This Order amends the Renewable Transport Fuel Obligations Order 2007 (S.I. 2007/3072) (“the RTFO Order”) and, in one minor respect, amends the Legislative and Regulatory Reform (Regulatory Functions) Order 2007 (S.I. 2007/3544). It also makes transitional provision in respect of the amendments to the RTFO Order.

The Order transposes, in so far as they relate to transport, articles 3, 17 to 19 and 21(2), and Annexes I and V, of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (OJ No L 140, 5.6.2009, pp. 16-62) (“the Directive”).

Article 3 inserts new definitions into article 2 including various definitions which underpin the imposition of the mandatory sustainability criteria for biofuels imposed by the Directive. This article also amends the definition of “connected person” to cross-refer to a new definition contained in the Corporation Tax Act 2010 (c.4).

Article 4 inserts and amends various definitions of fuels in article 3. In particular “hydrocarbon oil” is redefined to cover gaseous fuels and to remove the cross-reference to the Hydrocarbon Oil Duties Act 1979. “Relevant hydrocarbon oil” is redefined so as to cover renewable transport fuel as well as fossil fuel for use in road vehicles. The definition of “renewable transport fuel” as partially defined at section 132(1) of the Energy Act 2004 (c.20) is also expanded in order to cover partially renewable fuels.

Article 5 amends the way in which the amount of renewable transport fuel which obligated suppliers are required to supply is calculated under article 4. That amount is now to be calculated as a percentage of the combined volume of fossil fuel and non-sustainable renewable transport fuel supplied. To reflect the fact that the mandatory sustainability criteria will apply as of a date in the middle of a reporting year under the RTFO Order, this article inserts a new article 4(5) which relates only to the obligation year 2011-2012.

Article 6 inserts new article 4A into the RTFO Order which places an ongoing duty on the Secretary of State to keep under review what further steps may be necessary to meet the requirements of the Directive in respect of transport.

Article 7 amends article 5 in order that renewable transport fuel only counts towards discharging a supplier’s renewable transport fuel obligation if it is shown to meet the applicable sustainability criteria. Fuel attributable to sustainable wastes which meets the sustainability criteria is double counted for the purposes of discharging a supplier’s obligation.

Article 8 amends article 12 to place identical obligations on the Administrator to require suppliers to provide fuel volume and sustainability information, and in turn on suppliers to provide that information. A default reporting period of a month, save in respect of December to January which is further sub-divided, applies in relation to the reporting of volumes of fuel supplied but does not apply to reporting of sustainability information.

Article 9 amends article 13 for consistency both with the definition of obligated supplier and the amendments made by article 8 of this Order to article 12.

Article 10 inserts new article 13A into the RTFO Order which both defines, and requires suppliers to use, a ‘mass balance system’ for reporting information on the sustainability of renewable transport fuel to the Administrator.

Article 11 revokes article 14 such that the Administrator is no longer under a duty to report to Parliament.

Article 12 amends article 15 for consistency with amendments made elsewhere in this Order.

Article 13 amends article 16 relating to the mandatory requirements that must be met before the Administrator can issue renewable transport fuel certificates (“RTF certificates”). The Administrator must now be satisfied that the renewable transport fuel in respect of which the certificates have been applied for has not and will not be counted under the support scheme of another EEA state nor under any other UK renewable energy obligation. The supplier must also now provide the Administrator with a verifier’s assurance report in relation to that fuel. The previous distinction between the obligations imposed on obligated and non-obligated suppliers when applying for certificates is removed.

Article 14 inserts new articles 16A and 16B into the RTFO Order. New article 16A sets out the standards and specific requirements that a verifier’s assurance procedures and subsequent report must satisfy. This article also sets out who it is who may prepare such a report and undertake the assurance procedures. New article 16B requires all suppliers who apply for RTF certificates in relation to any given obligation period to submit at least one verifier’s report in respect of that period confirming the ‘additional sustainability information’ required under Article 1 of Commission Decision 2011/13/EU (OJ No L 9, 13.1.2011, p11).

