In 2008 the UK established the Renewable Transport Fuel Obligation (RTFO). Fuels covered by the RTFO are supported by the government.
Ready to speak with an expert?
Our HVO team are here to help.
Keep reading for the details
The UK government recognises that advanced, environmentally sustainable liquid fuels – such as Prema HVO – are crucial for reducing greenhouse gas emissions in sectors that otherwise would be difficult to decarbonise.
To increase the development, production and use of these fuels, in 2008 the UK established the Renewable Transport Fuel Obligation (RTFO). Fuels covered by the RTFO are supported by government.
This support enables Prema to supply you with Prema HVO at a reasonable pricing-level. Read on to understand more about how this works.
The Renewable Transport Fuel Obligation is one of the UK’s main policies for reducing greenhouse gas emissions from transport fuel. It was established to deliver on the UK’s responsibilities under the EU Renewable Energy Directive, which aims to ensure 32% of Europe’s energy comes from renewable sources by 2030 (a target which could soon rise to 40% under current proposals).
Essentially, the RTFO obligates UK transport fuel producers to supply a gradually increasing volume of renewable fuel as a proportion of the fuel they produce.
Applications covered by the RTFO include:
There are two main obligations within the RTFO:
1. Renewable Fuel Obligation
The current obligation on transport fuel producers is to supply 9.6% renewable fuel. This is set to increase by 1.5% in 2022, followed by an additional 3.5% over 2023-2032. This means the obligation will reach 14.6% by 2032.
2. Non-Crop Based Fuel Obligation
Various fuels can be used to make up a supplier’s renewable fuel obligation. Conventional crop-derived biofuels, which are much less sustainable than waste-derived fuels like HVO, are allowed up to a certain limit. For 2021, the maximum limit is 3.83%. The level will decrease year-on-year to 3% by 2026, and 2% by 2032.
Meanwhile, there is an obligation to gradually increase the volume of what are known as ‘development fuels’ – technologically advanced fuels that are of high strategic importance in helping to reduce emissions in sectors that are difficult and costly to decarbonise.
Prema HVO comes under this category. The obligation is set to increase from 0.1% in 2019 to 2.8% by 2032.
So how do transport fuel producers meet their obligations? They must attain special credits known as Renewable Transport Fuel Certificates (RTFCs).
These certificates can be attained by the following means:
There is a market for RTFCs, meaning producers can ‘buy themselves out’ of the obligation altogether without purchasing or producing renewable fuels themselves. However, this is uncommon.
As outlined above, HVO is not only considered a renewable fuel under the RTFO, but also a ‘development fuel’. The government incentivises the supply of development fuels by allowing them to count double towards a fuel supplier’s obligations. This means that suppliers receive twice as many RTFC certificates for development fuels than they do for conventional biofuels.
In other words, we receive double the certificates when we supply Prema HVO for applications covered by the RTFO. This allows us to sell Prema HVO to you at a relatively economical premium over conventional diesel.
It’s important to note that fuels supplied under the RTFO, at these reduced prices, must only be used in the applications outlined earlier in this guide. For example, they cannot be used for heating.