Examination of Witnesses (Questions 467-479)
IAN PEARSON
MP
10 MAY 2006
Chairman: Minister, may I first welcome
you to the Committee, your first appearance before us after your
change in office from being in the Foreign Office and DTI and
may I thank you so soon after you have been appointed for volunteering
to come and take Elliot Morley's place to come and talk to us
about your Department's policies in the field of bioenergy. I
think, however, it would be remiss of me if I did not put on record
on behalf of the Committee our sincere thanks to Elliot Morley,
who not only on this subject but on so many others was not only
a willing witness but also a very useful contributor to so many
of our inquiries. I think we will miss him but we look forward
to our dealings with you.
David Taylor: That will go on record,
Chairman, but will it also be a formal letter from the Committee
because it is really important?
Q467 Chairman: I am sure the Committee
would wish to express that but I wanted to get it on the record
today because I think sometimes with the passage of personalities
and things in government it is easy to forget, and sometimes it
is important to say thank you when people have been singularly
helpful to us.
Ian Pearson: Chairman, could I
also acknowledge the enormous contribution that my predecessor
Elliot Morley made to the field of climate change and the environment.
I think it is important that I also put on record the Government's
thanks for the work that he has done during the time that he was
Climate Change and Environment Minister.
Q468 Chairman: Good, at least we
start from a point of accord! We have had some very helpful discussions
just before you came in with Mr Johnson from the Treasury and
one of your own officials Mr Perrins so we have explored some
of the issues surrounding the technical background to the subject
that we would like to talk to you about. As you will also be aware,
in preparing for a series of inquiries into issues affecting climate
change the Committee has been both to the United States and to
China and we are attempting now in the inquiry that we are now
undertaking in bioenergy to bring some of the lessons together
from those experiences. One thing that would just be helpful to
know for the record is which department is actually in charge
of strategy as far as bioenergy and biofuels is concerned?
Ian Pearson: There are a number
of departments that have a clear interest in biofuels and bioenergy
and it will depend on the subject area as to which department
takes the lead. However, there is co-ordination of Government
policy through the Sustainable Energy Policy Network and that
is a body that helps to co-ordinate our overall response.
Q469 Chairman: But for example we
have just been discussing questions of the duty derogation that
is available on biofuels and also the level of enhanced capital
allowances which are available. Defra on the one hand has policy
responsibility for the climate change agenda. It also has policy
responsibility for showing commitment and enthusiasm for biofuels
and biomass from the agricultural standpoint. Who is the adjudicator
when there is a difference of opinion between the two partners
in trying to determine the way policy moves forward?
Ian Pearson: I think the other
thing to stress is that we have a Cabinet committee which looks
at these issues as well.
Q470 Chairman: Which one is that?
Ian Pearson: The Committee is
called EE[8]
and there is a sub-committee of that called EE(SD)[9],
which is the sustainable development part of it.
Q471 Chairman: Who chairs that?
Ian Pearson: That was chaired
by Elliot Morley.
Q472 Chairman: And are the Treasury
members of that?
Ian Pearson: Officials will correct
me if I am wrong.
Q473 Chairman: If you want them to
come and sit next to you, they are very welcome to come back and
be there because it saves you having to turn round all the time.
You will get a crick in your neck!
Ian Pearson: I am sure they have
already had a good innings.
Q474 Chairman: What I am interested
in is, for example, if Defra took the view that more help needed
to be given of a financial nature in supporting the industry and
the Treasury disagreed, who is the ref?
Ian Pearson: We have to argue
our case within government. There are a number of areas where
Defra has policy lead responsibility where it does not have direct
control over policy and that is as you would expect in dealing
with a big issue such as climate change that covers a wide variety
of government departments. The key thing is that as a Government
we act corporately and that we pull things together. Ministers
meet, officials meet, and policy gets thrashed out as a result
of that process.
Q475 Chairman: Let us look at why
your Department is supporting the field of bioenergy. Would you
like to tell us in your judgment in rank order what are the reasons
why you are supporting it?
Ian Pearson: We believe that bioenergy
is good for the environment and good for energy security. Our
main policy driver is to stress the environmental benefits in
terms of reduced CO2 emissions and contribution to
our overall targets, but there are additional policy objectives
as well, and clearly in the Energy Review which is taking place
at the moment renewables is a key part of that and renewables
is an important element in the overall energy mix as regards security
of energy supply for the UK.
Q476 Chairman: In your written evidence
you indicate that between five and 6% of the UK's electricity
supply could be from biosources by 2020; 7% of the heat market
by 2015; and 5% of the UK's transport fuel demands by 2010. Are
you confident that all three of those goals can be met?
Ian Pearson: Those are certainly
goals. The DTI Renewables Innovation Review concluded that 6%
of energy could come from biomass by 2020. As you will understand,
we are at very low levels at the moment but the market is growing.
When it comes to biofuels, again we are starting from a very low
base but there is every reason to believe that the market is growing
strongly and there are a number of significant investments which
will be coming on-stream shortly that will enable us to make sure
that when it comes to the RTFO that that policy can be implemented
successfully. As you will appreciate, in the Budget the Chancellor
announced the progress that he wants to see taking place from
April 2008 through to 2010 when the full 5% target will be achieved.
Q477 Chairman: Do you want UK sources
of the biomaterials that are relevant to the targets that I have
just mentioned to come from within the United Kingdom?
Ian Pearson: Yes we do, but I
do not think it would be right to say that we want 100% to come
from the UK. I think that that will depend on the market. Certainly
it is Government policy to encourage domestic supply, and I think
there are some obvious reasons why that should be the case.
Q478 Chairman: Let us just probe
a bit in terms of what indigenous supply there is. As far as your
Department were concerned, a year ago on 16 March when I tabled
a parliamentary question Elliot Morley told me that the only bioethanol
plant that was currently going up in this country was the British
Sugar one which was proposed to produce 55,000 tonnes of bioethanol
a year. What has changed in the last 12 months?
Ian Pearson: My understanding
is that sales of biodiesel and bioethanol were five times higher
in 2005 than they were in 2004. As I say, that is still coming
off a low base but the figures that I have—
Q479 Chairman: But Minister, that
was not the question I asked.
Ian Pearson: I am coming on to
answer the question. I said the figures I have to hand say is
that in 2005 the market was around 33 million litres of biodiesel
and 85 million litres of bioethanol. There is a new plant in Scotland
which will produce 50 million litres of biodiesel a year from
animal fats and used cooking oil. A new plant on Teesside is under
construction which is going to produce up to 250 million litres
of biodiesel a year from oilseed rape and other vegetable oils
and a plant that is being built in Norfolk will produce 70 million
litres of bioethanol per year from sugar beet. It is my understanding
that various other plants are at the planning stage so there is
a lot of activity that is going on that has, I believe, been directly
stimulated by the tax breaks offered by the Treasury and also
the impending introduction of the obligation.
8 Ministerial Committee on Energy and the Environment
(EE). Back
9
Sub-committee on Sustainable Development in Government (EE(SD)) Back
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