The Department for Transport (DfT) launched a consultation on amending the Renewable Transport Fuels Obligation (RTFO) to increase carbon savings on land, air and at sea. The DfT proposes altering the RTFO for greater carbon savings by revised renewable targets, recycled carbon and non-biological fuel amounts, plus its role in maritime.

Proposes options to amend the RTFO in order to increase the carbon savings made, would be:

• Increasing the RTFO main obligation to supply renewable fuel by 2.5%
• Expanding the RTFO to:
  • reward recycled carbon fuels (RCFs) – RCFs are fuels produced from fossil wastes that cannot be avoided, reused or recycled
  • be more flexible in rewarding renewable fuels of non-biological origin (RFNBO)
• Updating the sustainability criteria applicable to renewable fuels.

The consultation also revises the role RTFO will have in maritime shipping by:

• Supporting fuels with the highest potential to deliver greenhouse gas savings in maritime industry
• Requiring that eligible maritime fuels be derived from renewable energy

Key points

Amendments to the Renewable Transport Fuel Obligation (RTFO) should be taken alongside, and in consideration of, implementing a comprehensive package of policies targeted at transport decarbonisation, consisting of:

• An enduring framework of outcome-based policy mandates or incentives targeted directly on the desired sectoral policy outcome (i.e. achievement of emissions reduction across the transport sector consistent with achieving Carbon Budgets and Net Zero), rather than mandates or incentives that focus on specific input technologies or categories of fuels.
• Complementary polices to support innovation in immature technologies and ensure that the necessary infrastructure is constructed. Distributional impacts will also need to be addressed, especially while EV prices continue to fall.

When considering amendments to the RTFO, we suggest the following are taken into account by DfT:

• Consideration of how proposed amendments fit with the wider context of ongoing work within Government, in particular BEIS, on supporting the role out of hydrogen (and to a lesser extent, CCS) infrastructure.
• Understand the impact that additional fuel subsidies for maritime and trains affects wider transport decarbonisation strategies, especially where there is a choice between electrification and use of hydrogen.
• Ensure there is a review process for assessing proposed amendments in light of the forthcoming Transport Decarbonisation Strategy, providing a clear plan for transitioning development fuels into a broader enduring outcome-based policy framework for transport decarbonisation.