The obligation means that by 2010, 5% of all the fuel sold on UK forecourts will come from a renewable source. The measure is predicted to save one million tonnes of carbon a year by 2010.

The consultation focuses on:

The detailed design of the scheme and which suppliers will be affected;

How suppliers of renewable fuel would report on the carbon savings and wider impacts of those fuels;

How the Renewable Transport Fuel Obligation (RTFO) might develop after 2010/11.

Mr Ladyman said: The obligation will play a key role in making road transport fuels greener. By consulting on the details now we are paving the way for the obligation to start in 2008. In particular, we want to encourage the supply of biofuels from sustainable sources which save as much carbon as possible.

The consultation will finish on May 17, 2007.