Fuel duty tax currently stands at £0.5795 per litre on petrol fuel. The Government should change this rate relative to the bio-ethanol content of the fuel (currently around 5%). This would reduce the cost of fuels that produce less CO2, and should make these fuels more affordable to motorists.
Creating financial incentives to increase the bio-ethanol content of fuel should decrease the amount of petroleum based fuels burnt in cars in the UK and so decrease the national net CO2 output.
This change should not decrease tax revenue as ethanol contains less energy per litre of fuel than petrol, so although it would be cheaper to buy, a greater volume must be used to travel the same distance in a car.