Select Committee on Environment, Food and Rural Affairs Minutes of Evidence


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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