import) as averaging 13.7%. Consequently, it was proposed to reduce the Efe figure to 22%.

Question 7

Do you agree or disagree that the Efe factor for EfW (electricity only) counterfactual should be taken as 22%?

Table 8: summary of responses to question 7

Answer	Number of respondents
Agree	17
Disagree	3
Other	2
Total	22

Those agreeing with the proposal included renewable fuel suppliers/producers, fossil fuel suppliers/producers, equipment manufacturers, trade associations, a research institute, and an energy trading company. It was echoed that this complies with the best available techniques (BAT) efficiency of EfW adjusted for parasitic load and is based on the widely applicable R1 standard as well as the best data from Tolvik’s 2020 report.

Those agreeing with the proposal did put forward some caveats. A fossil fuel supplier/producer noted that efficiency performance is usually focused on overall efficiency, not just electricity. A trade association and 2 renewable fuel suppliers/producers raised the issue of using the same Efe factor for industrial waste gases as this is likely to have a different efficiency to solid feedstocks.

A trade association pointed out that Tolvik’s data fluctuates slightly year on year and questioned whether or how the government would reassess this if a trend appeared in the changes to the figure. Furthermore, an equipment manufacturer requested clarity of the definition of the efficiency of conversion to RCF (EFrcf):

Ercf = RCF energy / energy in feedstock x 100

(Ercf equals RCF energy divided by energy in feedstock times 100)

The same stakeholder requested clarification of the definition of emissions from production and processing (Eprod), questioning whether the definition in the consultation excluded those emissions directly from the feedstock, as they are counted in the counterfactual.

Those disagreeing with the proposal were a waste management company, a renewable fuel producer/supplier and a commercial delivery company. The renewable fuel producer/supplier argued that not enough UK incinerators meet the R1 standard, and current regulations require 25% efficiency for new plants, and 20% for existing plants, therefore suggesting an Efe factor of 20%.

The waste management company proposed that 25.5% should be used because this represents modern EfW facilities and they should be those that are compared to new RCF plants. The same respondent suggested that this argument meant that a lower parasitic load of 12% should be applied, reflecting modern facilities, whereas 13.7% represents the average EfW plant. They go on to say individual RCF plant parasitic energy and imported energy factors should be factored into efficiency.

Government response

We received a range of responses, and while considering the range of points covered, it is confirmed the Efe standard will be 22%.

In terms of the Efe factor for IWGs, this will be assessed on a plant-by-plant basis. Calculating this based on electricity only reflects the conditions of UK EfW plants more accurately. It is appreciated that there will be fluctuations and possibly a trend in Tolvik’s data over time. If this does happen, DfT will engage with stakeholders and reassess the parasitic load value. It is confirmed that Ercf and Eprod are defined as in the consultation, more detail can be found in the accompanying draft guidance.

The 12% parasitic load will not be applied, as the average parasitic load of an EfW plant is more appropriate to use than that of new plants. As noted above regarding Tolvik’s data, if a trend appears then the value may reassessed. A 20% Efe value will not be used as this is for existing plants and a minimum efficiency value.

Coproducts and processing emissions

Where an RCF production plant produces multiple coproducts (including excess heat or electricity that is exported and utilised), it was proposed that allocation by energy content should be undertaken, consistent with the current RTFO GHG methodology for biofuels.

The factors to be allocated would be emissions from displaced energy use (Edisp) and those fractions of Eprod, emissions from transport and distribution (Etd) and emission saving from carbon capture and storage (Eccs) that take place up to and including the process step at which a coproduct is produced.

Question 8

Do you agree or disagree with the proposed methodology for dealing with processing emissions and coproducts? If you disagree, please describe an alternative proposed approach, and provide any relevant evidence to support the use of this alternative approach.

Table 9: summary of responses to question 8

Answer	Number of respondents
Agree	21
Disagree	2
Other	1
Total	24

Stakeholders agreeing with our proposals included:

• renewable fuel producers/suppliers
• fossil fuel producers/suppliers
• equipment manufacturers
• trade associations
• a waste management company
• an energy trading company.

