1. How do you know that the biofuels you supply really cut greenhouse gas emissions?

We have been counting the carbon benefits of our biofuels since January 2006 and publishing the results on our Carbon page. With the introduction of the RTFO in April 2008, we are now using Government figures to compare different biofuels and measure their greenhouse gas savings.

Not all biofuels offer the same carbon savings and our challenge as a business only to supply those that offer genuine whole of life savings. That means for example:

• not supplying bioethanol derived from US corn or palm biodiesel that has caused deforestation or peatland destruction; and
  
  
• favouring the lowest carbon biofuels as far as is commercially possible. All our bioethanol is produced from Brazilian sugar cane, which offers the greatest carbon savings of any crop-based biofuel. We are also working to increase our usage of biodiesel made from by-products.

Need more info? Read about our Biofuel sourcing practices.

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2. Which biofuels give the greatest carbon savings?

In general, biofuels made from crops grown in a sustainable manner in warmer and wetter tropical countries have a lower carbon intensity, both per hectare and per litre of fuel, than biofuels produced in colder, dryer northern climates where more energy input (e.g. nitrate fertilizers made from fossil fuels) is required.

To ignore these tropical sources of biofuel would significantly impact the world’s ability to cut carbon emissions through biofuel usage. It would also impact the potential of biofuel to generate wealth in some of the poorest parts of the world by bringing idle land into commercial production.

Need more info? Read our Carbon Perspective.

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3. What about palm oil sustainability?

• According to Government figures, palm biodiesel palm from sustainable sources cuts greenhouse gas emissions at levels broadly similar to biodiesel derived from rapeseed or soy.

• We are working to ensure continuous improvement in our palm oil sourcing:
  
  
  • We are committed to sourcing RSPO-certified product as soon as this is commercially possible; and
  • In the meantime we only buy palm if it can be traced back to well-managed plantations where there has been no recent land use change, whether rainforest or peatland destruction.

• Three quarters of all palm oil is used by the food industry, with most of the remainder going into cosmetics and toiletries. Only about 2% is likely to be used as biodiesel in Europe.

• With reporting rules already in place under the RTFO and new rules expected at EU level, the fuel industry faces a much stricter sustainability regime than other palm users.

Need more info? Read our Palm Perspective.

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4. Are biofuels a cause of rising food prices?

Many press reporters have suggested this is the case, but the evidence shows otherwise.

Wheat prices at the end of February 2008 were twice those of a year previously - yet little more than 1% of wheat was used for biofuel. Rice rose by 30% over the same period - and none is used for biofuel. And sugar fell by 8% in 2007 - despite increased demand for sugar-based bioethanol.

A combination of other factors has been driving up prices:

• Population growth and increased affluence particularly in India and China driving demand for meat and therefore grain-based animal feed;
  
  
• Crop failure in key producing regions;
  
  
• Increased agricultural production costs to due to high oil prices; and
  
  
• Speculative trading activity/ a commodity rush.

Need more info? Read our Food v Fuel? Perspective.

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5. Will the UK Government's carbon and sustainability rules for biofuels really be effective?

We believe that Government incentives for biofuels should be;

• Based on carbon so as to encourage a shift to the lowest carbon biofuels.

For the first two years only the Renewable Transport Fuel Obligation (RTFO) targets will be based on volume of biofuel supplied, but from April 2010 the intention is to reward biofuels according to the carbon savings offer.

• Contingent on meeting minimum sustainability criteria.

From the outset of the RTFO oil companies are required to report on the biofuels they supply but if no supporting evidence is available then they may report “unknown”. Whilst this at first appears weak, it is important to remember that the Renewable Fuel Agency intends to report on the performance of individual companies as early as September 2008 on a “name and shame” basis. Furthermore from April 2011 the Government intends to reward biofuels under the RTFO only if the feedstocks meet appropriate sustainability standards.

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6. How are biofuels affecting consumer fuel prices?

Biofuels are containing fuel prices by debottlenecking demand for petroleum fuel components.

Fuel prices at the pump are affected not just by the price of crude oil but also by the availability of refined oil products from which to produce petrol and diesel.

Worldwide demand for fuel is rising, yet there has been no increase in the amount of crude oil that refineries can process. Oil refineries worldwide are now operating at close to capacity (> 96%). Even relatively minor interruptions in supply can lead to significant and sudden increases in fuel prices as buyers bid for available supplies.

Biodiesel production is helping to meet this increased demand without putting further pressure on refining resources. We estimate that the elimination of biofuels in Europe would lead to petroleum fuel increases in the range 100’s $/mt.

Need more info? Read our Biofuel Perspective.

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