Examination of Witnesses (Questions 480-499)
IAN PEARSON
MP
10 MAY 2006
Q480 Chairman: So we have still not
got a great deal different from what you answered a year ago in
terms of actual production. I added it up and in the biodiesel
field it comes to roughly about half we would expect from UK sources
and we are miles off in terms of bioethanol. You said that one
of the reasons for having this policy was to do with energy security
and in the case of petroleum replacement we do not seem to be
getting anywhere near that. Is that satisfactory?
Ian Pearson: I do not accept that
as an assessment. Certainly the key driver is climate change and
wanting to tackle climate change. A subsidiary policy driver is
the fact that renewable energy is good for the security of supply.
If you add up bioethanol and biodiesel and if you say that the
market in 2005 was 114 million litres, then the new plants that
I just mentioned will produce an extra 370 million litres, so
that is more than treble, and that is just from those current
known plants that I mentioned. I am certainly very optimistic
indeed that various other plants that are at the planning stage
will receive planning approval and go through and that the market
in this area will build very strongly. I would certainly like
to see a high domestic proportion of biofuels as part of the overall
obligation.
Chairman: Mr Taylor, on the same point?
Q481 David Taylor: On the very same
point, Chairman. A very brief observation from the figures that
the Minister has quoted, in fact for this year I believe from
our papers here it is something like 150 million litres of biofuels
in a national consumption of 60,000,000 litres of fuel, which
is one quarter of 1% at the moment. I am not trying to rubbish
it but we are at an extraordinarily low base, are we not?
Ian Pearson: We certainly are
and I certainly accept those figures. It is about one quarter
of 1% and certainly the obligation says that we are going to get
to 5% by 2010. What I think is important to recognise is how quickly
the market can change in this area. We are already seeing the
plants I mentioned in the process of coming on-stream and I do
think that the combination of this early incentive in terms of
the tax breaks from the Treasury and the obligation starting to
come in from 2008-09 is really going to drive the market and the
market is going to deliver in this area. I am not saying that
all of it is going to come from the UK. Some of it probably will
be imported, but I think it is clear that there is a market building
in the UK, contracts are being signed with producers at the moment
for oilseed rape and other energy crops, and obviously we will
closely monitor developments as a Department, but I think there
is every reason to be optimistic that we have got a growing market
here.
Chairman: It would be helpful to us if
you could update us with as much accurate information as you can
on the answer that I got on 16 March and if you would be kind
enough to convert it into something common because your parliamentary
answer talked in terms of tonnes and your response to the Committee
has been in terms of litres. It would be quite nice if we could
find some common nomenclature to describe it so that we could
look, as Mr Taylor has done, at the proportions. I am going to
come back to some of the things that you have mentioned but Mr
Vara would like to ask you some questions further about the Road
Transport Fuels Obligation.
Q482 Mr Vara: Thank you, Chairman,
and welcome, Minister. As the Chairman says, if I can just continue
that theme, Defra has said in the past that the UK has the land
capacity to supply 5% of road fuels today and it is felt by 2050
the UK could produce as much as one-third of its transport energy
needs from biomass. You have been very optimistic in your comments
but if I can turn to being realistic: in your opinion how realistic
is it that we will be able to meet the 5% target by 2010?
Ian Pearson: I believe that the
five per target for biofuels is a realistic target. As has been
mentioned, we are currently at one quarter of 1% so the market
will have to get a move on between now and 2010. I believe that
it is a realistic target and, as I indicated, I think there is
a strongly growing market out there that is going to deliver.
Obviously when it comes to the obligation it will be up to companies
to comply with that obligation and we hope that they will find
it in their interests to source a lot of that obligation from
UK domestic companies. We cannot and it would not be right to
guarantee a particular percentage that has to come from UK sources.
Q483 Mr Vara: How much capacity of
UK land should be used to meet that 5% target?
Ian Pearson: UK arable land is
round about five million hectares, of which half a million is
classified as set-aside and industrial crops such as biomass could
be grown on set-aside land. The Biomass Task Force suggested that
about one million hectares could in the future be devoted to all
industrial crops, so that would be energy crops as well as biofuel
crops and other crops for industrial use as well. If you look
at that figure, certainly in our view it would be a plausible
figure that could be devoted to what is a new opportunity for
the farming sector.
Q484 Mr Vara: The subject at hand
is obviously medium to long term and whilst I appreciate the target
is 2010, to what extent are any preparations being made at the
moment to ensure that post 2010 we are heading for the target
of one-third of transport energy coming from biomass in 2050,
or is that something that is going to be sorted in 2010?
Ian Pearson: I think the figures
quoted in the memorandum about one-third by 2050 were actually—and
I will have to check this with officials because I must admit
I looked at it and thought, "Um, this seems rather on the
high side"—is based on results from a report Liquid
Biofuels and Renewable Hydrogen to 2050—An assessment of
the implications of achieving ultra-low carbon road transport,
which is a document published by the Department for Transport
in July 2004. That is the technical basis for the figure quoted
of one-third of transport energy needs from biomass but that is
just a study; it is not a Government commitment.
Q485 Chairman: It is set down here
in the evidence you gave to the Committee as a Department. If
you did not accept it, why did you submit it?
Ian Pearson: I was not actually
the Minister responsible at the time here.
Q486 Chairman: Whoever wrote this—
Ian Pearson: Can we be clear what
we put in the memorandum. We said: "With advances in technology,
it is estimated that by 2050 the UK could produce as much as one-third
of its transport energy needs from biomass." That is not
a policy commitment, is it? It is saying we could.
Q487 Chairman: I am not saying it
was but you yourself—
Ian Pearson: —I think you
strongly hinted.
David Taylor: Is that an aspiration or
a target?