The following were outlined as benefits of the methodology by stakeholders:

• the consistency with the current methodology for biofuels under the RTFO
• emissions only being taken into account where they do not cancel out with counterfactual use, as well as the approach towards coproduct allocations
• the proposal that specific additional circumstances may be taken into account during the assessment process

There was a request from a waste management company that imported power or products used in the manufacture of RCFs should also be included in calculations.

A research institute and a commercial delivery company disagreed with the proposals and reiterated their concerns about focussing on the transition to electric vehicles.

Government response

Most stakeholders agreed with our proposals and the method described in the consultation to deal with processing emissions and coproducts will be taken forward. In line with the approach taken for renewable fuels under the RTFO, the methodology covers the whole life cycle and, therefore, imported power and products used in the manufacture of RCFs must be accounted for.

Further clarity is provided in the draft guidance as to how emissions savings are calculated and allocated. The government is confident that this addresses the concerns raised.

Greenhouse gas emission savings threshold

To be eligible for renewable transport fuel certificates (RTFCs), suppliers of renewable fuels under the RTFO must meet a minimum GHG emission savings threshold relative to the typical emissions from fossil fuels used in transport. The emission saving is calculated relative to a ‘fossil fuel comparator’, which from January 2022 onwards, has been 94 grams of carbon dioxide equivalent per megajoule (gCO2e/MJ). Given the distinct methodology proposed for RCFs, it is also appropriate to consider a distinct threshold.

To ensure that the threshold remains suitably stringent as the grid decarbonises, it was proposed that the required threshold becomes more stringent with time (for example, the percentage saving required increases).

Based on the analysis undertaken in the consultation, 2 potential options for the GHG emission savings threshold were developed:

• option 1 (preferred approach): tie the GHG threshold trajectory to the grid carbon intensity
• option 2: retain the stepped GHG threshold trajectory proposed in the previous 2021 consultation but with amendments

Further details on the methodology can be found within the consultation document.

Question 9

What is your preferred option for the GHG emission savings threshold? Please justify your answer and provide supporting evidence where available.

Table 10: summary of responses to question 9

Choice	Number of respondents
Option 1	13
Option2	6
Other	3
Total	22

Those agreeing with the preferred approach of option 1 were:

• fossil fuel suppliers/producers
• renewable fuel suppliers/producers
• equipment manufacturers
• trade associations
• an energy trading company

Stakeholders outlined that the main positive of this approach was that the risk of grid decarbonisation being slower or faster than expected is mitigated and it provides flexibility given the uncertainty over gas supply, unlike option 2. This option was also seen as more appropriate by stakeholders as there are no indirect land use changes associated with RCFs, as compared to crop-based biofuels.

From those agreeing with the proposals, there were some additional requests made. A fossil fuel supplier suggested that the same year should be used for grid carbon intensity as for calculating counterfactual emissions. A fossil fuel supplier/producer, a renewable fuel supplier/producer and a trade association requested clarity on whether this would apply to fuels not sourced in the UK and asked for details on how this would work.

A renewable fuel supplier/producer requested the ability to replace displaced electricity production with additional renewable electricity to decarbonise further.

Those agreeing with option 2 consisted of:

• renewable fuel suppliers/producers
• trade associations
• a fossil fuel supplier/producer.

They generally argued that this would provide more certainty to producers as to the level of GHG savings needed, especially useful in the first few years. A trade association argued that option 1 was not technology-neutral and over-penalised RCFs, as other low-carbon fuels have the stepped approach. They continued to say that if decarbonisation is not as expected, a review of the threshold could be completed, and emphasised that there should be consistency with the EU, such as the RED III methodology. They requested that the fossil fuel comparator proposed should mirror that of the SAF mandate, which it currently does not.

One of the renewable fuel producers/suppliers supporting option 2 requested a lower starting threshold, until 2030, and that carbon capture, usage and storage (CCUS) should be incorporated into workings.

A waste management company and research institute disagreed with both options. The waste management company argued that aligning liquid fossil fuels to the grid marginal was unsound as the metrics are not closely linked, with a concern this will over-incentivise fossil fuel production, and the link should be to the average GHG intensity of the fuels being displaced. The research institute encouraged a reward rate based on actual GHG savings, avoiding the need to set thresholds and removing complexities involved with the counterfactual.

