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5.39 pm
Mrs. Caroline Spelman (Meriden) (Con): I should like to begin by paying tribute to the work of the Select Committee in preparing this report, and to all hon. Members present for speaking with such a high level of understanding on this subject. I feel that I am among cognoscenti. Also, I think that this is the first time I have spoken at the Dispatch Box on an occasion when no one has dissented on the matter under discussion. That is quite extraordinary.
If I were to summarise the debate, I would have to say that there has been a tangible sense of frustration on both sides of the Chamber at the lack of progress in this area. The hon. Member for Sherwood (Paddy Tipping) said that we were in danger of falling at the first fence, in terms of making progress on biofuels. My right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) said that at present we have nothing more than a cottage industry and that the time for action was yesterday. The hon. Member for Stroud (Mr. Drew) said that we were in danger of ending up with a lose-lose situation. All those remarks sum up our real frustration. I shall be adding a very positive view of biofuels, so I shall wait with great interest to hear whether the Minister is going to dissent from the consensus that has broken out to the effect that action is long overdue.
I should also like to make it clear that I stand at the Dispatch Box having spoken about this issue to my colleagues on our DTI and Treasury teams, as well as our Transport spokesman, who is part of my multi-departmental team. We speak with one voice on this subject, and I think that that is what is lacking elsewhere. The Chairman of the Select Committee, my right hon. Friend the Member for Fylde (Mr. Jack), called for a champion on the subject. The Chamber seems to be full of such champions, but we have one very big opponent. It is pretty clear that the opposition is coming from the Treasury. All the other Departments have said very nice things about bioethanol, but the plain fact is that they are in hock to the Treasury. This reality reminds me of an old adage that sums up exactly why there has been such inaction: when everyone is responsible, no one is responsible. That certainly seems true in this case.
I must declare an interest. Twenty years ago, I wrote my PhD setting out the economic case for bioethanol. I said at the time that the price of oil would have to rise to $35 a barrel before bioethanol could ever be economic on straight competitive terms. It is a sad fact that that situation has not changed. I can hardly believe that so much time has elapsed without any underlying movement in the fundamental economics between the fossil fuel and its equivalent alternative of biological origin.
Some important facts should lead the Minister to do all that he can to persuade the Chancellor not to dismiss the case for these biofuels on purely economic grounds. The biofuels are from a renewable source, while fossil fuels are not. The incredible reluctance in this country to explore biofuels more positively undoubtedly stems from the fact that we are in the quite luxurious position of having our own indigenous source of fossil fuel. We are therefore in a somewhat different position from our European competitors. It is therefore all the more surprising that one of the economic barriers to considering the opportunity for biofuels should exist in
the context of our having the highest percentage of tax on gasoline of any European Union member state, despite our indigenous fossil fuel supply resulting in our having the lowest pre-tax cost of gasoline in the European Union. That seriously reduces the Treasury's room for manoeuvre when considering the biofuels option. Such a contradiction is worth mentioning in this context.One of the reasons given for the long-standing resistance to biofuels is the fact that we are a major oil producer. However, it is worth noting that in January this year, the UK trade in oil was at a deficit of £37 million for the first time for more than 12 years, and that a deficit has been recorded showing a decline of £416 million from the previous month. So the situation is changing. That underlines the point that biofuels offer a strategic, if not immediately cheaper, alternative. That is another strong reason for their serious consideration.
Several Members have pointed out that biofuels give the Government an opportunity to reduce carbon emissions by offering a closed carbon cycle. According to British Sugar, a saving of up to 70 per cent. can be achieved through the use of biofuels. The Government signed us up to Kyoto—a decision that my party entirely supports—but as a result of going beyond the Kyoto requirement to cut carbon emissions by 12.5 per cent., to 20 per cent., we as a nation will have to work much harder to find where these carbon savings can be made. That is another reason to look closely at the biofuel option.
Instead of being clear on this issue, the Government have set this higher target—a gold-plated target—without giving any real thought as to how to achieve it. That is at serious odds with important decisions taken in other departmental areas. For example, we should consider the implications of the aviation White Paper, which will blow our Kyoto compliance right out of the water.
Today, I received a very interesting answer to my parliamentary question to the Minister about the impact that the aviation White Paper will have on our capacity to reduce carbon emissions. It stated:
- "International flights from the UK do not currently count in the national inventories of greenhouse gas emissions as there is no international agreement yet on ways of allocating such emissions between countries."
We have had a substantial discussion, and if we are all agreed that biofuels offer the way forward, the next question is whether they should be imported. It is clear from what a number of Members have said that if nothing more is done, the most likely scenario is that the fuel will be imported from Brazil, where the sugar plantations are enormous and the wages are lower. Because of those factors, it will be very difficult for us to compete, notwithstanding the freight costs. I support those Members who have called for an opportunity to secure a domestic source of biofuel.
