Examination of Witnesses (Questions 520-539)
IAN PEARSON
MP
10 MAY 2006
Q520 Lynne Jones: You said a little
earlier, Minister, that Brazil leads the world on biofuels. Have
you got any analysis of why that is and whether there are any
lessons to be learned?
Ian Pearson: I do not have any
analysis to hand, but certainly one of the reasons that Brazil
is one of the world leaders—and I would not necessarily
say it is definitely the world leader—is that it has had
government commitment to this policy area and it has been very
efficient in terms of being able to use principally sugar cane,
from my understanding, and being able to convert it into ethanol.
If you catch a bus in Brazil, it will be run on bioethanol. If
you look at their cars, most of them will be run on bioethanol.
It is impressive and I think that we do have lessons to learn
from Brazil and what Brazil has done.
Q521 Lynne Jones: You might like
to look at that because the caveats in relation to some of the
schemes that you were mentioning about subject to acceptability
of the markets and the infrastructure being in place, subject
to this, that and the other, maybe the Brazilian Government was
a bit more determined and did not have so many caveats but—
Ian Pearson: —Maybe it is
starting from a different position as well.
Q522 Lynne Jones: On a different
tack, one of the problems with Brazilian bioethanol is that it
is not as good as it could be in terms of the potential carbon
savings. The table that you gave us showed that it had about 40
to 50% of the CO2 emissions of conventional fuel, and
that does not take into account other problems in relation to
the sustainability of production, which really brings me on to
the need for carbon assurance schemes. How far are we away from
having a carbon assurance scheme on the production of biofuels
and how important is it to your Department?
Ian Pearson: It is important to
our Department and we believe that obligated companies under the
RTFO will be required to report on the level of the carbon saving
achieved from biofuel and on other aspects of sustainability.
We have said also that this aspect of the RTFO will be reviewed
with the possibility of making these criteria mandatory, but we
have not committed to doing that yet.
Q523 Lynne Jones: We heard earlier
that it is irrelevant what the carbon savings are in terms of
whether biofuels will qualify for the 20p derogation and the RTFO,
and that causes us considerable concern because you said that
you do not think it is a question of either/or in terms of first
generation or second generation biofuels. I do not know whether
you had any feedback from our meeting with Shell last week and
the evidence we got from them, but they were very concerned that
the current policy could lock out second generation fuels because
we are willing to accept as qualifying fuels those which actually
have very poor performance in terms of reducing greenhouse gas
emissions.
Ian Pearson: I think you are very
right to highlight this as an issue. You make a very good point
about this. It is a policy question that we will need to look
at as a Government.
Q524 Lynne Jones: I was suggesting
that it was very urgent. We were talking earlier about production
of biofuels from set-aside land and also from surplus production,
but we had evidence that to get to the 5% renewable obligation
we would require all of that land mass in terms of current technologies,
which does not actually leave us very much for other areas where
we should be considering crops that could help us in climate change
generally such as biomass. Biomass has far more potential for
carbon savings in terms of land use. Are some of the priorities
not somewhat inappropriate in terms of this? If the driving force
behind this is climate change, should your Department not be doing
more in terms of carbon accreditation and having the information
available to ensure that we use efficiently what land mass we
have available and what support that we are giving in terms of
financial support? You are nodding—so what are you going
to do about it?
Ian Pearson: I am nodding because
I think you are making a number of very important and sensible
points. The primary purpose of what we are trying to achieve in
terms of promoting biofuel is to reduce carbon emissions, so clearly
we want to ensure that we achieve the optimal environmental outcomes.
That is why I said that we would certainly be prepared to review
this particular aspect of the RTFO because we do not want to be
in a situation whereby we are not achieving the optimal carbon
outcomes that we are seeking.
Q525 Lynne Jones: Should this not
have been thought about before going down the route of the RTFO?
Should not some work have been done on the carbon accreditation
scheme because you are encouraging farmers and you are encouraging
land use for biofuels and to a lesser extent encouraging biomass
crops for energy and heat?
