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4.53 pm
Mrs. Gillian Shephard (South-West Norfolk) (Con): This debate illustrates perfectly the cross-party alliance on this issue. The Select Committee report was unanimous, the issue has stimulated several early-day motions and there have been well-supported debates in this Chamber and Westminster Hall. The Minister can be in no doubt about the size of the political lobby in favour of more help for biofuels. Treasury Ministers have also received many delegations. Last week the hon. Member for Sherwood (Paddy Tipping) and I met the Economic Secretary, and an all-party lobbying group has been formed in Norfolk, of which the hon. Member for Great Yarmouth (Mr. Wright) is a valued member. That group is supported by Members of the European Parliament, all Norfolk local authorities, the University of East Anglia institute of food research, British Sugar, hauliers, fuel and petroleum companies, the Royal Norfolk Agricultural Association, and others.
The Government say that they support the case for more help for biofuels. After all, they introduced the 20p a litre reduction in the 2003 Budget, which will be implemented in January 2005. The Government's own Commission on the Future of Farming and Food recommended in the Curry report that duty on biofuels should be reduced.
The Government have signed up to the European Union biofuels directive, which requires the UK to notify the EU Commission in just four months from now the volume of biofuels that it will use by the end of 2005. The Department for Transport has provided rather coy answers to questions on how it proposes to meet that timetable but it is there. Then there is the Government's energy White Paper, which refers to a commitment to produce
- "an assessment of the overall energy implications of a hydrogen economy and of large scale biomass-based fuels".
- "an extremely small cottage industry."
What will happen? It is useful that we are holding this debate a week before the Budget. In his pre-Budget report, the Chancellor indicated that there might be some movement in the Budget. He said:
- "I propose also to consult on a new framework for the tax treatment of green fuels: that we make a commitment to prior announcements, three years ahead, of incentives to increase usage and thus promote investment in new fuel-efficient technologies. The Budget will announce the way forward on that measure."—[Official Report, 10 December 2003; Vol. 415, c. 1066.]
The Government could do several other things, as other Members have outlined; they could introduce duty reductions, capital grant schemes or mandatory inclusion levels, which is the subject of an amendment in the other place to the Energy Bill, of which my right hon. Friend the Member for Fylde (Mr. Jack) spoke so fluently. Some of us who lobbied the Economic Secretary gained the impression that the mandatory inclusion route might be announced next Wednesday. In passing, I pay tribute to the patience and courtesy of the hon. Gentleman in his dealings with the many, many lobbying groups that he has met in connection with the issue.
It is clear that the Treasury has taken charge of the matter, and I have no doubt that the Minister for the Environment will want to explain the strength and vigour of the arguments that he has used, face to face with the Treasury, in advancing the case for biofuels. I hope that he will also be glad that there is such strong cross-party and national support for such moves.
The Select Committee report had to point out that
- "the departments involved do not speak with one voice . . . we deplore the fact that the Government has not nominated any one Department to lead on biofuels and consider that this is a prime reason for the slow progress that has been made".
- "expressed support for biofuels but the mechanisms used to promote their use have had little effect so far".
Despite the fine words and the commitments to environmental goals that are repeated so often, production of biodiesel is a cottage industry, and we have no bioethanol production at all. Meanwhile, our competitors are forging ahead and rapeseed is exported from the UK to be re-imported as biofuel—at what cost to the environment, no one dare calculate.
Next week's Budget will give the Chancellor the opportunity to put all those things right. Time is running out. Imported biofuels are already on sale on our forecourts. I know that the Minister is with us in spirit, and even in action and in bio-spirit. The time for pronouncement is over. He is persuaded of the rightness of the cause, in terms of sustainability, security of supply and consistency of action with the Government's objectives.
As I said, the time for pronouncement is over—the time for action was yesterday. That should be the message from the House to the Chancellor.
