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28 Jun 2006 : Column 130WH—continued
Let me draw attention to our commitments under “Kyoto and Beyond” in respect of the threats of environmental change. As my hon. Friend will know, we set ourselves the tough target of reducing carbon emissions by 20 per cent. by 2010. In our 2003 energy White Paper, we flagged up the important role that biomass can play in that. We expect that it may become one of the largest contributors to our renewables generation mix. Through our policies, that is what we are hoping to use to meet the target of 20 per cent. of
electricity produced from renewables by 2020. In our response to the report of the Royal Commission on Environmental Pollution on biomass as a renewable energy source, which was published in 2004, we agreed that biomass has the potential to make a significant contribution to the reduction of carbon dioxide levels, if it is substituted for fossil fuel in the generation of heat and electricity.
How can we achieve those objectives and reconcile them? We need to expand the biomass industry. We have set ourselves targets and, to achieve them, we need to increase the amount of energy cropping by as much as 125,000 hectares, not including crops that might be developed for transport use—biofuels, biodiesel and the like. With colleagues in the Department for Environment, Food and Rural Affairs, we are actively encouraging the development of biomass crops and directly supporting the planting of short rotation coppices using willow and miscanthus—a species of woody, perennial grasses that came from Asia. The Government agreed with the royal commission that an integrated approach is needed to ensure that our industrial, agricultural and environmental policies cohere effectively to ensure maximum, optimum benefits from our biomass energy.
The renewables obligation, to which my hon. Friend referred, was introduced in 2002. It provides a substantial market incentive for all eligible forms of renewable energy by providing support for biomass in the form of renewables obligation capital grants for biomass heat and power generation, planting grants for establishing energy crops, set-up costs for producer groups to harvest and market biomass, and certificates that can be claimed under the renewables obligation if biomass is co-fired with coal. By the end of 2004, generation from renewable sources eligible under the renewables obligation stood at 3.1 per cent. of the UK’s electricity supply. In the 2003 energy White Paper, we committed to review the obligation in 2005-06. That review is not a fundamental rethink of our renewables policy but an opportunity to look at amendments to improve the effectiveness of the obligation in certain areas. We published a preliminary consultation document, setting out the Government’s proposed policy, on which we sought stakeholders’ views in March 2005. We followed that with a statutory consultation document, published in September 2005, in which we set out our proposed policy and sought views on the specific changes.
One outcome of “Renewable Obligations”, the DTI review, was the lowering of the biomass purity requirement from 98 to 90 per cent to bring more waste woods, which are currently sent to landfill, to be burned. That seems wasteful—my hon. Friend said that he had seen clean materials going into landfill—but I am told that biomass material goes to landfill because it is too contaminated for either processing into other products or burning. However, I shall look again at that matter, because it is an important means by which we could try to make progress. As my hon. Friend knows, interest in co-firing has exceeded the 10 per cent. cap that came into effect in April this year.
There is also growing interest in clean coal and carbon capture and storage, which form a significant part of our long-term generation mix. We are looking again at co-firing as part of the ongoing energy review. We are focusing on the potential contribution that it can make to our energy policy goals and the level of support that it will require. I am conscious that that may create additional problems for my hon. Friend and the industry that he seeks to support in the debate today.
We understand the importance of investor confidence in the renewables obligation. We have said that a careful assessment of the impact of any changes on other renewable technologies and other biomass-using industries will be a key factor in that review. I can give him that commitment. When we have published the energy review, which is on course to be published in July before the recess, we will make a high-level statement on co-firing. If we decide to propose changes in respect of co-firing or any of the other matters, we will have a full consultation. I urge my hon. Friend to discuss the matter further with the Minister for Energy.
The Wood Panels Industry Federation has made a significant contribution to the energy review and representatives have met the Minister for Energy. My hon. Friend the Member for Clwyd, South has also met and consulted officials from the renewable policy and development section of the Department of Trade and Industry and voiced the concerns that he has expressed today about co-firing. Those views will certainly be taken into account. We are trying to take a tough set of decisions to reconcile our objectives, as I hope he appreciates.
We are also talking to our colleagues at DEFRA in a biomass taskforce and trying to put together what is described as a biomass action plan, to grow that industry. We hope to publish that document next year. Clearly, if we can improve that part of our policy, that will help us to reconcile the manufacturing and the sustainable energy objectives for which we are striving.
DEFRA has also been looking into the use of non-food crops for more sustainable improved homes; it will publish the findings of that study in November. There will always be a conflict, as I am sure my hon. Friend appreciates, between balancing all the aspects of our economic, social and environmental ambitions. It would be unreasonable to prejudge the outcome of the consultations, but I hope that I can reassure my hon. Friend that the concerns raised by the industry, many of them through him, are being listened to. I assure him then we come to implement policies flowing from the energy review, the effects on the wood panel sector will be taken into account. I hope that in that context, my hon. Friend can engage with the Department, and with relevant Ministers, to ensure that he can continue to protect an industry and a factory in his constituency that undoubtedly makes an important contribution not only by providing local people with jobs, but by providing more modern ways of construction, which are themselves sustainable, so meeting one of our objectives.
Adjourned accordingly at three minutes to Five o’clock.
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