The Bio Energy Experts

U.K. companies fined for violating biofuel regulations

January 21, 2011

The Renewable Fuels Agency has issued the maximum civil penalty in its power after an oil company failed to meet its legal duty to deliver biofuels.

Yorkshire Petroleum Company Ltd (Yopec) has been issued with a civil penalty of £50,000 after it failed to meet its obligation under the Renewable Transport Fuel Obligations (RTFO) Order.

The Order requires companies supplying more than 450,000 litres of diesel or petrol for road transport in the UK to match the fossil fuel they supply with a fixed percentage of biofuel and to report on the carbon intensity and sustainability credentials of that fuel.

Companies can choose to meet their obligation by surrendering tradable certificates purchased from suppliers that exceeded the volume of biofuel they were required to deliver. They may also elect to ‘buy out’ of their obligation, paying a set rate per litre of biofuel not supplied into a central fund that is then recycled proportionally amongst those companies that have met their obligation.

Yopec has been issued with the civil penalty as despite being fully aware of its obligation, it did not meet it for the 2009/10 period, giving the company a market advantage over its competitors during that period.

While the company has made some payments these are not sufficient to buy-out its obligation. It is still liable for an outstanding sum on which it will be charged interest. If this is not received by 17th January, the RFA will take appropriate action up to and including winding up the company.

“We will always come down hard on those who fail to meet their obligation, as this is at the heart of the RTFO as a carbon reduction measure.” said David Calderbank, Head of Regulation at the RFA.

“This company had full knowledge of what was expected of it and failed to deliver. We take these breaches very seriously and will take whatever action is within our power to ensure compliance.”

Civil penalties were also issued to two companies identified by the RFA as failing to register under the Order. Penalties of £5,000 each were imposed on Aral Direkt and Total Additifs et Carburants Speciaux for their failure to register; however both companies subsequently met their obligation in full.

The RFA will be recycling the buy-out payments received shortly and any subsequent received monies will also be recycled.

Yopec has indicated that it intends to appeal against this decision. Any such appeal will be heard according to the provisions of the RTFO and Yopec has the right to challenge the decision about the Appeal in the Courts should it wish to do so.

The buy-out fund arises because one or more obligated companies have chosen to buy-out of their obligation rather than redeem RTFCs either earned through supply of biofuel or purchased from other suppliers that have supplied.

The buy-out fund will be recycled to each company who has either redeemed RTFCs against the 2009/10 obligation or who chose to surrender RTFCs to receive an additional proportion of that buy-out. The fund will be allocated proportionately to each certificate redeemed or surrendered.

FiveBarGate Consultants have been working with industry, including the RFA for many years. We have helped develop carbon and sustainability reporting standards and helped many companies implement them. There really should not be any excuse for avoiding an obligation. FiveBarGate would like to see Government to take greater powers with regards to fining companies who do not meet minimum sustainability standards, as laid out in the Renewable Energy Directive and supported by the UK Parliament early day motion no. 1173. http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=42185

If you would like to learn more about these matters or how you could achieve the requirements of the Renewable Energy Directive, please contact us.