Ian Pearson: As you will see from
the evidence, we are providing encouragement for both biofuels
and for biocrops as well. I certainly do not see this as an either/or
situation.
Q526 Lynne Jones: It is if you have
got a limited amount of land and it is crucial that it is optimised
for CO2 emissions.
Ian Pearson: If you just look
at things purely in a UK context then that might well be true,
but certainly I do not think that anybody is suggesting that all
our biofuel obligation will be met purely by UK domestic production.
Lynne Jones: It certainly will not and
carbon accredited schemes are essential for imported fuels as
well.
Q527 Chairman: Can I follow that
on by directing you to your own evidence because in paragraph
4.5 you say: "As part of the Renewable Transport Fuels Obligation,
the Government proposes to develop carbon and sustainability assurance
schemes. The schemes would apply to fuels sourced in the UK, wider
EU and at the international level." Where are we with that
work?
Ian Pearson: My understanding
is that that work is very much going on at the moment.
Q528 Chairman: That is a great statement,
Minister, but, for example, in paragraph 4.4 of the same evidence
you say here: "The Home-Grown Cereals Authority is setting
up a carbon accreditation scheme for bioethanol from wheat and
sugar beet." I think the worry is that you are going to have
different standards being set by different people. Can you tell
us when the work on the assurance scheme mentioned in paragraph
4.5 is likely to see the light of day? I know it is continuing.
It may be that you have not yet been advised of that but could
you find out for us?
Ian Pearson: I have not been advised
of it yet but I am more than happy to discuss that with officials
and get back to you.
Chairman: Thank you. Also it would be
very helpful to know what kind of things are going to be looked
at because it is alright talking about well-to-wheel assurance
schemes but we have not seen the guts of what one of these things
look like, bearing in mind some of the wider issues to which I
think your official referred to earlier before you came in when
we were talking about biodiversity issues, and I hope I do not
misquote him, particularly when it comes to imported fuels, because
clearly in terms of UK agricultural land usage there are environmental
requirements already built into the system, so it would be helpful
to have a little more information on that. Lynne, did you want
to go back to the question you had?
Q529 Lynne Jones: I was going to
ask about the Cereals Authority scheme but I think it is very
important as well that we have a scheme for environmentally friendly
techniques and it should apply to overseas production as well
as British production and we need to know how you are going to
do that.
Ian Pearson: Let me try and provide
some more information to the Committee on this particular area.
I would want to stress that the Government is concerned about
the risk of inappropriate development of biofuels which could,
for example, add to rainforest destruction and could lead to incentives
so that in some of the least developed countries they do not produce
the food that they want because they are producing biocrops for
export. It is an area that we do need to look at and we would
be concerned if that were happening. We are happy to write to
the Committee about that.
Q530 Mr Drew: When we went to Brazil
as a select committee—and welcome Minister by the way—I
think we were impressed by the commitment of the Brazilian Government
(and you have been there more recently). They set strong physical
incentives to both the car manufacturers, ie, they told them what
they had to do, and they then provided the bioethanol. Okay, we
have not got bioethanol to the same extent but surely there is
a message there that unless you have a physical set of measures,
you can have all the fiscal incentives under the sun but you have
got to kick-start this, you have got to tell somebody what to
do. Why is this Government so unwilling to recognise that climate
change is not going to be faced up to unless we actually tell
some people what their commitment should be?
Ian Pearson: I do believe that
the Government is facing up to the issue of climate change. The
UK has taken a leading role internationally on climate change.
Last year during our G8 Presidency, we made climate change (along
with Africa) a top priority and it remains of fundamental importance
to the UK Government that we continue to lead by example domestically
and to push internationally on the climate change agenda. So we
are certainly doing that and we think that what we are putting
in place with the Renewable Transport Fuels Obligation, with the
tax break that is already in place, is kick-starting the—
Q531 Mr Drew: —But they are
all fiscal.
Ian Pearson: They are all fiscal
incentives.