Government response

The government welcomes the evidence provided and will be proceeding with the preferred option to tie the GHG threshold trajectory to the grid carbon intensity.

It is important to note that the RTFO is a volume-based scheme, so while the comments suggesting that reward should be based on GHG savings are noted, it is not possible to do this under the RTFO. The upcoming SAF mandate will reward SAF in proportion to the GHG savings that the SAF achieves, so reducing the carbon intensity of displaced electricity production should be incentivised more under the SAF mandate.

This response confirms the same year’s grid carbon intensity will be used for both the emissions-saving threshold and for calculating counterfactual emissions. Fuels not sourced in the UK will have to follow the same criteria as those sourced domestically. More detail is provided in the draft guidance. Regarding the request to be able to replace displaced electricity with additional electricity, this is covered in our response to question 6.

The government understands that option 2 would offer greater certainty as to GHG saving thresholds. However, uncertainty over future grid decarbonisation trajectories outweighs this. The initial threshold is established so that only projects that have the potential to remain competitive can initially be rewarded under the RTFO.

Other international schemes will be monitored and DfT will continue to look for best practices in this emerging technology. It is not thought that this approach overly penalises RCFs compared to other LCFs. On the contrary, it provides a bespoke methodology and threshold specifically designed to cater for the nuances of RCFs and the counterfactual GHG methodology employed.

It can be confirmed that in option 1, carbon saving thresholds are calculated concerning the equivalent fossil fuel comparator. The minimum threshold, however, is linked to the grid decarbonisation trajectory to ensure plant efficiencies are maintained. Carbon capture and storage (CCS) is incorporated into the GHG emissions methodology.

Reporting and verification requirements

For RCFs to receive dRTFCs, it was proposed that they, at a minimum, meet the same requirements as are currently specified for renewable fuels under the RTFO. This requires appropriate documentation and evidence relating to the above to be verified by a qualified third party and be available for review by the RTFO Administrator as required.

For RCFs, like renewable fuels, it was proposed that the verifier be required to provide a limited assurance opinion. As with renewable fuels, RCF suppliers would be permitted to make use of recognised voluntary schemes where they are available.

Question 10

Do you agree or disagree that the reporting and verification requirements for RCFs should be aligned with renewable fuels currently supported under the RTFO?

Table 11: summary of responses to question 10

Answer	Number of respondents
Agree	23
Disagree	0
Other	1
Total	24

The responses to this question were universally positive. The advantages of the proposal highlighted were:

• practices are well understood by stakeholders
• a consistent playing field is created with other low carbon fuels
• overall cost and administrative burden are reduced

There was a suggestion from a renewable fuel producer/supplier that more details may be needed on the criteria outlined, for example, what constitutes ‘sufficient data’. There was also a request from another renewable fuel supplier/producer to have a parallel system for the SAF mandate.

Government response

In line with the almost unanimous support, the government will align the reporting and verification requirements with the RTFO as proposed. Further detail is supplied in the accompanying draft guidance.

In respect of reporting and verification, the approach for the SAF mandate will be set out in the government’s response to the second consultation of the SAF mandate.

Additional sustainability criteria

For renewable fuels currently supported under the RTFO, additional sustainability criteria have been introduced to mitigate against wider sustainability risks of renewable fuel production beyond those captured through the GHG methodology. There are several risks associated with supporting RCFs that are not related to GHG emissions.

The following criteria (the sustainable waste management criteria) were, therefore, proposed and it was suggested that they should be met for all consignments of RCFs:

1. BAT that has been used to maximise the separation of waste and extract recyclable material.

2. The process through which the waste feedstock is produced has not been intentionally modified to increase the production of the waste.

3. No adverse local environmental impacts have been caused as a result of sourcing or processing the feedstock.

Question 11

Do you agree or disagree that RCF suppliers should be required to demonstrate compliance with the ‘sustainable waste management criteria’? If you disagree, please provide alternative suggestions concerning how to mitigate sustainability risks.

Table 12: summary of responses to question 11

Answer	Number of respondents
Agree	22
Disagree	3
Other	0
Total	25

Among those agreeing with our proposal were:

• renewable fuel suppliers/producers
• trade associations
• fossil fuel suppliers/producers
• equipment manufacturers
• an energy trading company

It was recognised that these criteria are needed to prevent other environmental impacts and the criteria were highlighted as not being overly onerous if the site is already suitably regulated.

