Draft Renewable Transport Fuel Obligations (Amendment) Order 2021

Trudy Harrison Excerpts

Monday 29th November 2021 General Committees

[The Chair]

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[The Parliamentary Under-Secretary of State for Transport (Trudy Harrison)]

I beg to move,

That the Committee has considered the draft Renewable Transport Fuel Obligations (Amendment) Order 2021.

It is a pleasure to serve under your chairmanship for the first time, Mr Stringer. The instrument amends the Renewable Transport Fuel Obligations Order 2007, which established a certificate trading scheme known as the renewable transport fuel obligation. The RTFO promotes a market for renewable fuels and places obligations on larger suppliers of fossil fuels to ensure the supply of renewable fuels. Since 2018, that main obligation has included a sub-target supporting the uptake of development fuels. Development fuels are made from sustainable wastes or renewable energy. They deliver higher carbon reductions than traditional biofuels, and include fuels of strategic importance such as aviation fuels, drop-in fuels and renewable hydrogen. The amount of renewable fuel, including development fuel, to be supplied under the obligation is calculated as a percentage of the volume of fossil fuels supplied in a calendar year. Those obligations are met by acquiring certificates that are awarded for the supply of sustainable renewable fuels. The trade of those certificates provides a revenue stream for suppliers of renewable fuels.

The draft instrument delivers several commitments made in our transport decarbonisation plan, which was published in July. It increases the main RTFO obligation level from 9.6% to 14.6% by 2032, continuing at that level in subsequent years, and makes a corresponding change to the development fuel sub-target, ensuring that it is not reduced in absolute terms. The instrument further expands RTFO support for suppliers of renewable hydrogen. It does so by extending certificate eligibility to renewable hydrogen used in maritime vessels and in fuel cell-powered rail and non-road vehicles. Importantly, as targets for the supply of renewable fuels increase, this instrument further strengthens the sustainability and greenhouse gas emissions savings criteria that renewable fuels must meet.

The changes made by this instrument will make an important contribution to achieving UK carbon budgets. As we transition to zero-emission vehicles, we cannot ignore carbon emissions from conventional road vehicles, and increasing the supply of renewable fuels is the best abatement option for many such vehicles. Those low-carbon fuels will increasingly be required in the aviation and maritime sectors. The increase in targets for the supply of renewable fuels in this instrument can deliver carbon reductions quickly, and will provide investor certainty. Expanding eligibility for renewable hydrogen used in maritime and fuel-cell vehicles is an important transitional step, which will encourage the innovation needed to increase deployment of low-carbon fuels in transport sectors that are more challenging to decarbonise.

This instrument is a small part of the wider work that we are undertaking to drive down carbon emissions from liquid and gaseous fuels. Work is progressing at pace to consider further RTFO support for hydrogen, building on the summer consultation. That work includes better supporting hydrogen production plants located away from sources of renewable energy. We will respond with further proposals on the treatment of hydrogen under the RTFO early next year. Similarly, it is our intention to make recycled carbon fuels eligible for support under the RTFO scheme, once primary legislation is secured.

Recycled carbon fuels could play an important role in decarbonising aviation, supporting the aim set out in our net zero strategy to become a leader in sustainable aviation fuel. The net zero strategy contained £180 million of new funding to accelerate the commercialisation of UK SAF production and our ambition for 10% SAF to be blended into UK aviation fuel by 2030.

Beyond 2030, we are developing a long-term strategy for low-carbon fuels to meet decarbonisation challenges across transport sectors. The strategy, to be published next year, will set out the likely transition from road to other transport sectors, and examine the size of the opportunity for UK industry and the ways in which Government policies could support these changes.

In the here and now, it is worth noting that the RTFO delivers around a third of the savings required for the UK’s current transport budget. In 2020, the RTFO scheme saved carbon emissions equivalent to taking 2.5 million combustion-engine-powered cars off the road. The changes in this instrument are estimated to deliver carbon reductions equivalent to the removal of an additional 1.5 million cars from the road by 2032.

This instrument builds on the success of the RTFO scheme and is an important part of our future work to decarbonise transport. I commend this statutory instrument to the Committee.

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[Trudy Harrison]

I thank the hon. Member for his interesting comments. The UK’s sixth carbon budget requires a reduction in emissions of 78% by 2035 compared with 1990 levels. That will require rapid action across the economy, supported by technological innovation. The changes in the instrument to expand the support currently provided by the RTFO for renewable hydrogen and to foster that innovation send a clear message for future low-carbon fuel investments. The increase in the RTFO obligation by 5% to 2032 is beyond ambitious. It is also necessary to reduce the environmental impact of conventional vehicles that use petrol and diesel. It is achievable, based on the availability of sustainable feedstocks, and it is widely supported by fuel suppliers, including suppliers of fossil fuels that would be obligated.

With the ongoing support of the RTFO, the UK fuel sector can play its part in helping to drive the UK’s transition to net zero and the green jobs that it will bring. The hon. Member referred to a number of measures that he would like to see. I remind him that, as we set out in our transport decarbonisation plan this July, we have made a commitment to phase out the sale of petrol and diesel cars from 2030, and that all cars and vans will be zero emission at the tailpipe from 2035. We have made a commitment on heavy goods vehicles: 26 tonnes from 2035, and then larger vehicles from 2040. We have set out our commitment for sustainable aviation fuel: 10% by 2030. I think that he, and Members across the Committee, would agree that we are making huge progress in the decarbonisation of transport. I hope that the Committee will join me in supporting the statutory instrument.

Question put and agreed to.