Q532 Mr Drew: You have got to tell
somebody like the manufacturers that they have got to provide
vehicles that are dual fuel and that that dual fuel will gradually
move from fossil fuel to bioenergy. Tell them. The Brazilian Government
told them and now they flock there—and we saw the cars being
made—to make their cars because they have built up that
expertise. We do not build cars, sadly, not to the extent we should
be anyway, but we could be telling the parts of the world that
do build cars that is what we expect in terms of the importation
of cars.
Ian Pearson: Firstly, we build
1.6 million cars a year in the United Kingdom, which is probably
more than we have done at any other point in the UK's history.
We are also home to 19 of the world's top 20 component manufacturers.
Q533 Mr Drew: So why are we not telling
them what they have to do?
Ian Pearson: And we have a successful,
vibrant UK industry even though we have had recent announcements
like Peugeot.
Q534 Mr Drew: So why are we fearful
of actually giving some clear instructions of where we expect
the world to go?
Ian Pearson: I think the days
of the Government directing the car industry have perhaps gone.
What we do believe—
Q535 Lynne Jones: You can set regulation
in terms of requirements. It is done not just in Brazil, it is
done in California.
Ian Pearson: At the UK and at
EU level there have been regulations set in terms of emissions.
There is no doubt about that. What we do believe, though, is that
with the measures that we have put in place through the Renewable
Transport Fuels Obligation as a key measure, but also through
the duty tax break that is on offer and through the Enhanced Capital
Allowances regime, we have got a range of measures there that
will work with the market and we believe deliver the policy objectives
that we want to see. I would be very interested to hear the Committee's
view when it reports on the Brazilian experience and its views
about whether we can sensibly be doing more in this area. As a
Government we do have an open mind. I would like to believe that
government officials and government ministers have thought through
this and come to a considered policy view, but if there is compelling
new evidence that suggests there is more we should be doing in
particular areas then we are very happy to consider that.
Q536 Mr Drew: Why do we not move
the Government's stock of cars over to being largely bioenergy?
They have done that in terms of LPG and compressed natural gas
some years ago, certainly for ministers' cars. Why can we not
just make a revolutionary statement saying that in two years'
time the whole stock will go over to biofuel and bioenergy like
Somerset? Why can we not do that?
Ian Pearson: We are certainly
looking at the moment at sustainable procurement, not just in
the narrow sense to which you are specifically referring, but
in a broader process as a Government. We think that sustainable
procurement is an area where we can do a lot more as a Government,
not just in government procurement but also local government procurement
as well.
Q537 Chairman: It is interesting
that the briefing that the Global Bioenergy Partnership put out
at Gleneagles was that "G8 leaders would be travelling in
cars powered through a blend of ethanol derived from biomass."
I wonder what happened to those cars. Could it be the little bit
of pump-priming that you are needing for your initiative? Do you
think the Global Bioenergy Partnership has the ability or is the
forum to establish some kind of international agreement on the
kind of benchmarking exercise in terms of the well-to-wheel carbon
dioxide savings that we have been discussing?
Ian Pearson: I think it is very
early days for the Global Bioenergy Partnership but certainly
I am optimistic that it can be an important forum for a wide range
of discussions about—
Q538 Chairman: Is it on its agenda?
Ian Pearson: My understanding
is that its first meeting is actually tomorrow.
Q539 Chairman: That is funny, I have
got a round table minute here for a meeting that occurred on 9
December 2005 between the hours of 1 pm and 3 pm in EU Pavilion
Room One where a vast array of people connected with this all
met and discussed what they were going to do. Maybe that was just
the round table meeting to set up the thing but perhaps you can
find out whether they are going to discuss this for us. That would
be very helpful. Now we are going to move on to biomass.
Ian Pearson: My officials tell
me that the formal launch is tomorrow.
Chairman: The formal launch? I wonder
what all these people were doing in December. It is up on their
web site. It was a meeting convened by the Italian Ministry for
the Environment and Territory. So there we are. You can have a
look at it if you like and see what they were up to. Daniel?
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