There were a few extra variables identified by stakeholders for the government to consider. A fossil fuel supplier/producer, a renewable fuel supplier/producer and a trade association all raised the issue of suppliers outside of the UK, and if they would have to meet the same criteria with a request that they would provide fair competition.

A renewable fuel supplier/producer requested that countries with existing environmental permitting procedures be automatically satisfied and requested a list of these countries. The same stakeholder suggested that the verification of compliance should be combined with the feedstock eligibility assessment, to streamline the process and avoid additional burdens.

A renewable fuel supplier/producer argued that the criteria were more applicable to the waste supplier and should not fall on the shoulders of the RCF producer/supplier, especially with regards to BAT for separation of waste. A trade association argued that local authorities should enforce the local laws to assure compliance with waste management criteria as minor non-compliance is not unusual. Two trade associations requested clarity on the ‘no adverse environmental impacts’, stating this is overly restrictive and has no frame of reference, so any negative impact, for example, lorry movements could fail the assessment.

Those disagreeing with the proposals were a waste management company, a chemical research company and a renewable fuel supplier/producer. The renewable fuel supplier/producer echoed many of the points from above, that the criteria are overly restrictive, especially with regards to ‘adverse environmental effects’. They proposed this be corrected to ‘no disproportionate adverse environmental effects’, to allow local planners to come to this decision.

The same stakeholder stated that off-gas feedstocks will not always be able to be sourced from steelworks using BATs, especially outside the EU and UK. They, therefore, argued that BATs should only apply to solid waste feedstocks.

The chemical research company argued that the criteria do not provide a forward-looking approach to emerging technologies, curbing the scaling up of recycling technologies and this should be considered during the assessment. The waste management company did not believe that the criteria went far enough, suggesting additional controls should be applied. They do not believe voluntary schemes provide the necessary assurances and referenced their previous responses as additional criteria to be considered during assessment, arguing that assessments should be professionally delivered.

Government response

The government has carefully considered the approach to the sustainable waste management criteria. After engagement with other regulators on the practicality of implementing the 3 criteria, it has been decided to only fulfil the third criterion:

No adverse local environmental impacts have been caused as a result of sourcing or processing the feedstock.

However, feedback has been taken on board and the requirement has been reworded to be in line with existing RTFO sustainability criteria, such as the soil carbon criteria. Therefore, the requirement will be that:

Adequate monitoring or management plans are in place to address the local environmental impacts caused as a result of sourcing or processing the waste.

The first and second criteria will be incorporated into the principles-based feedstock assessment. More details on how this will be implemented can be found in the accompanying draft guidance, where the definition of the third criterion has also been clarified. The details requested by stakeholders on the criteria, such as what an ‘adverse environmental impact’ is, or whether local planning authority will be enough for approval will be outlined in more detail in the guidance.

RCFs sourced from abroad will have to meet the same sustainability requirements as RCFs sourced domestically. Further detail is provided in the accompanying draft guidance.

Regarding the request for assessments to be professionally delivered, it is intended that existing permitting regimes in the UK and countries with similarly robust environmental regulations will be sufficient to demonstrate compliance. The use of voluntary schemes will be subject to their standards and audit procedures providing appropriate assurance as assessed by the RTFO Administrator.

Where neither a national permitting system nor voluntary scheme certification is available, third-party audits can be employed. In all these cases, assessments will be required to be professionally delivered.

Rewarding the supply of recycled carbon fuels

In the 2021 consultation, it was proposed that to be eligible for reward under the RTFO, RCFs would have to be categorised as a development fuel. It was, therefore, proposed that RCFs would receive development renewable transport fuel certificates (RFCs).

In 2021, it was proposed that RCFs made from gaseous feedstocks would be eligible for 1 dRTFC per litre and those made from solid feedstocks would be eligible for 0.5 dRTFCs per litre.

Many respondents were opposed to this reward rate, claiming that the rate was too low to deliver RCFs to the market and that there was little case for differential reward between gaseous and solid feedstocks. This is outlined in more detail in the government’s response to the previous consultation.