Q488 Chairman: You yourself questioned
the validity of the evidence because one of the things I was going
to ask you was how was this trick to be pulled? What was actually
going to happen? What were going to be the changes in land use
that would see quite a significant change from 5% to 33Ú%?
Ian Pearson: My understanding
is that this is a study that looked at potential and it is clear
from the evidence that we submitted that this is something that
could be achieved.
Q489 Chairman: That is why I asked
the question about who was in charge? You have got a situation
where the Department for Transport in 2004 go off and produce
a report and you as an incoming minister astutely look at this
and say, "That seems to be quite a large number. I do not
know whether I can potentially sign up to that; I will ask a question"
(which is a very healthy start to your incumbency that you ask
the question) but your Department receives this document from
the Department for Transport and they put this possibility into
a piece of evidence which has got your Department's name on it.
Therefore I ask the question: should it not have been ruled out
in the first place? If it is not realistic, what right have the
Department for Transport got to go writing policies about what
is going to happen on the agricultural land of the United Kingdom?
Ian Pearson: I think we were trying
to be helpful to the Committee in terms of indicating the potential
in this area but what is clear to me is that we have our own targets
when it comes to the RTFO and biofuels and we do want to see,
when it comes to bioenergy crops, an increase in the percentage
that comes from the UK.
Q490 Chairman: You said in your evidence
that there is a "healthy marketplace" which is the phrase
that you have used there.
Ian Pearson: For biofuels.
Q491 Chairman: Yes, and that you
think that you will get to your 5% in 2010. Let me turn the numbers
the other way round. That still leaves us in 2010 with 95% of
fuels which are not of a bio variety. So are we not going to be
stuck at that figure of 5%? Is that the ceiling? Is that the limit
of the Government's ambitions? Because if it is not, what are
you going to do to stimulate this to take advantage of biotechnology
to help reduce greenhouse gas emissions in the two sectors in
which it has been significantly rising during the Government's
stewardship of policy for this area?
Ian Pearson: It is not the limit
of the Government's ambitions.
Q492 Chairman: So what are the Government's
ambitions?
Ian Pearson: The Chancellor said
in his Budget statement that the Government intends that "the
target should rise beyond 5% after 2010-11 so long as infrastructural
requirements and fuel and vehicle standards allow, and subject
to the costs being acceptable to the consumer."
Q493 Chairman: Where does the Chancellor's
ambition lie? If by that, we are talking about the introduction
of flexi-fuel vehicles, tell me how you see things moving? Where
does the Chancellor's ambition lie for starters? Where does he
think it can go to?
Ian Pearson: I think that is a
question that you might want to direct to the Chancellor rather
than to me.
Chairman: You are here.
Q494 Lynne Jones: You should be pressing
him.
Ian Pearson: I have not taken
the Chancellor's mind on this area.
Q495 Chairman: Let me relieve you
of the difficulty to try and walk away from the question; will
you as the Minister who is before the Committee in the Department
that is responsible for this policy be kind enough to pose the
question to the Treasury and get us an answer?
Ian Pearson: With respect, I have
given you an answer. I have given you an answer that says that
the Government intends that the target should rise beyond the
5%.
Q496 Chairman: But to where?
Ian Pearson: It intends that it
should do that as long as infrastructural requirements and fuel
and vehicle standards allow.
Q497 Chairman: But the Committee
has heard evidence about the availability for example of bio flexi-fuel
vehicles which do not require a significant change to the vehicle
fueling infrastructure. The technology is proven. The technology
as an example is available now. I am interested to know whether
in the thinking that the Chancellor has had about the potential
target or the potential opportunity for more biofuels to be used,
when he looks at all of these existing pieces of technology, and
things are obviously going to change up to 2010, where does he
see this target going? What is the track? We seem to be able to
produce targets for everything else. For example, in the Enhanced
Capital Allowances document the Chancellor projects forward what
he thinks he is going to be able to relieve. The document for
example goes as far as 2012 so somebody is thinking about this
as far as 2012. The target is 2010 for the Road Transport Fuels
Obligation. What is going to happen in the next two years?
Ian Pearson: I appreciate that
you might, Chairman, want to get me to try and set new targets.
Q498 Chairman: No, I am just asking
will you go and ask the Chancellor what he means by that.
Ian Pearson: What is clear, again,
is that we have already heard that at the moment we are at a quarter
of 1% and that we have set a target for 2010 of 5%. We have said
that we have an intention that we would look to proceed further.
I do not think it is an unreasonable place to be as a Government.
I think you run the risk of losing credibility if you are going
to suggest that you are going to set targets for 2012, 2015 or
2020 in an area that is still developing and still under a state
of evolution at the moment.
Q499 Chairman: But, with respect,
the Government has set a 2050 carbon reduction target. I do not
think it is unfair to ask what are the component elements as to
how you are going to get there. If the Chancellor has made a statement
that he thinks that something can go beyond present numbers, I
do not think it is unreasonable for us to simply ask what does
that mean because obviously the implications of that target are
important in terms of UK agriculture land use, importation and
some of the other issues that we are going to come on to. I appreciate
that you cannot answer that question at the moment but I think
we would like you as the representative of the department with
policy responsibility to go back and ask the question what does
it mean.
Ian Pearson: As I say, there are
certain things that will need to be put in place if the target
is going to go higher and I mentioned some of the infrastructural
requirements and, as I say, fuel and vehicle standards. Let me
be blunt about this. I think personally that there is scope for
us to go further after 2010. I would be very surprised if the
Government decided that it did not want to do that. I do believe
from my understanding of the technology that it would certainly
be feasible to go further than that. I am just saying to you that
at this moment I think it would be unwise to jump to have a longer
term target when we have already got a stretching target of 5%
by 2010 to achieve.
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