Supplementary memorandum submitted by
the Department for Environment, Food and Rural Affairs
1. When I gave evidence to the Environment
Food and Rural Affairs Committee on 10 May I agreed to write to
you on a number of points. The following responses are offered
in the order in which they occurred in the session and are referenced
in line with the transcript.
Q481
2. You asked for an update on the information
supplied by Elliot Morley in his answer to your Parliamentary
Question on 16 March 2005. You also asked for it to be comparable
to the information given to the Committee and I have supplied
the updated information in litres. You will appreciate that information,
which is at annex 1, only relates to those companies, which have
publicly announced their plans.
Q519
3. You asked what discussion officials from
Defra had had with the industry which would give some indication
of the type of projects which might be coming forward to produce
biofuels in the UK. My officials have liaised very closely with
officials from HM Treasury, Department for Transport, Department
for Trade and Industry and the Low Carbon Vehicle partnership
to gather information from industry which would inform decisions
about policy options. As part of the background work for the enhanced
capital allowance Defra officials contacted, through trade associations,
companies which were interested in building biofuel processing
plant in the UK, together with those which were already in the
process of building plant. The information which they provided
to us was on a commercial in confidence basis. Some have announced
their plans and they are included in the table at annex 1. Others
are still considering the options available to them. In summary,
we already have some biodiesel production and expect to see more.
There are plans for bioethanol production (work is already going
ahead at the British Sugar plant at Wissington), some plans for
biogas and we see the possible prospect of some second- generation
productions.
Q519
4. You also asked whether normal rollover
relief provisions also apply to capital allowances here. I attach
at annex 2 a note on this supplied by HM Customs and Revenue.
Q528 and Q529
5. You asked about progress on work relating
to carbon and sustainability assurance schemes. Government has
announced that companies which are obligated under the Renewable
Transport Fuels Obligation will be required to report on greenhouse
gas savings and the sustainability of the renewable transport
fuels which they supply. Work co-ordinated by the Low Carbon Vehicle
Partnership has been progressing on the development of reporting
systems for carbon savings and environmental standards and it
is intended that a social standard should also be developed.
6. The carbon reporting system will relate
to the whole biofuel process from the growing of the feedstock
or collection of the waste material to production of the fuel.
It will be consistent for different fuel pathways and will enable
quantification of emissions at each stage of the production pathway.
It will be transparent and applicable to both home grown and imported
fuels. It will recognise the availability of different types of
data and will be auditable.
7. The methodology will allow detailed calculation
of emissions using both detailed real data for individual and
multiple batches of fuel; or use of default values to estimate
emissions at each step in the production chain or cumulatively,
depending upon the extent to which the provenance of the fuel
is known.
8. The methodology will be based on eight
calculation modules (already developed) and detailed calculations
will initially be produced for the most likely chains eg ethanol
from sugar cane, wheat/grain, corn and wood; biodiesel from waste
oils, palm oil and rapeseed: biogas from waste green material.
9. Work has also been progressing on the
development of sustainability indicators. A report from consultants
that has indicated the scope for a proposed environmental standard
is being finalised. The indicators will aim to cover issues from
land use change through cultivation to processing and will pull
on work such as that done by the Home Grown Cereals Authority
and the Roundtable for Sustainable Production of palm oil.
10. The aim is to have these standards piloted
in the first half of the 2007-08 financial year and rolled out
in the second half of that year so that they are ready for companies
to report against by the time the RTFO is introduced in 2008.
11. Reports of work to date can be viewed
as fuels working group papers on the LowCVP website at www.LowCVP.org.uk.
Q537-539
12. You asked whether GBEP would be discussing
the possibility of establishing an international agreement for
the sustainable procurement of biofuels and feedstocks. GBEP is
a voluntary, non-binding partnership which met formally for the
first time on 12 May. As such, it is too early to say how it will
develop but you may wish to note that under its terms of reference,
agreed by the Steering Committee, GBEP will provide a forum to
analyse and develop policy recommendations on technical guidance
for internationally-recognized standards. It will also seek to
formulate standard guidelines to measure greenhouse gas emissions
reductions which will include development of baseline methodologies
and monitoring tools. Therefore, we are confident that GBEP will
contribute to efforts to promote efficient and sustainable production
and use of bioenergy though not necessarily via formal international
agreements.
Q552
13. I said that I would write to you about
the Natural Environment Research Council's restructuring of its
Centre for Ecology and Hydrology (CEH) and closure of several
CEH sites.
14. CEH is wholly-owned by NERC and provides
independent research and training in the environmental sciences.
NERC Council has recognised for some time that the current structure
of CEH is unsustainable. In December 2005, NERC put to consultation
plans for a new shape for CEH. These plans were informed by a
strategic review that involved extensive consultation with stakeholders
including Defra. Scientists at many of its sites contribute each
of CEH's six science areas to. The restructured CEH will consist
of four sites and will still allow all scientific areas to continue.