Revised position on the appropriate reward rate

The following underlying principles were considered:

1. As RCFs are produced from non-renewable material and emit fossil carbon into the atmosphere when combusted, it is proposed that the level of support for RCFs should be lower than for renewable fuels.

2. If possible, the same reward rate should be given regardless of feedstock type, liquid, solid or gaseous.

3. The reward rate should be set conservatively to avoid subsidy, maximise value for money and reduce the risk of adverse outcomes.

It was proposed to align the treatment of all feedstocks at 0.5 dRTFCs per litre (equivalent to 2 times 0.25 dRTFCs). This was a reduction in the previously proposed level of support of 1 dRTFC per litre for gaseous feedstocks and evidence for taking this approach can be seen in the consultation.

Question 12

Do you agree or disagree with our proposal that all RCFs should be awarded 0.5 dRTFCs per litre of fuel supplied? If you propose a higher or lower level of reward, please provide evidence to support your reasoning.

Table 13: summary of responses to question 12

Answer	Number of respondents
Agree	6
Disagree (too high)	4
Disagree (too low)	12
Other	2
Total	24

Three fossil fuel suppliers/producers and 3 renewable fuel suppliers/producers agreed with the proposals. Those agreeing argued that this levels the playing field between gaseous and solid feedstocks and provides a sufficient incentive for RCFs without the risk of diverting feedstock away from recycling or other uses further up in the waste hierarchy. Two stakeholders made the point that 0.5 dRTFCs was an acceptable level of reward, however, if this does not incentivise RCF investment enough, there should be flexibility for this to increase.

The respondents who argued that the reward rate was too high included:

• 2 waste management companies
• a trade association, and a commercial delivery company

The main point raised was that this would lead to an over-incentivisation of RCFs, distorting the market, as well as disrupting the waste hierarchy. A trade association outlined that past projects with large investments had failed due to performance issues. They also suggested this incentive contradicted the upcoming expansion of the Emissions Trading Scheme.

A waste management company argued that 0.25 dRTFCs per litre would be a more appropriate level, with over-incentivisation potentially leading to low-efficiency processes being developed, and recycling and best waste techniques being reduced.

The respondents who thought that the proposed reward rate was too low included:

• renewable fuel suppliers/producers
• trade associations
• an equipment manufacturer
• an energy trading company

There were various, detailed submissions on why 0.5 dRTFCs was not an appropriate value to support RCFs, and that this would prevent the development of the technology required to create RCFs. It was suggested that this would curb the commercialisation of RCFs, having a large knock-on effect on the industry, as well as impacting those hoping to develop SAF from RCFs. On the environmental benefits of RCFs, it was argued that RCFs potential negative environmental risks are mitigated by the additional sustainability criteria applied.

A renewable fuel supplier/producer raised that as RCFs achieve a similar level of GHG savings to biofuels, without indirect land-use change effects, they should be rewarded equally. It was argued that recycling had been significantly undervalued in the consultation and that a higher reward rate would still not exceed the financial benefits of recycling. There were questions raised in relation to the financial modelling presented in the consultation and, therefore, the methodology that led to choosing 0.5 dRTFCs was flawed.

Government response

The government has noted the detailed feedback and additional analysis provided by respondents. The government has decided that a higher reward rate would better support RCF deployment while avoiding unintended consequences. As a result, the government is proceeding with a reward rate of 1dRTFC per litre equivalent to the relevant RCF supplied.

It is not believed that this will over-incentivise RCFs or disrupt the waste hierarchy, in part due to the wider structure of the RCFs eligibility requirements such as the counterfactual methodology, the additional sustainability criteria and the principles-based approach.

Furthermore, inefficient processes will have higher counterfactual emissions and will therefore struggle to meet the GHG emissions-saving threshold. The government is also reassured that gasification and pyrolysis could be important chemical recycling techniques, so investment in this technology should encourage the development of the circular economy.

It is believed that this will provide the necessary incentive for the industry to produce RCFs. It is important that this incentive remains lower than that for truly renewable development fuels, as evidence suggests carbon savings from RCFs will be lower.