There is a very real opportunity for diversification that is not to be missed, at a time when farmers face the most radical reform to the common agricultural policy that I can remember.We must however heed the National Farmers Union's warning that set-aside payments and payments for the growing of energy crops will simply not be enough to kick-start the domestic industry. It will take more than that, and the Minister has heard a number of constructive suggestions as to how that can be achieved. We urge him to seize the opportunity to get this point across to the Chancellor just before the Budget, because it is clear that that is where the sticking point lies.
I cannot complete my contribution without pointing out that, if we are all agreed that biofuels offer a way forward for strategic, environmental and wider rural and economic reasons, we must acknowledge that the way in which the crops are produced is very important to the overall economic argument. There are concerns that if biofuel feedstocks are grown en bloc in a concentrated manner, some of the environmental benefits that can accrue could be undermined. I want to pay tribute to the work done by English Nature and the Royal Society for the Protection of Birds in looking at biofuel production's impact on biodiversity—both plant and animal diversity. It is right to record that the question of how we produce such crops is just as important.
Let me end by challenging the Government. I entirely agree with my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice), who criticised the Government for their obsession with wind farms as renewable technology to the detriment of biofuels. Why the rush to wind power, and why the reticence on biofuels, he asked? There is a distinctly un-level playing field. There is no doubt that wind farms are increasingly unpopular, partly because they seem to cause environmental damage. It is not just a question of their appearance in the countryside; as ScottishPower made plain to me, linking them to the grid would require the building of swathes of pylons. No one could argue that that has no environmental implications.
I urge the Government to seek the opportunity provided by next week's Budget statement. I urge them to think again about adopting the comprehensible, comprehensive policy on renewable energy that is currently lacking, and to give biofuels the chance that has been ignored for far too long.
5.51 pm
The Minister for the Environment (Mr. Elliot Morley): I congratulate the Select Committee on its report, and echo the comments that have been made about the effective way in which its Chairman, the right hon. Member for Fylde (Mr. Jack), put its case. I can honestly say that I have attended few debates during which the case has been made so persuasively, and Members have spoken with such authority. We heard from my hon. Friend the Member for Sherwood (Paddy Tipping), the hon. Member for Lewes (Norman Baker), my hon. Friend the Member for Great Yarmouth (Mr. Wright), the right hon. Member for South-West Norfolk (Mrs. Shephard), my hon. Friend the Member for Southampton, Test (Dr. Whitehead), the hon.
Member for South-East Cambridgeshire (Mr. Paice), my hon. Friend the Member for Stroud (Mr. Drew), the hon. Member for South-West Hertfordshire (Mr. Page), my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) and, of course, the hon. Member for Meriden (Mrs. Spelman). All their contributions made a great deal of sense, and I shall try to respond to them. One or two specialist points were made, and I shall deal with those if I have time.The right hon. Member for Fylde set the scene very effectively. I was particularly interested to hear what he said about sugar, but let me put this to him and to the right hon. Member for South-West Norfolk. Has the present sugar regime been unhelpful in terms of support for innovation and new markets such as the market for ethanol? It is quota-controlled, which is quite restrictive. Is there an argument for reform? I am thinking of the part C quota, which was mentioned earlier. I was also interested in the right hon. Gentleman's comments about spreading the costs of duty across all fuel duty. There is a good deal of merit in what he said, and I shall return to it shortly. I shall also return to what he said about the Lords amendment.
I hope I can respond to the main points made today as positively as they were made. The hon. Member for Lewes said that I had been put at the wheel of a vehicle with no fuel. Well, I am often put at the wheel of a vehicle, but it usually contains something that is about to blow up in my face as the vehicle starts moving. In that respect, this debate is a bit of an improvement.
I am sympathetic to what has been said, as are the Government. Of course some issues need to be addressed, and they are complicated, as my hon. Friends have pointed out; but the Government's objectives for biofuels were stated clearly in the energy White Paper. I agree with my hon. Friend the Member for Southampton, Test that the production of hydrogen from ethanols may have a role to play in the future, along with that of other biofuels. They represent an important potential way of achieving the goal of zero-carbon transport. We have made good progress in relation to industry, but transport poses a big challenge.
As to why we should support renewables from wind, it is that those will make a contribution. We will need a range of contributions to meet our targets for boosting renewables, to which biofuels can contribute. I do not dispute that for moment. I do not want it to be thought that wind energy is the be-all-and-end-all of the Government's approach, which it is not. Its contribution is perhaps more important than was being argued, however.
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