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Mr. Andrew Miller (Ellesmere Port and Neston): My hon. Friend will know that I have been closely involved in the debate about the use of gas, and one of the difficulties is the chicken-and-egg argument about whether cars are to be on the road before distribution points are available, or vice versa. In some parts of the country, there have been planning difficulties in the installation of gas distribution points at the fuel pumps. Is he satisfied that local authorities have now been given good enough advice on removing that obstacle?
Mr. Jamieson: I am very satisfied about the number of LPG stations opening around the country. There are 900 stations throughout the United Kingdom, and they are opening at a rate of one per working day. We hope that the 1,000th station will open in the new year. That means that anyone who converts to a dedicated LPG vehicle should find a supply readily accessible in almost all parts of the country. I would be happy to see any evidence of difficulties with planning permission that my hon. Friend may have.
Mr. Bill Wiggin (Leominster): I am curious as to what assurances the Minister can give us about what future taxation will be levied on LPG and whether the Chancellor's stealthy fingers will be dipping into our LPG tanks.
Mr. Jamieson: The hon. Gentleman makes a beguiling argument. I look forward to his Front-Bench spokesman making commitments beyond this Parliament. He made great play during the election campaign about not giving commitments beyond one Parliament. Although I cannot speak for the Chancellor, I can say that the Government are totally committed to cleaner air and the objectives that I set out earlier, and we have put in place fiscal measures to ensure that they are achieved. The PowerShift programme means that cars can be converted, and the oil companies have ensured that LPG is available. Those are clear indicators of the Government's commitment to seeing through our objectives. However, I will not be tempted to outline a Budget for 2004, and I do not think that the hon. Gentleman really expects me to.
Mr. Andrew Turner: How accessible will LPG be in rural areas, given that many rural filling stations are closing down and it can be difficult to obtain conventional diesel and petrol?
Mr. Jamieson: The hon. Gentleman's point has to do with the accessibility of all fuels in rural areas, not just LPG. That is of concern to us. For filling stations to stay open, it must be viable for the oil companies to use them.
A good friend of mine who lives in Cornwall—a rural area in which it can sometimes be difficult to access fuels—tells me that there are sufficient stations in Cornwall to enable him to go over to a dedicated LPG vehicle. My constituency is near Cornwall, and I know from my journey through Devon that one can travel
through the whole of that very rural area and find LPG available. I see that the hon. Member for Poole (Mr. Syms) agrees with me.The really good news is that the programme to have LPG at filling stations is continuing apace, so it will be more widely available as time goes on. It is a chicken-and-egg situation: we now have the stations and we need more vehicles to start using LPG fuel. That is why the PowerShift programme encourages use of other types of car.
The grants available through the PowerShift programme will provide between 30 and 50 per cent. of the cost of conversion, depending on the emissions performance that is achieved by doing so. That is excellent news for the estimated 2 million motorists who will be eligible for financial assistance to help with the extra cost of converting their vehicles to run on cleaner LPG. They will also benefit from low-duty fuel that costs less than 40p per litre on the garage forecourts.
Mr. Greg Knight (East Yorkshire): Will the Minister clarify something? He said that gas conversions were particularly suitable for older vehicles, but an engine can be converted to run on gas only if it is at the outset capable of running on unleaded fuel. In other words, conversion is not an option for vehicles that run on lead replacement petrol because the gas does not have the quality to lubricate the head of the engine, as LRP does.
Mr. Jamieson: The thrust of the right hon. Gentleman's remarks is correct. However, the majority of vehicles will run on unleaded fuel, and they can be converted. The right hon. Gentleman will appreciate that the programme cannot embrace every vehicle. Some specialist vehicles will be difficult to convert; converting some will be so expensive as not to be economically worth while. However, there are packs to convert the average medium-sized vehicle, and engines have been manufactured to the required standard. Given that, this facility is available to the majority of motorists.
Mr. Mark Francois (Rayleigh): If I heard the Minister correctly, he said that the PowerShift grants may cover the cost of 30 to 50 per cent. of conversion. My understanding was that until recently they could, in some circumstances, cover up to 75 per cent. of the cost of conversion. Is he announcing that as a result of the consultation the amount that can be covered has been cut?