Hierarchically, if only 0.5 dRTFC/l were provided, then the incentive to produce RCFs would likely be below the incentive to create crop-based biofuels, which is not in line with the goals of the RTFO. Conversely, if the reward rate was raised above 1 dRTFC/l, then the incentive would be high enough that it would incentivise the production of RCFs over a non-development fuel waste-based biofuel. This would not be in line with the principles set out in the consultation.

Summary of analysis

In support of the consultation, additional analysis was undertaken on the impact of counterfactual fates on the overall GHG intensity of RCFs, how the GHG intensity of RCFs may change over time, and the impact of different reward rates.

Assumptions made in modelling counterfactual emissions

The greenhouse gas emissions across 4 different counterfactuals were modelled, each with 3 different scenarios (high, mid-range and low emissions). These counterfactual scenarios were:

• energy from waste (electricity only)
• energy from waste, combined heat and power (CHP)
• process heat
• energy from waste, electricity, with CCS

More on the assumptions made can be found in Annex B of this consultation, (PDF).

Question B1

Do you agree or disagree that the assumptions made in modelling the RCF counterfactual emissions are reasonable? Please give reasoning for your answer.

Table 13: summary of responses to question B1

Answer	Number of respondents
Agree	2
Disagree	3
Other	1
Total	6

Of the 6 stakeholders who responded to this question, a trade association and a fossil fuel supplier/producer agreed with our assumptions. They highlighted that this is in line with the published data and the 2019 E4 Tech report.

Another renewable supplier/producer requested references for the 15 gCO2eq/MJ fuel based on typical waste-to-fuel processes, as well as the conversion efficiencies of 40% and 50% for the medium and high emissions scenarios. They agreed with the other assumptions made.

The 3 stakeholders disagreeing with the proposals were a commercial delivery company that reiterated their repeated concern, a waste management company and a trade association. The trade association argues that EfW can also supply heat, to provide municipal heating so should also be considered when calculating the counterfactual. The waste management company disagreed with a variety of assumptions made, such as the conversion efficiency, the parasitic figure the efficiency of an EfW plant with CCS (Efe-ccs) counterfactual, the CCUS counterfactual and the efficiency of an EfW plant with combined heat and power (Efe-CHP) figure.

Government response

The references for the figures used in the assumptions can all be found in the footnotes of the consultation document. Due to uncertainty in these assumptions, a range of scenarios was modelled. Combined heat and power were modelled in our analysis.

All assumptions were quality-assured by our external technical support contractors.

Assessing how the GHG intensity of RCFs may change over time

To inform decisions concerning the GHG emissions saving threshold, how the GHG emission savings might vary over time was modelled. This analysis assumed electricity from waste (electricity only) counterfactual and modelled 3 scenarios for each year:

• low emissions: 60% RCF conversion efficiency and 10 gCO2e/MJ production emissions
• mid-range emissions: 50% RCF conversion efficiency and 15 gCO2e/MJ production emissions
• high emissions: 40% RCF conversion efficiency and 20 gCO2e/MJ production emissions

The electricity grid carbon intensity was varied over time using Treasury Green Book figures to project the average carbon intensity of the grid over time.

Question B2

Do you agree or disagree that the assumptions made in modelling the how the GHG emissions from RCFs will change over time are reasonable? Please give reasoning for your answer.

Table 14: summary of responses to question B2

Answer	Number of respondents
Agree	0
Disagree	5
Other	1
Total	6

Those disagreeing with the assumptions made included:

• a commercial delivery company
• a waste management company
• trade associations
• a fossil fuel supplier/producer

The waste management company referred back to its previous points about disagreeing with the modelling. The trade association and fossil fuel producer/supplier concur that the model has disregarded the lifecycle GHG emissions of RCFs, which may be significantly higher than their fossil equivalent.

The other response came from a renewable fuel supplier/producer, who agreed that most assumptions were reasonable. However, they did raise the fact that there is no decrease in supply chain emissions over time, unlike counterfactual emissions and, therefore, the overall emissions will be lower than is shown.

Government response

In response to the disagreement with the assumptions taken, these have been addressed in responses to previous questions explaining the justification for using the assumptions in the counterfactual calculation. Due to uncertainty in these assumptions, a range of scenarios was modelled. The updated cost-benefit analysis uses modelling with more up-to-date assumptions.

