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Campaigners warn against UK tax hike on biodiesel

By introducing a tax hike on biodiesel produced form used cooking oil, the UK Government is at risk of flushing its environmental aspirations down the drain, according to an alliance of users and producers of biodiesel.

By Kari Williamson

The warning comes as the UK Government plans an increase of £0.20per litre in the duty for sustainable biodiesel made from used cooking oil in April 2012.

The alliance has sent an open letter to the UK Chancellor, George Osborne, which has been co-signed by groups including The UK Sustainable Biodiesel Alliance, Biffa, Stenaline, Spire, Shearings and 3663 as part of the SOS biodiesel campaign.

HM Treasury has previously announced plans to replace the current £0.20 duty differential with double certificates under the revised Renewable Transport Fuels Obligation (RTFO), but the new system of double certificates is yet to begin and evidence suggests that this market-based system will fail to incentivise high-blend users.

The campaign also warns Ministers that the Exchequer could lose out on more than £100 million in taxable revenue if their planned tax rise takes effect and that without an industry to turn waste cooking oil into biodiesel, the raw material will simply be poured down the drain.

Used cooking oil has become a primary fuel source for biodiesel used in UK transport, helping the Government exceed its greenhouse gas savings target by 8% in 2010, and incentivising industry to invest in new technology to increase the amount of waste cooking oil that can be collected and turned into biodiesel, the campaigners say.

Tracey O’Keefe, Director of the UK Sustainable Biodiesel Alliance, which is leading the campaign, comments: “Our industry is on a knife-edge. The Government’s proposed tax hike will lead to inflated costs for sustainable biodiesel that will price users and producers out of the market and force them to go back to using fossil fuels. Raising taxes on sustainable fuels sends out entirely the wrong message about the UK’s commitment to growth and the challenge of climate change.

“Across Europe we have seen the damaging consequences of overly-taxing the sustainable biodiesel industry with the end result being a need to import biodiesel from abroad to meet binding European targets. With this tax rise the UK risks making exactly the same mistake and we urge the Chancellor to rethink.”

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