Transport Minister Stephen Ladyman said details would soon be announced of the Renewable Transport Fuel Obligation (RTFO), revealed last November and due to come into effect in 2008.
The Government wants 5% of all fuel sold in the UK to come from a renewable source from 2010. And biofuel, an environmentally- friendly fuel made from crops such as oilseed rape and wheat, is expected to form the bulk of that.
Speaking at a Low Carbon Vehicle Conference in London, Ladyman said the Government would set out its support package for biofuels soon.
He said: ‘We hope it will give the industry the necessary confidence to invest in new production facilities.
‘Of crucial importance will be the long-term sustainability of the supplies. It is essential that the RTFO supports the right kinds of biofuel. It would be disastrous if we ended up solving one environmental problem and creating another.’
Ladyman said he wanted to avoid a rush to get the maximum amount of biofuels on to the market in the shortest possible time as it would not encourage sustainability.
He instead proposed a phased approach. From day one, companies covered by the RTFO would have to report their carbon performance, and the wider environmental sustainability of the biofuels they use, from the field to the forecourt.
In the longer term, carbon and environmental performance will be an integral part of the scheme. There could be carbon targets and a restriction on biofuels that do not meet minimum environmental standards.
Ladyman said: ‘I want to make clear our full commitment to making the RTFO work and to ensuring it provides the best possible package of support for high quality biofuels.’