New Year, New Renewable Transport Fuel Obligation…

We have jumped into this new decade with many new green and healthy resolutions. From Veganuary, to properly recycling, or walking into work instead of taking the bus; or for us in the downstream Oil Market, a Renewable Transport Fuel Obligation (RTFO) change.

The UK government has implemented this policy change to help achieve the target set by the Climate Change Act of an 80% reduction in greenhouse gas emissions by 2050 compared to 1990 levels. One quarter of UK carbon emissions are from transport. Hence, the decarbonisation of the transport sector is essential in achieving these targets

The RTFO was initiated in 2008 and covers Petrol, Diesel, Gasoil and the non-renewable portion of any partially-renewable fuels. Suppliers are legally required to meet these targets but how they get there is up to them.

The change to this Policy in 2020 has increased the Developmental Fuel Obligation (DFO) to 0.08 pence per litre (ppl), meaning that UK suppliers must ensure a certain percentage of road fuels contain the correct proportions of developmental fuels. Currently, there is no fuel in the commercial market that qualifies as a developmental fuel under Government standards. This has led to suppliers paying a buyout fee of 0.12 ppl of fuel not meeting the DFO.

The Greenhouse Gas (GHG) obligation has increased to 0.79 ppl. This requires a higher level of biofuel to be blended with Gasoil and Diesel. The carbon intensity of Gasoil and Diesel prevents suppliers being able to meet these GHG targets, resulting again, with another buyout fee to compensate.

As of January 1st 2020, all of our suppliers on the OnlineFuels’ platform have updated their contracts and spot offers to meet these obligations. So, whether you’re an end-user or reseller of transport fuels you are inadvertently achieving your green new years resolutions in your day-to-day fuel buying … there was no need for Veganuary anyways!

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Polly Serpell
polly.serpell@onlinefuels.com
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