In 1993, HM Treasury realised that, if biodiesel were to be made in the UK there could be a loss of revenue - biodiesel did not fall within the remit of the Hydrocarbon Oil Duties Act 1979 to enable it to be taxed as a road fuel. They wanted their pound of flesh!

A body of opinion in HM Customs & Excise (since retired, unfortunately) managed to hold this up for a couple of years but, finally, in December 1995, a Statutory Instrument was issued which classified biodiesel as a Substitute Fuel and applied the same rate of tax as fossil diesel. As biodiesel cost two to three times as much to make - particularly as oil was at a low price at that time - this effectively prevented biodiesel being produced commercially in the UK.

Meanwhile, Germany, France, Italy and other countries were producing by the thousand tonne!

The cudgel was taken up by the British Association for Bio Fuels and Oils (BABFO) and others, including Martin Steele - a window cleaning contractor from Swinton - and myself. The camp was effectively split into two - those who wanted to make biodiesel from fresh rapeseed oil (in the BABFO camp) and Martin, myself and a few others, who could see the benefits of making from used cooking oil. We were rather looked down upon.

The breakthrough came when the Chairman of BABFO, Peter Clery, persuaded his MP to arrange a meeting with the Treasury secretary, Stephen Timms MP. HM C&E were consulted as to who should be present, and the guest list therefore included myself (who had been making legally at home for some six months), Stephen Whittaker (Ebony Solutions, making a product called "E-diesel") and a North of England oil recoverer, who wishes to remain anonymous but who had also been highly vocal in the campaign.

The meeting in the Treasury was held on 25 October, 2000. Steve Whittaker couldn’t make it down at the last minute, so there were Peter Clery, Graham Secker of Cargill Seeds, myself and Anon to plead the case. We were allowed just 45 minutes.

The BABFO "side" made a good case for making from fresh oil - a new industry, jobs for the farmers, stop exporting 200,000 tonnes of rapeseed oil to France for them to make biodiesel from and all the rest of the right noises. Peter Clery illustrated his presentation with a packet of rapeseed and a little bottle of fresh rapeseed oil. The tax break requested was unclear, other than it should be "on a par with gas fuels". No firm tax rate was proposed, leaving room for confusion.

He then committed the faux pas of referring to the making of biodiesel from used oil as "kitchen sink technology". I felt Anon bristle beside me, but then it was my turn to speak.

"Here’s some I made earlier" I said, as I put on Stephen Timms’ desk a Coke bottle of freshly prepared and sparkling biodiesel. I then went on to explain my definition of the word "sustainability" (for ever and ever, amen) and the beneficial re-use of land, year after year. The tax break I was proposing (for biodiesel made from recycled oil) was that it should be taxed at the rate of 20p per litre (a tax break at that time of 28.82p per litre), on virtually the same grounds stated by BABFO. At double the energy content, this concession would be marginally higher than "parity with gas", but lower than that required to make from fresh rapeseed oil.

Anon then spoke of his future plans to set up a sizeable biodiesel plant, coining the phrase "ethical switch" for the diversion of used cooking oil from the human food chain. He stated that a tax reduction of 10p per litre would enable him to do this (although at a later date he upped this figure).

Stephen Timms listened - thereby, unusually, fulfilling a governmental pledge.

This meeting began the chain of events that led to the Green Fuels Challenge and the setting up of a joint Department of the Environment, Transport and the Regions (DETR) and Department of Trade and Industry (DTI) working party, resulting in the Renewable Transport Fuels Seminar held in London on 13 December, 2000. There were 42 delegates invited.

Initially, a representative from DETR was scheduled to speak on the "Assessment of biodiesel" but, following strong protests from both Peter Clery and myself that nobody at DETR knew what biodiesel was, Werner Korbitz of the Austrian Biofuels Institute was invited to speak instead. In addition, there were guest speakers from AEA Technology (the guys who had got it wrong as ETSU!), the Swedish Bioalcohol Fuel Foundation and, of all people, Shell International.

Sadly, the DTI and DETR speakers rather made fools of themselves, misusing the word "sustainability" endlessly, confusing fossil gas fuels with renewables and generally demonstrating that they were anything but experts on the subject of transport fuels. They should not have been put in that position and certainly deserved sympathy.

Finally, the quite competently produced Green Fuels Challenge paper (announced by the Chancellor in his November pre-Budget Report) was issued to delegates, requesting responses by 31 January, 2001. There were 65 submissions, and a veil of secrecy descended on the decision process.

Thus far, proceedings had been more than satisfactory. The BABFO commission of the ECOTEC report, debunking the 1995 ETSU report that had done so much damage had been vindicated. Their lordships Whitty and McDonald were beginning to realise that their Civil Servants had misinformed them, and the necessity for removing a potential source of BSE contaminant had been recognised.

What was not forecast was the input from other government departments, based on yet more misinformation.

On March 7^th, 2001, the Budget was announced. It included an undertaking that the government would apply a tax rate to biodiesel, 20p below that of ultra low sulphur diesel (although the Chancellor actually said 20%) - but not until next April (2002)! (Addendum - this speech, reported verbatim by Hansard, was translated as "will be announced in Budget 2002" in the 2001 Finance Bill, which later caused problems with the EU derogation timetable by removing any sense of urgency!)

The background to this was the previous year’s Budget, had which announced a 3p reduction in duty on ultra low sulphur petrol, which few had heard of. There was a certain backlash - Joe Public was looking for this "cheaper fuel", which was nowhere to be had. Government had no wish to end up embarrassed again, although the biodiesel tax break could realistically have been introduced in October 2001. 

