According to Greenpeace:

[...] the Renewable Transport Fuels Obligation (RTFO) will force fuel companies to include biofuels as part of their fuel mix. [...] 2.5 per cent of all petrol and diesel sold in the UK will come from crops such as palm oil and maize.

Here's why RTFO is a bad idea:

Say I take a (diesel) train to work, but I've adapted my house so that it is zero carbon. My neighbour cycles to work but lives in a draughty house. Even if our carbon emissions are the same, our penalties aren't the same. There's a higher price for emitting carbon by burning diesel than for the same emissions from burning gas to heat a house.

Okay, you may concede that the penalties for CO2 emissions aren't the same, but why is that so bad?

In the above example, you could say that I should live like my neighbour (I shouldn't have insulated my house and I should cycle to work) and then I wouldn't be paying a higher CO2 penalty. This would have a detrimental effect on my finances because a local job would be less well paid, and so would be detrimental effect to the economy.

In summary, having unequal penalties for different ways of emitting CO2 is worse for the economy than having single penalty rate for all types of CO2 emissions. Such a single rate system is CO2 TaxBack.