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Fuel providers are compelled to add an increasing proportion of biofuel to diesel and petrol under the Renewable Transport Fuels Obligation. This year 3.23 per cent must be made up of biofuel and by 2020 that increases to 13 per cent.

However, the first annual report by the Renewable Fuels Agency (RFA) claims that fuel companies are exploiting a loop hole which means they are not required to disclose the origin of nearly half the biofuel supplied to filling stations in 2009.

Last year Esso reported the source of only 6 per cent of its biofuel while BP reported 27 per cent. Shell, the best performing of the main oil companies, only revealed two thirds of its biofuels origins.

Palm oil is the cheapest fuel to buy and is used by most companies to meet part of their biofuels obligation.

However, it is also the most damaging to the environment due to the CO2 released when forest is burnt down to create plantations.

The RFA said: "The large proportion of unknown previous land use is of concern. If even a small proportion of this was carbon-rich grassland or forestland, it could have substantially reduced the carbon savings resulting from the renewable transport fuels obligation as a whole, or even resulted in a net release of carbon."

Indonesia is the third largest CO2 emitter after America and China due to the expansion of the palm oil industry.

Oil companies can provide certified sustainable palm oil which is slightly more expensive but last year only 0.5 per cent of the 127 million litres of palm oil added to petrol and diesel came from sources approved by the Roundtable on Sustainable Palm Oil, an international monitoring body.

The RFA report named Chevron, Murco and Topaz as failing to report any of the requirements under the RTFO.

 
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