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This is the second year of operation of the Renewable Transport Fuel Obligation and this report outlines the progress that is being made in encouraging the use of sustainable biofuels in the UK. It provides statistical evidence on an evolving market and highlights good practice as well as those areas where more work is needed. There is potential for biofuels to play a useful role in reducing greenhouse gas emissions without causing substanial environmental damage. However this is unlikely to be achieved without careful planning and regulation.