House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Eighth Report

6 International comparisons

178. The net result of current policy is that the UK lags behind other countries in its efforts to promote bioenergy. While the UK does not have the land capacity to rival countries such as Brazil in terms of biofuel production, it could realistically seek to match the achievements of countries such as Sweden and Denmark, whose policies represent best practice in supporting the production and use of biofuels and biomass.

179. Our conclusions in this report emphasise the role that action at local level has to play in establishing the generation and use of bioenergy on a commercial scale. We will further investigate the potential of efforts at local level in connection with our "citizen's agenda" inquiry. We conclude this inquiry by urging the national Government to work harder to equip itself with the scientific and economic research it needs to make complex policy decisions, and in the meantime, to increase its support for the generation of bioenergy from a range of sources. Without this support the Government cannot realistically hope to act as a credible domestic or international leader on climate change.

Biomass

180. According to the DTI Microgeneration Strategy there are only 150 biomass boilers (using wood pellets) in the UK.[216] This is despite evidence that biomass heating (with electricity) can—in its present state of development—be cost-effective when compared to conventional domestic electricity and could reduce household carbon emissions by 3%, or around 720,000 tonnes.[217]

181. In contrast to the UK, Austria and Denmark both have well-established biomass heating infrastructures. Austria is heavily forested, but Denmark, where forest cover amounts to 10% of its total area, is broadly comparable with the UK. Denmark currently imports wood pellets by ship from the Baltic and Canada.[218] According to Powys County Council, which has established a partnership with Upper Austria, there has been a large increase in woodfuel heating in the region in the last decade, with over 300 woodfuel district heating networks, and wood pellet heating systems in nearly 50% of new homes.[219] In Austria, sales of domestic biomass boilers only really took off with the introduction of wood pellets—a clean, "pleasant to handle", convenient fuel requiring less storage space than conventional woodchips.[220]

182. Scandinavia—and Sweden in particular—was often held up in evidence as an exemplar of good practice in terms of bioenergy. According to the Natural Gas Vehicle Partnership, more than 50% of the natural gas used in Sweden is biomethane.[221] The NFU told us that the UK would do well to look to the Scandinavian example:

I look around at the 470,000, 480,000 new homes looking to be built in the south-east, if that was in Denmark or Sweden they would have a compulsory district heating scheme, a combined heat and power scheme, which seems to me a brilliant use of renewable by-product from farming if we could do that.[222]

183. The Biomass Task Force argues that "the potential for biomass district heating systems needs to be better understood", highlighting their use in Finland and Sweden in particular, and supporting the use of planning obligations to establish district heating systems, particularly in new housing developments.[223] We agree and note that measures such as these are also relevant to policy on tackling fuel poverty.

184. In June 2006 the Government announced that its office estate would go carbon neutral by 2012.[224] The Government Estate is estimated to comprise some 50,000 buildings. The Biomass Task Force proposes that the Government adopts a programme of positive preference which requires "all new build and refurbishment in the public estate to consider fully the use of biomass". This would apply to the use of biomass heating in schools, for example, which would bring the additional benefit of raising awareness of the problem of climate change and the urgent need to implement mitigating measures at every level. In its response to the Task Force report, the Government has pledged "to map the potential use of biomass across the main procuring departments of the Government estate".[225]

185. We commend the Government's decision to adopt the Biomass Task Force's recommendation that it consider the use of biomass across the Government estate, and call upon the Government to publish a detailed plan, before the end of 2006, showing how biomass will be fully utilised across the Government estate, and what contribution this will make towards the achievement of the target to make Government carbon neutral by 2012. We also call upon the Chancellor to use the 2007 Comprehensive Spending Review to ensure that the Departmental Budgets contain sufficient resources to fulfil this commitment.

Biofuels

186. Biofuels were pioneered in Brazil in the 1970s when, in response to the oil crisis, ethanol from sugar cane was added to petrol. By the mid-1980s, around 90% of new car sales in Brazil were of ethanol-only vehicles. However, after a poor harvest in 1990 resulted in a national ethanol shortage, confidence in the fuel dropped. Only in recent years has bioethanol consumption risen again, owing to the introduction of 'flexfuel' cars, capable of running on a range of ethanol-petrol blends (the ratios are commonly anywhere between 75% and 25%). Brazil is still the world's largest producer of sugar-based bioethanol—followed by the US—and produces around 16 billion litres a year, which is approximately half the world's total output. Around 14.5 billion litres of this is used in Brazil.

