In December 2009, the government announced plans to extend the 20ppl tax differential for biodiesel made from used cooking oil (UCO) to April 2012. But this was just a stay of execution.

The decision to remove the differential was driven not by economic consideration but by a fear that incentivising biodiesel production and use in this way was creating environmental conflicts of interest. And herein lies the problem. Deforestation, changing land use and rising third world food prices are clearly not attributable to the production of biodiesel sourced from waste products such as UCO. The distinction between sustainable and unsustainable sources hasn’t been made.

This is a tax relief that has not only served to encourage carbon and waste management initiatives but also to drive green innovation, skills growth and employment opportunities in a flourishing sector of the UK’s renewable energy industry. The withdrawal of the differential will inevitably dent the short and long-term growth prospects of the UK biodiesel industry as fleet operators, faced with the bleak prospect of a 20% increase in high-blend biodiesel prices, are forced to abandon environmental policies and considerations and switch attentions to more commercially- viable fossil-based fuels.

Meanwhile, the UK Sustainable Biodiesel Alliance (UKSBA), the representative body of the sustainable biodiesel industry in the UK, continues to lobby for the retention of the tax differential. Its figures show the UK produces 250 million litres of UCO per annum. By comparison, a paltry 34 million litres of UCO was estimated to have been used in the manufacture of biodiesel last year. This is a missed opportunity. Surely, with a more coordinated, long-term approach to UCO waste management at regional and national level, more could be done to use the untapped 216 million litres destined for landfill or the plughole. With UK transport emissions continuing to rise, everything should be done to incentivise fleet operators to opt for environmentallyfriendly high-blend biodiesels. 

Source

Paul Pegg

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