4.58 pm
Dr. Alan Whitehead (Southampton, Test) (Lab): I think that it was the hon. Member for Worthing, West (Peter Bottomley) who said in a newspaper article some while ago that to get the attention of the House for an idea, one has to enunciate it at least six times. This will
be the fifth time that I have spoken in this place about an ethanol escalator, so I am optimistic about the progress of the idea.I am gratified that everyone in the Chamber agrees that some such device—an obligation for an escalating mix of biofuels with conventional fuel—might be a way forward.
The word that has been used this afternoon is "action", but perhaps the right word is "traction". How do we get traction for a series of proposals that perhaps now have the merit of being obvious? That is, farmers can grow biofuel crops; a European Union directive is coming forward; there is a pressing and urgent need for further action on transport with regard to climate change; and we have an industry that in principle could make both biodiesel and bioethanol. The issue is one not of experiment, but of making these things happen.
The alternative fuels market has been a little confused about what will be the winning fuels. Hon. Members may share my experience of wondering which car to buy in order to be a "goodie"—in order to drive a car that is environmentally more sound than one that I might have possessed before. The messages that have emerged over the past few years would have caused one to buy a different car every six months.
Simply placing bioethanol into existing petrol tanks and driving about in the same cars, with the immense gain that that would represent in terms of CO2 emissions and all the other benefits, is perhaps a much more stable and secure way forward in making a change in fuel. We do not need to imagine that, because we have the experience of Brazil. In its first attempt to introduce ethanol into its market, Brazil set up separate petrol pumps, made arrangements for new cars to be produced and introduced 85 per cent. ethanol into petrol pumps across the state. That did not work very well overall.
What has worked much better is the escalator method that Brazil has introduced, increasing the amount of ethanol in petrol to, I think, 23 per cent. to 24 per cent.—far greater than anything proposed today. That has been a success, whereas the attempt to introduce a parallel system of fuelling vehicles was not. Therefore, I believe that the escalator that has been suggested this afternoon, and which we have discussed previously, is the right way forward.
Ethanol is also the right way forward in that it can be not only a fuel in its own right, but a transitional fuel towards a long-term hydrogen fuel economy. When we envisage such an economy, we realise that one of the problems is that many people who talk about it neglect to say that one of the prime ways of making hydrogen, at least for the foreseeable future, is from mineral fuel. Therefore, one does not solve the problem of CO2 emissions; one simply places it one stage up the chain.
Recent work at the university of Minnesota has demonstrated methods of making hydrogen directly from ethanol. Among other things, the use of hydrogen for fuel can be reduced by using ethanol to create it. Therefore, any investment we may make in introducing it now also leads in the long term to a hydrogen fuel economy, if that is the direction in which we are going.
The other advantage of an ethanol escalator of perhaps 1 per cent. a year over a period of time, as my hon. Friend the Member for Great Yarmouth (Mr. Wright) suggested, is that it would gear up the industry
to create the ethanol that can go into petrol. Indeed, bioethanol can be made from a variety of sources and in a variety of ways. Sugar cane is used in Brazil. Sugar beet or wheat is used in the UK. A company called Iogen has recently proposed setting up a plant in the UK—it might not do so because of problems with the market—to make ethanol from the fermentation of straw. So an escalator that would bring that industry on stream and give it the traction needed to bring its products to market would be the right way forward.In talking about possible ethanol imports, we might reflect for a moment about the fact that, for a number of years, we in the House have happily talked about importing large quantities of mineral fuels to run our vehicles. We are about to become a net importer of mineral fuel again, yet we do not seem to find that particularly remarkable. Even if we did import some ethanol, it would not come from oil-producing countries. The pattern of importation would be different. Indeed, that could support some economies that are not oil rich and do not have the ability to take oil out of the ground.
For all those reasons, I believe that an ethanol escalator represents the right way forward. The Government are seriously thinking about those issues, and I am proud of the fact that the energy White Paper identifies, for the first time, the need radically to reduce our carbon dioxide emissions as part of our energy policy. An escalator would be a way to ensure that that policy is pursued in respect of road transport, and I hope that it comes to fruition shortly.
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