Mr. Jamieson: No, I am not announcing it here. There was an announcement last week, which was made available to the House, that we had made some changes. The grant system that was in place, which was largely formulated by the previous Government—this is not a criticism, because we agreed—was focused on converting newer vehicles. At the time, that was the right policy. However, in the interim, newer, cleaner engines and cleaner fuel became available and the advantage of converting newer vehicles to LPG reduced. The emissions advantage of converting a brand-new vehicle coming out of the factory was limited, so the gap had narrowed. After the consultation, many people rightly said that we needed to refocus on the older vehicles, so the grant has moved away from newer, cleaner vehicles to older, more
polluting vehicles. We have also given the manufacturers an extra incentive to put the grant at the point of manufacture rather than the point of conversion. I will come to that shortly.Important changes were announced for LPG conversions of new vehicles by offering additional incentives for production-line conversions and for new LPG vehicles replacing diesel vans and taxis. At present, LPG conversions are done as after-market conversions. The petrol vehicle is taken to a garage and converted, sometimes very soon after it has come from the production line. Although many such conversions deliver good environmental performance, the process is labour intensive and consequently relatively expensive. We want to see a move away from after-market conversions to production-line LPG vehicles, which should reduce costs and improve reliability and environmental performance.
Giving higher grants for such vehicles gives a clear signal that the Government want to move in that direction. We have moved the emphasis of the funding to those areas in which we think the greatest advantage will be achieved. The grants will range from 50 to 60 per cent. of the cost of conversion, depending on the emissions performance. Higher grants for LPG vans and taxis reflect the significant air quality benefits to be obtained by replacing diesels with LPG. LPG offers reduced emissions of harmful particulates and oxides of nitrogen compared with diesels, as well as being much quieter.
With the additional incentives offered through PowerShift, I expect the number of LPG vehicles to grow significantly over the next few years from its current level of around 50,000. Thanks to the investment from fuel suppliers, the LPG refuelling infrastructure is also developing rapidly. As I said, there are already 900 LPG filling stations nationwide, with one opening every working day. By the end of next year, we expect around 10 per cent. of all petrol stations to be able to supply LPG, making it a practical fuel for most motorists.
Mr. Robert Syms (Poole): Italy has more than 1 million vehicles that run on LPG. Even the Netherlands has more than 400,000. When does the Minister think that we will catch them up?
Mr. Jamieson: That is difficult to predict. Many of us hoped that the market for LPG and CNG would grow. In Italy, there has been much greater take-up of CNG. We are putting the incentives in place. We have the infrastructure of supply in place. We have in place the fiscal encouragement to go ahead and convert. Hon. Members can go out and proselytise on behalf of cleaner fuels in their constituencies, because those fuels deliver cleaner air and the other objectives that I have set out.
It is true to say that LPG cars and vans have taken off in a big way. We are seeing further developments each day. The difficulty is that the news is not so good for the heavier gas vehicles such as trucks and buses. Despite the range of incentives on offer, operators have been reluctant to switch from diesel to gas. I intend that we should change that rapidly. Gas offers many advantages to the heavy vehicle operator. It is cheap and clean and the vehicles are reliable. Many fuel suppliers are happy to install the refuelling infrastructure free of charge, so refuelling need not be a problem.
To give operators the confidence to invest in cleaner vehicles and refuelling infrastructure, I announced recently that PowerShift grants for heavy duty gas
vehicles would be maintained at their current levels of up to 75 per cent. of the additional cost of the vehicle. This grant level is also mirrored in CleanUp—PowerShift's sister programme that focuses on reducing pollution from existing vehicles.My Department has set up two pilot initiatives with the London Mayor and Transport for London and with Manchester city council, with the aim of getting prospective compressed natural gas users and suppliers together. We believe that this partnership approach could encourage many transport operators in those two cities to invest in natural gas. If it is a success, we intend to roll it out to other towns and cities. Perhaps the hon. Member for Poole and others will watch that with great interest. If we achieve success in London and Manchester, perhaps smaller towns and cities will go over to a similar programme. We may see vehicles such as Royal Mail delivery vans and other vehicles that operate within a limited radius using natural gas.
Gas fuels such as LPG and CNG offer an immediate way of reducing vehicle emissions, in particular local air pollutants, but they do not do much to reduce carbon dioxide emissions. For that reason, the Government are also thinking about the next generation of fuels. I must stress that the role of the Government is not to pick winners in terms of fuels or technologies but to take a more strategic view of where we want to get to with environmental outcomes. Industry can then develop the appropriate fuels and technologies to deliver the outcomes that we want.
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