This level of tax break created a very distinct division between the fresh and used oil proponents, the cost of fresh oil feedstock being twice that of treated used oil, thereby requiring a higher tax concession to make it economically viable. The policy had been deliberate, the input from the Ministry of Agriculture, Fisheries and Farming (MAFF) ensuring the split.

MAFF has, since 1993, been promoting the Non Fossil Fuel Obligation (NFFO) generation of electricity from short rotation coppice (SRC) willow. The scheme has been a dismal failure, caused by bloated administrative procedures, steadily reducing rates paid per unit and the prevailing plight of farmers, strapped for cash and unable to spend four years watching the willow grow.

MAFFs main case for precluding the making of biodiesel from fresh oil was that it would interfere with their plans for future NFFO development by using up available land to grow rapeseed. This, given that the NFFO scheme was currently in limbo! There was a subsidiary reason, and that was the Blair House Agreement which put a one million tonne cap on the production of cattle cake (the seed residue after the oil has been pressed out) by the EU, in that it would interfere with imports of soy cattle cake from the USA.   Balance of Trade!

Totally overlooked by MAFF were the facts that the cultivation of rape results in the production of both straw and, rather than feeding it to cattle, the seed cake - both of which would make viable renewable energy feedstock for NFFO schemes. Especially the seed cake, which still retains some of the concentrated energy contained in the oil residue! Not a very scientifically informed piece of advice.

Further input was received from DETR and HM Customs & Excise. The staunch supporter of the biodiesel campaign had retired, and it was left to a number of innocents (though they tried hard!) to give advice. Theirs was that there had to be a manufacturing standard laid down, and that there was a European standard currently being discussed - it would take another year for it to be published. Hence, it would be convenient to delay proceedings until April, 2002.

Except for the fact that, once the CEN standard had been thrashed out, it had to be ratified by member states, thus delaying implementation until October, 2003. Somebody had not done their homework properly!

The effect of this delay could be harmful to the future of the emergent biodiesel industry in the UK. It had been agreed by EU that, in order to promote this emerging environmental benefit, a tax concession cap of five million tonnes should be put on production. This limit will be reached by the end of 2002. Depending on the pressure applied by countries involved in biodiesel production for renewal, this could jeopardise the future of British production.

The UK had to obtain derogation from the EU Mineral Oils Directive to apply a reduced rate of duty. Given that most other member states had already applied a reduction of around 25 to 28p per litre, there was unlikely to be any objection - but this was another of the reasons given to me by Stephen Timms, the Treasury Secretary, for delaying introduction of the tax break.

So, what of the future? At last, the UK government has put a little of its money where its mouth is. Given the DETR estimate of recovered vegetable oil of 100,000 tonnes per annum, this will produce, say, 100M litres of biodiesel and cost the Treasury £20m. Not a lot, but a start. There were no other subsidies available for setting up plant - the EU pilot plant money having gone to Germany in 1992!

The EU Agricultural Ministers have held off banning the use of used oil (which often includes a considerable amount of animal fats) in animal feed. Therefore, a price war between the animal feed manufacturers and the newly incorporated biodiesel manufacturers has been forecast. This will raise the price of treated oil, which could affect the profitability of both activities. It is cheaper to make from untreated oil, which will be the next target. This will adversely affect the livelihoods of the collectors and processors of used oil, although there is a great deal of oil currently being illegally discarded to compensate for this - people will just have to try harder.

Come the day when the use of recovered oil in animal feed is banned, the biodiesel producers will gain the monopoly.

The CEN standard will not be finalised until October 2003, at the earliest. It will therefore be necessary for the UK to adopt an advisory standard. Given the current vehicle approvals, this could be the German DIN 51606, but it will not form a prerequisite to selling on the open market. It will therefore be difficult for quality standards to be both established and maintained - the law of caveat emptor will apply, but the job of the Trading Standards Officer will be a difficult one.

The government is not even prepared to test samples free of charge, as a form of assistance to an industry it has held back for so many years

It was suggested that the market could be regulated by the "industry body", but the attitude of BABFO has convincingly precluded this. When I rang Peter Clery to find out his reaction to the Chancellor’s announcement, he shouted down the phone "Oh, it’s you! I hold you entirely to blame. If you had put in a more realistic figure, we may have got a better deal!" Well I suppose I should be flattered, that the Chairman of BABFO considers I had such influence, but the fact is that most of the subscriptions collected by the association are from companies interested in the oilseed business.

It was also an ill-judged assumption - if the tax break were to be increased, then the profits of the makers from used oil would increase by that amount - we would be more than delighted!!

I haven’t been asked to renew my subscription to BABFO, needless to say.  The "industry" - making biodiesel from the government approved feedstock - therefore became a collection of individuals and "wannabes", unrepresented by the alleged representative body. (This situation changed in January 2002 - see www.ukbiodiesel.biz)

Following the Budget, BABFO did manage to persuade a Liberal Democrat MP to raise an amendment to the Finance Bill 2001, to lift the tax concession to 33p and to bring the introduction forward. This move was supported by the Conservative spokesman. Even though there were only a couple of dozen MPs in the House at the time, voting was on party lines and the amendment was defeated.

Thus, biodiesel in the UK has got off to a begrudging start.

There is, however, a silver lining - every time there is an oil price hike, so the production of biodiesel becomes more profitable.