Select Committee on Environmental Audit Written Evidence

Memorandum submitted by the Environmental Industries Commission (EIC)

  EIC was launched in 1995 to give the UK's environmental technology and services industry a strong and effective voice with Government.

  With over 290 Member companies, including suppliers of clean and low greenhouse gas fuels, such as biodiesel, alternative fuels, diesel water emulsions and low ash lubricating oils, suppliers of catalysts and catalysed components and consultants covering transport and the environment, EIC has grown to be the largest trade association in Europe for the environmental technology and services (ETS) industry. It enjoys the support of leading politicians from all three major parties, as well as industrialists, trade union leaders, environmentalists and academics.


  We note that the Committee is interested in number of strategic issues related to carbon emissions from transport. Our response focuses on the issue of "what specific steps the department should now take to reduce road transport carbon emissions . . . over the next decade".

  The transport sector is responsible for one quarter of the UK's carbon emissions and this is growing rapidly, threatening to derail Government targets to reduce carbon emissions. It is, therefore, clear that urgent action needs to be taken to reduce transport carbon emissions.


  The technology to produce biofuels is still developing, however, there is ample evidence from Government and independent studies to demonstrate that biofuels are a promising technology for tackling carbon emissions from the transport sector. For example, the report published by DfT in July 2004 " Liquid Biofuels and Renewable Hydrogen to 2050" concludes that "It would be possible, by 2050, to reduce total carbon emissions from road transport to very low levels, through significant use of renewable hydrogen or biofuels. This could help the UK to achieve its goal to reduce CO2 emissions by 60% by 2050".

  The current duty differential of 20p per litre introduced for biofuels has had some impact in stimulating the production and use of biofuels. However, this is not sufficient for biofuels to become a significant part of the fuel supplied at the pump. EIC has, therefore, supported the introduction of a Renewable Transport Fuels Obligation and continues to discuss regularly with DfT, Defra and Treasury the details of such a scheme. EIC has put forward the following as key features of the RTFO it believes are necessary to support biofuels:

    —  RTFO Targets of 3/4/5% for 2008/9/10.

    —  RTFO Targets to rise consistently beyond 2010 subject EU fuel specifications.

    —  A Buy Out price of 30ppl.

    —  Duty derogation of 20ppl from April 2008 to April 2009.

    —  A significant overlap between the duty derogation and obligation regimes.

    —  No implied increase in duty contribution from Treasury beyond 2008.

    —  Support for accreditation of carbon and sustainability issues.

  EIC has also consistently called for the RTFO to be introduced earlier than 2008 if it is to make a real contribution to meeting the UK's target for reducing CO2 emissions by 20% by 2010.

  We would be happy to supply the Committee with a more detailed paper on the RTFO should that be of interest.

  The other key area for EU and UK policy is addressing the restriction on using more than 5% biofuel in regular fuel supplied at the pump. It is vital that the DfT encourages the EU moves quickly to ensure the relevant standards allow a higher level of inclusion.


  As DfT brings forward policies to tackle transport carbon emissions EIC believes it is important that these work with policies to tackle the continuing air quality problems associated with vehicle emissions—air quality and climate change objectives need not conflict.

  For petrol cars, experience with Euro 4 certifications and projections for Euro 5 show that NOx emissions can be driven down with no associated penalty for CO2 emissions. Developments in emissions control systems for lean burn petrol engines, using direct injection, now enable these vehicles to deliver low NOx emissions in combination with lower CO2 emissions.

  The last decade has also seen considerable progress in the performance (both fuel economy and lower pollutant emissions) and popularity of diesels. Over the next 10-years, tackling diesel pollutant emissions to avoid air quality objectives being compromised by the growing popularity of diesels needs to be a priority.


  The Government has set out a commitment to invest in and exploit the competitive and environmental potential of low carbon transport technologies through its Powering Future Vehicle's Strategy (PFVS). One of the recommendations of this was to use public procurement as a means of overcoming the innovation gap (market risk based on higher incremental cost) for new low carbon and hydrogen technologies.

  EIC Members believe there is considerable potential to stimulate low carbon technologies through public procurement and would urge DfT to support the proposed Directive on this topic recently proposed by the European Commission.

  Government regulation is also of particular importance in the environmental sector. As the market fails to included environmental costs, market mechanisms cannot be relied upon. Environmental benefits are a social, rather than an individual, good and consumers typically will not drive development of the market alone.

  The development of low carbon vehicle technologies will require clear, long-term and progressive regulation in the environmental sector. This is particularly important where innovative technology is involved. For example, the US Federal Clean Air Acts and the Californian Zero Emission Vehicle Mandate were instrumental in creating the market for automotive emission control catalysts and for automotive fuel cell development respectively. Comparable regulation in Europe has been weaker and has retarded the development of European adoption.

  The example of the RTFO is a good example of Government creating a clear regulatory framework to overcome market barriers to the take up of a new low carbon technology.


  The United States and Japan are investing heavily in R&D and making the first investments in infrastructure (notably the Californian Hydrogen Highway) necessary to enable them to exploit the potential of hydrogen to deliver sustainable, energy diverse and energy efficient economies meeting quality-of-life objectives.

  Given the long term potential of hydrogen it is important that EU and UK R&D funds are used to progress innovative technologies in key areas like hydrogen storage and fuel cell power trains.

February 2006

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