Thursday, March 13, 2008

Surprise UK Budget Subsidy Change Will Boost Biofuel from Biogas

There is an item about this in the Daily Telegraph:-

http://www.telegraph.co.uk

Which describes this biofuel subsidy removal as a negative, which it will be for the big petroleum companies, but for biogas producers it provides an additional incentive to further invest in the equipment to take their biogas and process it into biofuel (eg biodiesel).

All UK biogas producers should now consider biogas to biofuel investment. The reasons for this are explained in the following paragraphs which are provided using information provided by John Baldwin, MD of CNG Services Ltd at http://www.cngservices.co.uk .

In essence, in Tuesday's Budget the Government has increased the RTFO buy-out price to 35 p/litre (from 15 p/litre) so customers pay for the shift to biofuels and not the Govt (in form of duty reduction). Yes, it is a stealth tax, but one that helps biomethane as biomethane still will have the same low fuel duty as it had previously.

If you run a vehicle on biomethane you will pay 13.7 p/kg duty, but you will now (as a result of this budget change) get back 35 p/kg. Before this budget you would have got back 15 p/kg. This means that you will now get paid 20 p/kg by the UK petroleum industry + Government.

How do you make biofuel from biogas? You clean biomethane up and compress it.

A small 400,000 kg clean up facility costing about £600k should provide a potential extra income of 80,000 pounds/annum from the RTFO credit (400,000 kg at 20 p/kg, and there will be no diesel to be paid for!).

Those with biogas should consider starting to clean some of it up fom now on, and running vehicles on it.

That way the biogas producer will get paid to save the planet.

Now that can’t be bad!

The vehicles are also already available to run on it, made by VW and MB. These are not conversions and still run on petrol.

We can’t see any downsides, and also some biogas operations will be able to run these vehicles on gas that would otherwise be flared!

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