Thanks to Phillip for posting the following correction in the comments section of the blog:
The version of the RTFO Carbon Reporting Methodology you are referring to is out of date. This was a version consulted on in the middle of last year and has since been updated.
In particular, the co-product treatment procedures were updated. The recommendation to use allocation by energy content for energy co-products was withdrawn. During the consultation exercise many stakeholders highlighted the fact that use of the energy allocation method could lead to perverse incentives (e.g. little or no reward for installing an efficient CHP system at a biofuel plant, which would have significant GHG savings).
Energy coproducts are now treated by system expansion / substitution. The rest of your post is accurate.
Please see the following link for the final version of the Carbon Reporting Methodology: