Guidance

Energy Security Bill factsheet: Recycled carbon fuels and nuclear derived fuels for transport

Updated 1 September 2023

Transport is the largest emitting sector of greenhouse gas emissions, producing 24% of the UK’s total emissions in 2020. The Transport Decarbonisation Plan set out that, while switching to electric vehicles will be a key part of our progress to Net Zero, low carbon alternatives to traditional fuels like petrol and diesel, or the fuels used in maritime transport and aviation, will play an important role in our energy transition.

1. Why are we legislating?

To enable the support of recycled carbon fuels (RCFs) and nuclear derived fuels (NDFs) under renewable transport fuel schemes. Currently powers under the Energy Act (2004) only permit renewable fuels to be supported. However new fuels, such as RCFs and NDFs, can provide comparable greenhouse gas emissions savings, are critical to production of strategic fuels such as Sustainable Aviation Fuel and hydrogen and should be able to be supported under the same frameworks.

Renewable transport fuels are currently supported in the UK through the Renewable Transport Fuel Obligation (RTFO), the Government’s key measure for incentivising the use of low carbon fuels in transport. As outlined in the Jet Zero Strategy^{[footnote 1]}, we are also developing a sustainable aviation fuel (SAF) mandate with the aim of ensuring 10% of aviation fuel is sustainable by 2030.

Technological developments mean it is now possible to produce low carbon fuels from non-renewable sources like RCFs. These are produced from unrecyclable waste plastics or industrial waste gases that cannot be avoided, reused, or recycled. RCFs have the potential to deliver significant carbon savings over traditional fossil fuels like diesel and kerosene and have become a replacement for difficult to decarbonise sectors like aviation and heavy good vehicles.

Hydrogen is also a key future fuel for difficult to decarbonise transport sectors, as well as being needed in the wider economy. Zero carbon hydrogen can be produced using electricity or heat generated by nuclear power stations. This hydrogen can be used directly as a fuel or further processed into liquid fuels, providing significant carbon savings, and supporting the development of the UK nuclear sector. These fuels, if derived from nuclear energy, are known as nuclear derived fuels (NDFs).

By legislating in this area, we will be able to reward RCFs and NDFs through support schemes like the RTFO and the forthcoming SAF mandate, helping the UK decarbonise transport and meet our Net Zero ambitions.

2. How the Bill will achieve this

Subject to the affirmative procedure, the Energy Bill will amend the Energy Act (2004) to allow RCFs and NDFs to be rewarded under renewable transport fuel orders. These powers have been used to create the RTFO scheme and will be used for the forthcoming SAF mandate.

Currently, RCFs (derived from fossil wastes) and NDFs (derived from nuclear energy) could not be supported under these schemes as they are limited to supporting renewable fuels only.

The Bill will ensure that the RTFO, SAF mandate and any other future renewable transport fuel orders will be able to reward the supply of RCFs and NDFs. These fuels will still need to meet other requirements, including contributing to the reduction of greenhouse gas emissions in the UK. Following consultation with industry, the intention is to set out a detailed eligibility criteria in secondary legislation to ensure this is the case.

The RTFO scheme has been operating since 2008. We regularly consult on changes to the scheme to ensure it can continue to deliver greenhouse gas emission savings in transport whilst providing value for money. A detailed consultation is in progress for RCFs, and for NDFs a similar process will occur at the next opportunity.

The RTFO currently has a list of renewable fuel feedstocks^{[footnote 2]} which are eligible for support. When new feedstocks are submitted, an administrative unit assesses the eligibility of the feedstock and resulting fuel, before deciding whether they should be added to the approved list. Our 2021 consultation set out that RCFs would be subject to a principle-based assessment for eligibility, with additional sustainability criteria in order to ensure sustainability of the fuel. These proposals are subject to the publishing of the government response to the consultation. A link to the RCF consultation and the details of these proposals is included in the further information section. Following this process, secondary legislation will be introduced, and fuel producers will be able to apply for their feedstocks to be considered for eligibility under the new criteria. Successful feedstocks will then be added to the approved list.

The inclusion of NDFs has been consulted on during development of the SAF mandate. When introducing NDFs to the RTFO, SAF mandate or any other renewable transport fuel scheme, the specifics of how NDFs will be supported will be subject to consultation. However, this will likely follow similar criteria to that which already apply to hydrogen and hydrogen derived fuels produced from renewable electricity.

3. FAQ

How will you ensure these fuels provide greenhouse gas emissions savings given they are not renewable?

