In the ever-evolving transport and energy landscape, staying informed on regulatory changes is crucial for businesses across the fuel supply chain. One of the key legislative mechanisms in the UK that directly influences fuel pricing is the Renewable Transport Fuel Obligation (RTFO). For fuel card resellers, understanding how RTFO works and its pricing implications can be a strategic advantage.
What is the RTFO?
The Renewable Transport Fuel Obligation (RTFO) is a UK government policy designed to reduce greenhouse gas (GHG) emissions from the transport sector by encouraging the use of renewable fuels. Under this scheme, fuel suppliers who supply more than 450,000 litres of fuel per year are obligated to ensure a certain percentage of the fuel they supply is renewable.
How Compliance Works
To meet their obligations, fuel suppliers have two options:
- Redeem Renewable Transport Fuel Certificates (RTFCs): These are earned by supplying eligible renewable fuels. One RTFC is typically awarded per litre of renewable fuel. Some fuels, particularly those derived from waste or classified as development fuels, may be eligible for double certificates — 2 RTFCs per litre.
- Pay a Buy-Out Price: If suppliers are unable or choose not to meet their obligation with RTFCs, they can instead pay a fixed buy-out price.
The Role and Value of RTFCs
RTFCs are tradable commodities, and their market value can vary based on supply and demand. If a supplier generates more RTFCs than they need, they can sell the surplus to other suppliers who are short. This trading flexibility introduces a real-time cost dynamic into the system.
- 2025 Market Price for RTFCs: As of March 2025, the average price of an RTFC is 26.1 pence per certificate, up from 15.4 pence a year earlier.
- Cost Comparison: Paying for RTFCs at market value is often cheaper than paying the buy-out price.
Current Buy-Out Prices (2025)
- Main Obligation: £0.50 per litre of unmet obligation
- Development Fuel Obligation: £0.80 per litre of unmet obligation
Because the buy-out prices are significantly higher than the average RTFC price, suppliers are incentivised to either supply more renewable fuel or purchase RTFCs from others to meet their obligations.
2025 RTFO Targets
For the 2025 obligation year, the following targets have been set:
- Main Obligation: 14.054% of the total fuel supplied
- Development Fuel Target: 1.619% of the total fuel supplied
Failure to meet these targets through renewable fuel supply necessitates buy-out payments, which are often factored into the cost base of fuel suppliers.
What This Means for Fuel Card Resellers
As a fuel card reseller, it’s essential to understand that RTFO compliance costs incurred by suppliers can influence the prices you pay and, in turn, the prices you pass on to your customers. When fuel suppliers absorb higher RTFO-related costs—whether from purchasing certificates or paying buy-outs—those increases may be reflected in wholesale or pump prices.
Being aware of RTFO dynamics enables you to:
- Have informed pricing conversations with suppliers and customers
- Understand seasonal or annual price fluctuations tied to obligation periods or RTFC market shifts
- Position your offering with sustainability-conscious customers by highlighting renewable fuel supply and compliance transparency
Conclusion
RTFO is more than a behind-the-scenes compliance scheme; it is a cost driver that directly affects fuel economics in the UK. Fuel card resellers who grasp the mechanisms, pricing trends, and financial implications of RTFO will be better positioned to navigate pricing negotiations and customer expectations in an increasingly environmentally conscious market.
Stay informed, stay competitive, and use your understanding of RTFO to add value in your role as a Fuel Card reseller.