Lifecycle emissions and supply chain emissions are addressed in the GHG methodology.

Assessing the impact of different reward rates

To inform the reward rate proposals, analysis was undertaken to determine the incentive per tonne of feedstock for different RCF reward rates modelled over a range of scenarios.

It was assumed that the fuel produced is diesel with a density of 0.85kg/l and a low heating value of 42.8 and investigated 2 different reward rates: 0.5 dRTFC per litre and 1 dRTFC per litre. To account for inherent uncertainties in these calculations, 3 scenarios were modelled for each reward rate:

• high productivity scenario: assumes a market price of 80p per dRTFC (current buyout price), a waste energy content of 36.6 MJ/kg (appropriate for segregated plastic waste) and an efficiency of conversion to RCF of 60%

• mid-range scenario: assumes a market price of 60p per dRTFC, a waste energy content of 18.2 MJ/kg (appropriate for residual waste) and an efficiency of conversion to RCF of 50%

• low productivity scenario: assumes a market price of 40p per dRTFC, a waste energy content of 9.12 MJ/kg (appropriate for unsorted municipal solid waste) and an efficiency of conversion to RCF of 40%

The RCF incentive rate per tonne of waste feedstock was then calculated using the equation in Annex B of the consultation.

Question B3

Do you agree or disagree that the assumptions made in modelling the impact of different RCF reward rates are reasonable? Please give reasoning for your answer.

Table 15: summary of responses to question B3

Answer	Number of respondents
Agree	2
Disagree	4
Other	0
Total	6

The 2 stakeholders agreeing with the assumptions were a renewable fuel supplier/producer and a waste management company. The fuel supplier expressed that the central figure in both scenarios is lower than recycling so should not disrupt the waste hierarchy. The waste management company, despite agreeing with the principles set out in the modelling, referred to their previous points where they disagreed with some incentive rates and their application.

Those disagreeing with the assumptions included a commercial delivery company, trade associations and a fossil fuel producer/supplier. A trade association and fossil fuel supplier/producer argued that the maximum allowable density of the current standard for automotive diesel (BS EN 590) is 845kg/m3. They also suggest that more analysis should be completed on higher dRTFC costs and that it is far more valuable to recycle plastic than to convert it into an RCF.

Government response

The density used in the analysis was 0.86kg/l or 850kg/m3. The suggested density of 845kg/m3 is a similar value, the same once rounded. Minor differences in the values will not affect the outputs from the analysis or the overall conclusions. Rewarding RCFs at a higher rate than 1 dRTFC per litre would risk bringing their reward in line with, or above waste-based biofuels.

Cost-benefit analysis

A cost-benefit analysis (CBA), (PDF) was undertaken to test and, where appropriate, monetise, the impact of the RCF policy, while having regard to the core policy objective – maximising the carbon savings delivered by the RTFO.

There were various assumptions made in the CBA.

Question C1

Do you agree or disagree that the assumptions made in the cost-benefit analysis are reasonable? Please give reasoning for your answer.

Table 16: summary of responses to question C1

Answer	Number of respondents
Agree	2
Disagree	3
Other	1
Total	6

Those agreeing with the assumptions were a fossil fuel supplier/producer and a trade association. They agreed that the maximum costs of RCFs are likely to be lower than the associated buy-out cost.

Those disagreeing with the assumptions included a waste management company, a trade association, and a renewable fuel supplier/producer. The waste management company argues that the assumptions lead to an over-incentivisation of RCFs and, therefore, will encourage unsustainable activity.

The renewable fuel supplier/producer claims there is little data on the cost of producing RCFs and, therefore, little evidence to back up the assumptions made. They go on to say administrative costs need to be added in. The trade association argues that plants using RCFs will be dependent on a gate fee to pay for feedstock and that the table that values RCF per tonne is not available on the market.

The other response, from the trade association, stated the importance of SAF and that this should be the government’s priority.

Government response

The government does not believe the proposed reward will over-incentivise the production of RCFs, as the principles-based approach will disqualify feedstocks that could be eligible for recycling. Additionally, recycling remains the more economically viable option for waste, even at a higher reward rate.