Article 15 amends article 17 to ensure that RTF certificates are only awarded to fuel meeting the applicable sustainability criteria. This article also provides that one certificate is now to be issued for each litre of the notional volume of renewable transport fuel supplied, the effect of which is to allow an appropriate number of certificates to be awarded in respect of partially renewable fuels.

Article 16 amends article 18(3) to clarify a previously unclear provision.

Article 17 substitutes a new article 19 dealing with ‘carry over’ of RTF certificates into a later obligation period. The effect is that certificates issued in the 2010-2011 obligation period may be carried over into 2011-2012 without any sustainability criteria being applied. Certificates issued in respect of fuel supplied between the commencement of the 2011-2012 obligation period and the coming into force of this Order may be carried over into 2012-2013 only if a verifier’s assurance report is submitted sufficient to satisfy the Administrator that the relevant fuel met the sustainability criteria. Certificates issued in respect of fuel supplied after the coming into force of this Order may, in most cases, be carried over without any further application of conditions as to sustainability since the certificates will only have been issued in the first place where a verifier’s assurance report confirming compliance with the sustainability criteria was submitted. However, if the greenhouse gas emission saving threshold applicable to the fuel covered by a certificate changes at the end of an obligation period, that certificate can only be carried over into the next obligation period if the new threshold was met by that fuel.

Article 18 amends article 20 for consistency with amendments made elsewhere in this Order relating to verifier’s assurance reports and the additional sustainability information. This article also amends the dates by which the steps in the revocation process must be taken.

Article 19 amends article 21 to remove obsolete references to the duty derogation and to change the dates by which buy-out payments must be made and by reference to which interest accrues on overdue buy-out payments.

Article 20 amends article 22 to clarify that the buy-out fund is to be distributed amongst those who held the relevant RTF certificates at the time they were redeemed or surrendered. This article also amends the dates by which the steps in the buy-out recycling process must be taken.

Article 21 amends article 23 to make suppliers liable for a civil penalty for failure to submit a verifier’s assurance report in respect of the additional sustainability criteria. This article also extends the period of time within which suppliers must inform the Administrator after becoming aware that information or evidence they have provided may be inaccurate. It also makes amendments for consistency with amendments made elsewhere in this Order.

Article 22 inserts new articles 25 to 30 which set out transitional provisions allowing for the continued operation of the RTFO Order as it stood immediately prior to the amendments made by this Order in relation to fuel supplied before this amending Order comes into force.

Article 23 inserts a new schedule setting out the sustainability criteria which renewable transport fuel must meet if it is to count towards discharging the obligation. Such fuel will satisfy the criteria if it both meets the applicable greenhouse gas emission saving threshold and the feedstocks from which it was produced meet the land criteria. Fuel produced from wastes or residues (other than residues from agriculture, aquaculture, fisheries or forestry) benefits from a partial exemption in that it does not have to meet the land criteria.

Article 24 amends Part 1 of the Schedule to the Legislative and Regulatory Reform (Regulatory Functions) Order 2007 to remove the reference to the Office of the Renewable Fuels Agency which was dissolved by the Office of the Renewable Fuels Agency (Dissolution and Transfer of Functions) Order 2011 (S.I. 2011/493).

A Transposition Note in respect of the relevant parts of Directive 2009/28/EC has been laid before each House of Parliament.

A series of impact assessments on the effect that this instrument will have on the costs of business and the voluntary sector is available from the Low Carbon Fuels Division, Department for Transport, Great Minster House, 33 Horseferry Road, London SW1P 4DR (telephone 020 7944 4895). Those impact assessments and an Explanatory Memorandum are available alongside the instrument on the UK legislation website, www.legislation.gov.uk. Copies of the impact assessments have been placed in the library of each House of Parliament.

A copy of the Directive and the Decision referred to in this Explanatory Note may be obtained from the Office of Public Sector Information or viewed in the Official Journal of the European Union via the EUR-Lex website at http://eur-lex.europa.eu/.