This re-shaping and restructuring of the science teams will enable
CEH to sustain the delivery of high-quality environmental science.
It will also retain sufficient geographical spread across England,
Scotland and Wales for CEH to carry out its research activities.
15. The restructured CEH would continue
to deliver research under its current scientific areas: Biodiversity,
water, biogeochemistry, climate change, sustainable economies,
and environmental informatics.
16. The Government is fully committed to
maintaining the quality of environmental science in the UK, recognising
the important contribution this makes to understanding and addressing
issues such as climate change and biodiversity. The Department
of Trade and Industry provides funding to NERC to support research
and related postgraduate training in environmental sciences for
this purpose, and the NERC science budget allocation has doubled
since 1997 to £334 million for this year. It is the responsibility
of NERC Council to decide what environmental science it should
fund and where, in order to deliver its Charter objectives and
its mission. NERC, therefore, has a responsibility to keep under
review all the scientific work it funds, including that within
its Research and Collaborative Centres, such as CEH.
17. NERC consulted widely with stakeholders
on its proposals on how CEH can become a more sustainable organisation.
Defra submitted a formal response to this consultation which can
be found on the Defra website at http://www.defra.gov.uk/science/news/default.htm.
NERC announced on 13 March that Council had confirmed its plans
to re-structure the CEH.
18. Defra supports the need to establish
a sustainable CEH. We acknowledge the risks in the restructuring
and delivery in a number of science areas and the impact of these
will need to be monitored carefully in the light of the benefits
of restructuring to the wider climate change and R and D effort.
Q553
19. I also said that I would write to you
about the Institute of Grassland and Environmental Research (IGER).
20. IGER is an important research partner
for Defra in the development and delivery of our policy objectives,
in particular on sustainable farming and food. As a customer for
the services provided by IGER, Defra has an interest in the maintenance
of areas of scientific expertise and service provision that relate
to our present and developing needs. This is reflected in the
department's continuing significant investment at IGER, where
we are already committed to investing over £5 million in
research programmes in 2006-07. Further project proposals are
under negotiation and we anticipate the department's final commitment
will be nearer £5.5 million, excluding our contributions
to relevant LINK project consortia. By comparison, Defra's research
investment at IGER in 2005-06 was approximately £5.8 million,
excluding LINK projects.
21. Defra is funding research at IGER on
the development of miscanthus for energy crop production and we
are fully committed to that research until 2009.
22. The context for the change in Defra's
investment at IGER is that Defra's needs for scientific evidence
and, therefore, the expertise required within the scientific community
to service those needs are changing. This has been documented
in our Science Forward Look[10]
and our recent consultation document on our Evidence and Innovation
Strategy[11]
and will again be reflected in our finalised Evidence and Innovation
Strategy due to be published this summer. We are working with
IGER to ensure it is able to match its skills to our needs both
now and in the future. We have identified a need to step-up our
investment in a number of areas, largely to better align with
our strategic priorities on climate change, sustainable development,
protecting natural resources and rural communities. This refocusing
of research programmes will mean a reduction in our investment
in farming and land-based research, including grassland and livestock
sciences. Although this in turn may affect the volume of new contracts
we are able to place at a number of organisations, including IGER,
we will continue to be a major investor in biological research
on sustainable agriculture into the future. Of Defra's £160
million research budget for 2006-07, almost half is allocated
to sustainable farming and food.
Ian Pearson MP,
Minister of State (Climate Change and the Environment)
Department for Environment, Food and Rural Affairs
June 2006
Annex 2
Whilst roll-over relief is generally viewed
as a concept for capital gains tax, in the context of capital
allowances, the arrangements which allow expenditure to be pooled
in order to calculate writing down allowances, balancing allowances
and balancing charges could be seen as providing a rollover of
the disposal proceeds on the disposal of the asset within the
general pool against the unrelieved spending in the pool. For
spending that qualifies for first year allowances, I can confirm
that unrelieved spending, after the allowances have been computed,
can be added to the general pool, provided that the spending is
not required to be pooled separately under the general rules for
plant and machinery capital allowances. Where a business claims
100% first-year allowances on qualifying spending, the spending
would have been fully relieved so the value added to the general
pool would be nil. On the other hand, businesses that cannot take
immediate advantage of first-year allowances because they have
insufficient profits to give them full effect, can still claim
them and capital allowances more generally, to augment a loss
to carry forward against profits in future years. Alternatively
a business that chooses not to claim first-year allowances can
carry forward its unrelieved expenditure against profits in future
years.
HM Customs and Revenue
May 2006
http://www.defra.gov.uk/science/publications/documents/ScienceForwardLook3rd.pdf
http://www.defra.gov.uk/corporate/consult/ei-strategy-eis-consult.pdf
10 Evidence and innovation: Defra's needs from the
sciences over the next 10 years, July 2004 Back
11
Evidence and innovation Strategy 2005-2008-consultation document
issued October 2005 Back
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