Financial Times: Shell seeks targets on fuel from plants

Financial Times: Shell seeks targets on fuel from plants

By Fiona Harvey,Environment Correspondent

Published: Saturday July 23 2005

Royal Dutch Shell has called for compulsory targets on the amount of transport fuel to come from plants, an environmentally friendly energy source known as biofuel.

The oil company’s call adds to pressure on the government, which has been reluctant to make it compulsory for petrol to contain a small percentage of biofuel because it could push up the price of petrol.

Lord Oxburgh, chairman of Shell, said: “Indicative targets are a waste of space. What industry would like is very clear targets and a very clear timescale . . . and make it mandatory.”

The farming industry has been campaigning on the issue because it would enable farmers to sell crops such as sugar beet and grains to petrol companies for making ethanol. However, it is also popular with environmentalists because it cuts down greenhouse gas emissions from vehicles. Biofuel can be used without modification to engines.

Lord Oxburgh told a meeting of biofuels experts in Cambridge that a “renewable transport fuel obligation” could be implemented by industry in five years.

He said such a scheme could stipulate that up to 10 per cent of transport fuel should come from plants, instead of the 5 per cent usually considered the maximum viable.

“This 5 per cent limit is something we regard as absurd,” he said.

Baroness Gillian Shephard, a Conservative peer who has long taken an interest in the issue, hinted that the Tories would oppose such a move, in spite of their support for biofuels.

“It would be rich indeed for the government to say the cost should be borne by the taxpayer now when they have done nothing about [biofuels] for eight years,” she said.

The National Farmers’ Union has called for 5.57 per cent of transport fuel to be made up of biofuel by 2010. Many farmers are keen to grow crops such as sugar beet, willow and miscanthus that can be used as biofuels, but are unwilling to do so until the market has been proved.

Elliot Morley, environment minister, recently told the Financial Times that the government was wary of moving too fast on biofuels for fear of damaging the nascent British biofuels industry by sucking in imports before farmers were ready.

Biofuels can help the UK meet its targets for cutting greenhouse gas emissions, because the plants take up carbon dioxide as they grow, and release it when they burn, making them “carbon-neutral” as fuel.

*Delays to wind farm projects have caused an increase of up to 14 per cent in the price of Renewable Obligation Certificates, which electricity producers must obtain to show they have met government regulations in generating a certain amount of their electricity from renewable sources, according to the energy information company, Platts. This will mean higher revenues for renewable energy companies, a report says.

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