Additional demand for hybrids and vehicles running on second-generation biofuels could be generated from this month, when the EU tax commissioner Algirdas Šemeta proposes minimum CO2 tax rates on fuels.

This would cover all EU countries, including Britain, which lacks such taxes.

European Commission officials have confirmed Šemeta wants to vary minimum rates according to a fuel’s CO2 intensity, so fossil fuel petrol would have a higher minimum rate than biofuels.

Many EU countries operate CO2 taxes, and may push London to support the move. Šemeta said in a recent speech: “I intend to push a ‘green’ taxation agenda.”