Chancellor of the Exchequer Alistair Darling has been accused of getting cold feet on biofuels after abolishing a measure that encouraged their production.

The Chancellor announced in the Budget that the 20p per litre fuel duty differential benefiting biofuels was to be scrapped in 2010.

Instead, the Renewable Transport Fuel Obligation, which comes into effect next month, is designed to ensure that 2.5% of fuel is formed of biofuel, rising to 5% by 2010. But there was no mention of whether the scheme will continue beyond 2011.

Meurig Raymond, deputy president of the National Farmers' Union, said: "We are concerned at what appears to be a strong undercurrent of hostility to and lack of understanding of British-produced biofuels, which runs through the Budget small print.

"British-produced biofuels are sustainable and can make a very real contribution to the reduction in greenhouse gas emissions in transport especially. They should be encouraged by the Government, not undermined."

Transport Secretary Ruth Kelly launched a review into the use of biofuels for transport earlier this month. (The Times)