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Lift 'road tax' on bio-fuel

Leading industry figures have called for the Government to lift ‘road transport’ duty on biofuel destined for use in the heating market. Philip Adams, managing director of Riello Burners said current rules, which levy a road transport duty on biofuel used in heating, make the fuel uncompetitive and stifle the industry. Mr Adams believes the duty from the Treasury will make it more difficult for other Government departments to deliver its carbon reduction targets. “Despite its benefits, there are no incentives to use biofuel for heating, unlike the use of biodiesel is for use in road transport, where petroleum companies are penalised if they don’t meet Government targets,” said Mr Adams. “If the Government wants to hit its 20 per cent renewables targets, biofuel is a better way to do it than using solar and biomass.” Riello has identified the 11 per cent of the market in the UK and Ireland that use oil heating as “ready-made” for biofuel. The company claims that a significant carbon gain could be made quickly by switching from oil to a biofuel blend. Riello also says biofuel represents better value for money than biomass and is more appropriate for use in London, as it is easier to store and transport. “Biomass can be up to three times more expensive than a gas installation when all factors are taken into account. We believe that biofuel, with incentives, could be made available on a basis that is price competitive with oil,” said Mr Adams. OFTEC has also expressed concern that biofuel is liable for duty even when used for heating purposes. Richard Gales, chief executive of OFTEC said: “Gordon Brown taxes fuel for road transport, and at present there is no mechanism for using fuel that could be used for road transport for heating, without incurring a duty. We must find a way to encourage, or at the very least not discourage, the use of biofuel for heating.” However, Mr Gales sees a number of other obstacles to widespread use of biofuel. “The industry has been slow getting its act together. We haven’t done all the required testing, although it is being done at the moment,” he said. A further issue is that kerosene is burned in the UK, while different fuels are used in other European countries. Complicating the issue further, there is no universal standard for kerosene equivalent biofuel products. Until there is a universally adhered-to standard, the quality of the fuel will vary, and so will its burning properties, with possible implications for boiler efficiency and effectiveness, according to OFTEC. A Treasury spokesman said there were no plans to lift the road transport duty levied on kerosene and bio-product blends used for heating on a large scale. “Kerosene is classed as a heavy oil and we feel heavy oil / bio-product blends do not offer attractive economic and environmental benefits compared to other solutions. The issue is being kept under close supervision, but a convincing case would need to be put to us by the industry,” he said.