It is recognised that there is a lack of data, but the assumptions used represent what is believed to be the most accurate representation of RCF production costs available.

The assumptions have been updated in the updated cost-benefit analysis published alongside this response, using the most recent supply estimates available.

Question C2

Do you have any evidence on the estimated costs of producing RCFs?

Summary of responses

Three stakeholders provided evidence on the estimated costs of producing RCFs. A waste management company that has been involved in the production of RCFs suggested the costs range from £175/tonne to £250/tonne, depending on the process, scale, and feedstock. Pre-processing costs of the waste could vary significantly, however, and the net cost may be diluted as the process to develop RCFs is the same as that for renewable fuels.

A trade association and fossil fuel supplier/producer submitted the same responses, providing a technical analysis commissioned to E4tech, focussing on 4 waste-fuel pathways within the refining sector.

Government response

DfT welcomes the evidence provided by stakeholders.

Next steps

In summary, most proposals outlined in the consultation are to be implemented into the RTFO scheme to enable RCF eligibility without change. This includes the principles-based approach to assessing feedstocks and the counterfactual methodology.

The reward rate is being raised from 0.5 dRTFCs/kg/litre to 1 dRTFC/kg/litre, for both gaseous and non-gaseous feedstocks. The additional sustainability criteria have been edited, with the first 2 incorporated into the principles-based feedstock assessment and further clarity offered in guidance.

An amendment to the Energy Act has been introduced through the Energy Security Bill, which gained Royal Assent on 26 October 2023, providing DfT with the powers to amend the RTFO to support RCFs. The date that this support will come into place will be outlined in the subsequent secondary legislation which will be laid as soon as parliamentary time allows.

Glossary

Term	Definition
Account holder	An organisation holding an account with the RTFO Administrator, allowing them to be issued with or trade RTFCs
BAT	Best available techniques
CCS	Carbon capture and storage
Certificates	Shorthand for RTFCs
EfW	Energy from waste
EoL	End-of-Life
Feedstock	Raw material used to produce transport fuels including biofuels
GHG	Greenhouse gas
Grandfathering	Refers to biofuels produced in installations before certain dates and affects the GHG savings requirements
Indirect land-use change (ILUC)	Land-use change where the cause is at least a step removed from the effects – the knock-on effects on the expansion of agricultural land use resulting from the cultivation of biofuel feedstocks
IWG	Industrial waste gases
MSW	Municipal solid waste. A feedstock
Obligated supplier	A transport fuel supplier upon whom a renewable transport fuel obligation is imposed
RCF	Recycled carbon fuel
RDF	Refuse derived fuel
RFNBO	Renewable fuel of non-biological origin
RED	Renewable energy directive
Renewable fuel	A fuel used from a source that is either inexhaustible or can be indefinitely replenished at the rate at which it is used. Such as biofuel or other fuels produced from a renewable energy source, for example, renewable fuels of non-biological origin
RTFC	Renewable transport fuel certificate. One RTFC is awarded for every litre of liquid biofuel reported. Biofuels from waste receive double the number of RTFCs. They can be traded between suppliers. Their value is determined by the market
RTFO	Renewable transport fuel obligations. Introduced in 2008, it is the UK’s main mechanism for supporting the supply of renewable fuels in transport. It places an obligation on suppliers of more than 450,000 litres per year of fuel intended to transport to ensure a certain percentage of the fuel supplied is renewable and operates as a certificate trading scheme
SAF	Sustainable aviation fuel
Supplier	Any company or organisation supplying fuel or its precursors

1.  The potential environmental benefits of RCFs are demonstrated in the 2019 report which was previously produced to inform this policy. Annex C also presents a cost-benefit analysis that quantifies the potential financial benefits of supporting RCFs. ↩

2. The fossil component of RDF from the mechanical treatment of municipal solid waste streams, which would be inherently mixed with biological material. ↩

3. Industrial waste process gases containing carbon monoxide, that are only suitable for incineration or energy recovery. ↩

4. Grandfathering in this context would be to allow RCF producers to be exempt from changes in regulations once they have been approved. ↩

5. For example, when the status of starch slurry under the RTFO was being reviewed, the Administrator ran a call for evidence to ensure that all stakeholders had a chance to contribute to decisions. ↩