14 April 2013 Last updated at 20:29 ET
By Matt McGrath Environment correspondent, BBC News
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The UK’s “irrational” use of biofuels will cost motorists around £460 million over the next 12 months, a think tank says.
A report by Chatham House says the growing reliance on sustainable liquid fuels will also increase food prices.
The author says that biodiesel made from vegetable oil was worse for the climate than fossil fuels.
Under EU law, biofuels are set to make up 5% of the UK’s transport fuel from today.
“It creates a financial incentive to buy refined palm oil, cook a chip in it to turn it into used cooking oil and then sell it at profit…” Rob Bailey Chatham House
Since 2008, the UK has required fuel suppliers to add a growing proportion of sustainable materials into the petrol and diesel they supply. These biofuels are mainly ethanol distilled from corn and biodiesel made from rapeseed, used cooking oil and tallow.
Deep fried fuel
But research carried out for Chatham House says that reaching the 5% level means that UK motorists will have to pay an extra £460m a year because of the higher cost of fuel at the pump and from filling up more often as biofuels have a lower energy content.