The RTFO includes a range of strict eligibility criteria to ensure all fuels supplied are sustainable and provide minimum greenhouse gas savings. We are currently consulting on a detailed RCF methodology to ensure the emissions associated with their production and use are correctly quantified. NDFs will be subject to similar eligibility criteria as apply to renewable electricity used for fuel production. This will ensure supply and use of these fuels deliver greenhouse gas savings for the UK as a whole.

Won’t supporting RCFs incentivise or perpetuate the creation of plastic waste or industrial processes that generate waste gases?

RCFs are fuels produced from fossil wastes that cannot be avoided, reused, or recycled and have the potential to reduce greenhouse gas emissions relative to petrol or diesel. In line with the principles of the Waste Hierarchy^{[footnote 3]}, our recent consultation^{[footnote 4]} set out eligibility criteria to ensure RCFs would not be produced from recyclable material. For RCFs from plastic waste to be eligible for support, suppliers must demonstrate that the waste is derived from facilities that have adequate separation processes to remove recyclable material.

Why are you incentivising low carbon fuels instead of focusing on electrification?

Increasing zero emission vehicles and the efficiency of the transport system will help to meet UK Net Zero targets. However, the transition to zero emission technologies will take time and liquid fuels are still required in sectors that currently cannot be easily electrified – like aviation and heavy goods vehicles. Low carbon fuels, including recycled carbon fuels, will play a significant role in helping to decarbonise these sectors as the UK continues its journey to Net Zero.

Will introducing RCFs and NDFs under the RTFO and SAF mandate increase costs to suppliers and/or motorists/airline passengers?

No. Due to the way the schemes operate, the introduction of support for new fuel types will not increase costs to either suppliers or consumers. This is because the target levels set for the schemes can be met by any eligible fuel type. Fuel suppliers are therefore expected to supply the most cost-effective fuels to meet their targets. As we are not altering the target levels, but simply increasing the range of eligible fuels, overall costs are unlikely to change and could be slightly lower due to increased range and availability of eligible fuels.

4. Background

The Renewable Transport Fuel Obligation (RTFO) has delivered significant transport greenhouse gas emissions savings since its introduction in 2008. In 2021, over 2.5 million litres of renewable fuel were supplied to the transport sector, reducing greenhouse gas emissions by over 5 million tonnes CO2 equivalent^{[footnote 5]}.

The RTFO places annual obligations on fossil fuel suppliers to ensure a certain amount of renewable fuel is supplied. The RTFO only applies to suppliers of road fuel. We are also developing a similar scheme to incentivise the use of SAF. The forthcoming SAF mandate, planned to be introduced from 2025, will place a requirement on aviation fuel suppliers to supply certain levels of SAF in place of fossil fuels. Making RCFs and NDFs eligible for support under these schemes will broaden the range of fuels suppliers can use to meet their obligations. These schemes are all designed to decarbonise transport and ensure we meet our net zero goals.

RCFs use gasification and pyrolysis technology to turn wastes such as household waste and industrial waste gases into fuel. This fuel can then be used as a replacement for traditional fossil fuels. Although the materials used to create RCFs are not renewable, research shows that they can deliver greater greenhouse gas savings than energy from waste plants, the most common end-of-life fate for UK waste. Difficult to manage wastes that cannot be recycled are the ideal feedstock for RCFs.

As part of the Jet Zero Strategy[2], and in addition to the target of 10% SAF by 2030, the UK is also looking to have five SAF production facilities in construction by 2025. The £165 million Advanced Fuels Fund[3] is providing investment to these types of facilities and recently confirmed funding for four UK plants that will use RCF source waste material to produce SAF.

Nuclear energy can be used to produce hydrogen which can then be used as a transport fuel directly or further processed into liquid fuels known as “power to liquid”. These are alternatives to fossil fuels like petrol and diesel or the fuels used in maritime transport and aviation. Using these fuels can be considered zero-emission, helping our journey to Net Zero. Supporting NDFs is in line with the development of the British Energy Security Strategy[4] through providing additional revenue streams for nuclear power stations.

5. Further information

The following documents are relevant to the measures and can be read at the stated locations:

Consultation on supporting recycled carbon fuels through the RTFO

Consultation, summary of responses and government response on the SAF mandate

1. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1095952/jet-zero-strategy.pdf ↩

2. Feedstock – the raw material used to create a fuel]. ↩

3. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69403/pb13530-waste-hierarchy-guidance.pdf ↩

4. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1097039/supporting-recycled-carbon-fuels-through-rtfo.pdf ↩

5. https://www.gov.uk/government/statistics/renewable-fuel-statistics-2021-final-report ↩