Britain has signed up to a new EU directive that will introduce E10 fuel to forecourts – an environmentally friendly alternative that features 10% ethanol that has been derived from sources such as corn.
Although, a study by think-tank Chatham House has said that the fuel returns fewer miles per gallon and could lead to families paying extra to travel the same distance.
According to the Daily Mail, Chatham House warns: "The increased use of ethanol in petrol to meet EU sustainability targets is resulting in drivers paying extra at the pump."
But the increased cost to the consumer isn't the only concern, as the Department for Transport believes up to 8.6 million vehicles may not be compatible with the new fuel and could cause some components – especially in older vehicles – to cease and fail.
The EU's Renewable Fuel Transport Obligation requires 5 per cent of the fuel supply of member states to be renewable by 2014.
This is due to increase in the next seven years under the EU's Renewable Energy Directive, which requires 10 per cent of transport energy from renewable sources by 2020. Oil companies have decided to use ethanol as this renewable source.
The report by Chatham House calculated if the EU policy of supplying 10 per cent of transport energy from renewable sources had been applied in the UK in 2011-12, it would have cost motorists some £1.5billion, or around £80 a year more per family.
The news comes after David Cameron hinted that he may cut or freeze fuel duty in the upcoming budget.
Speaking to workers at a Mercedes-Benz plant on a recent visit, Mr Cameron said: "People look at the price of petrol and diesel... and it's still a very big amount we are paying. So we've got to do everything we can to help."