Chancellor urged to give incentives to emerging Biofuel Industry

A powerful cross-industry group has united to call on the Government to show a greater commitment to the use of biofuel in road transportation.

In a letter presented to the Treasury, the NFU, Saab Great Britain Limited, Morrisons Supermarkets and the Ford Motor Company urged the Chancellor to introduce financial incentives to develop the UK biofuel industry in his 2007 budget.

The letter focuses on the key benefits biofuels can offer the UK including:

· The potential to make a substantial contribution to reducing carbon dioxide emissions from road transport

· Improve fuel security by helping reduce our economic reliance on fossil fuels

· The demand for biofuel will create new markets for agriculture in growing renewable energy crops and provide a boost to the rural economy

The current Renewable Transport Fuels Obligation (RTFO) will largely be met by blending five per cent biofuels with fossil fuels for use in conventionally fuelled vehicles.

However, the signatories to the letter have called on the Government to demonstrate commitment to the UK biofuel industry by announcing as soon as possible the RTFO targets for post-2010, the year they are due to be reviewed.

NFU President Peter Kendall said: "We want to see the growth of higher blend biofuels which have the potential to allow the UK to make dramatic improvements to our environmental footprint.

"The way to tackle the issues surrounding climate change is to include farmers as part of the solution – we are more than ready and able to rise to the challenges of providing renewable energy. But we need firm commitment from Government to push this new industry forward and create a sustainable market."

The letter recognises the need to encourage consumers to change their habits, and calls for specific announcements in the 2007 budget to:

· Increase and prolong the fuel duty rebate applied to bioethanol E85

· Discount company car tax for high blend biofuel cars

· Revise vehicle excise duty to reflect more accurately the substantial environmental benefits of these cars

Ford and Saab currently manufacture cars sold in the UK capable of running on high blend biofuels. Morrisons Supermarkets are the only UK fuel retailers to sell bioethanol E85, currently available on 13 of its forecourts.