Alternative vehicle technologies

187. Recent developments in vehicle technology have included 'Flexi-Fuel' vehicles, which are capable of running on blends of ethanol and petrol commonly ranging between 100% fossil petrol to 85% bioethanol (hence the term 'E85'). The Ford Motor Company told us that with adequate Government support, FFVs could be a popular option for consumers:

In 2005, 90% of all the Focus vehicles sold in Sweden were FFVs [Flexi-Fuel Vehicles], a total [of] over 15,000 FFVs have been sold and more than 60% of FFVs are bought by retail customers. By 2008 we project 25% of new vehicles sold in Sweden will be capable of running on E85. In 2006 new car sales in Brazil are likely to rise to 80% FFVs.[226]

188. Both Ford and British Sugar claim the situation in Sweden is a direct result of the Swedish Government's policy of heavily incentivising the use of environmentally friendly products. To encourage uptake of vehicles with lower carbon emissions, Sweden has introduced free parking, exemption from congestion charging and tax incentives for eligible vehicles.[227]

189. Somerset County Council—together with the Avon and Somerset Constabulary, Ford Motor Company, the Energy Saving Trust, Wessex Water and Wessex Grain—has developed a scheme to establish the use of bioethanol as a transport fuel in the UK. Around 22 Flexi-Fuel vehicles (FFV) which use E85 are now in operation.[228] Currently supplies of E85 are being imported from Spain but there are plans to replace this supply with bioethanol produced from wheat in the UK.[229] The NFU argues that procurement at local government level—with large fleets of vehicles and earmarked fuel depots—would provide an ideal opportunity to promote the use of E85 vehicles.[230]

190. Bioethanol is less energy dense than conventional gasoline. This means that vehicles travel fewer miles per gallon, and so the cost per mile is greater, despite the discount for E85 afforded by the duty derogation. When petrol was retailing at 95.9p per litre (ppl), E85 at the same location sold for 92.9ppl. This difference in energy density has been recognised by the Swedish Government, which has taken steps to reduce the cost of E85, such that the cost per mile is now equivalent to conventional petrol.[231]

191. HM Treasury outlined the Government's policy of supporting biofuel production in general through the RTFO mechanism, in the expectation that the market will decide how the 5% by volume target is distributed across the range of different blends up to E85 fuels.[232]

192. Vehicle manufacturers have the technology available for E85 and flex-fuel vehicles, and uptake in Sweden is already high. We recommend that the Government assess the model provided by Somerset County Council which has established a pilot scheme to encourage E85 uptake at local level. We further recommend that Defra work with HM Treasury to produce a cost-benefit analysis of proposals to introduce a range of incentives similar to those used successfully in Sweden.

193. As the availability of low carbon vehicles increases, the Government should develop a uniform system to help consumers make informed choices about the CO₂ savings which can be achieved from different types of vehicle. Such a scheme should employ the same approach as is currently used to make fuel consumption comparisons under differing kinds of driving conditions.

Fuel standards

194. The maximum proportion of first generation biofuels which can be included in conventional fossil fuels and still comply with the European Fuel Standards Directive for retail fuel sales is 5% by volume.[233] As a direct consequence, manufacturers will only honour vehicle warranties—some of up to seven years—if the fuel used contains 5% or less by volume biofuel. This does not apply to specially designed Flexi-Fuel vehicles and the use of E85. According to the Biofuels Corporation, "An early indication of a move to 10% by 2015 is a critical catalyst to revising the fuel standards and ensuring vehicle warranties follow."[234]

195. The Department for Trade and Industry's Global Watch unit reports that in the US, when vehicles run on fuel mixes of up to levels of 10% bioethanol, vehicle warranties are honoured.[235] UK vehicle manufacturers set out the argument for changing the EU standard:

We know that vehicles are being manufactured in the UK and exported to the US to run on a ten per cent standard. There is no barrier to the technology. We can produce cars that run on that. We produce them in the UK now. It is just a clarification of what the standard is going to be.[236]

196. Several witnesses—including members of the petroleum industry and vehicle manufacturers—noted that the European Committee on Standardisation (CEN) is currently in discussions with key stakeholders to develop new European fuel standards which allow for higher inclusion levels of biofuels. The Society of Motor Manufacturers and Traders and the Biofuels Corporation both highlight the necessity for the UK Government to lobby for the early adoption of new fuel standards for biofuel blends of up to 10%.[237]

197. The Government must make clear its long-term targets for the Renewable Transport Fuel Obligation as soon as possible, in order to give car manufacturers and the petroleum industry sufficient lead time to develop vehicle engines and make the infrastructure adjustments necessary to support the use of fuels containing higher proportions of biofuels. We note that increasing the current limit of 5% will require the European Committee on Standardisation (CEN) to develop new fuel standards for higher inclusion levels of biofuels by volume. We recommend that the Government work with the CEN to ensure that new standards are set as a matter of urgency.

Overall conclusion

198. Climate change is a long-term concern but action is needed today. Bioenergy is only one part of a many-faceted solution to the pressing problem of climate change, but we must make use of all the measures available to us. If the UK is to be a credible leader, setting the global agenda for tackling climate change, the Government must take every opportunity to reduce domestic carbon emissions. Bioenergy represents one of the most significant such opportunities available today.

216 Department for Trade and Industry, Microgeneration Strategy Our Energy Challenge: Power from the people, March 2006 Back

217 Ev 207 [Energy Saving Trust] Back

218 Department for Trade and Industry Global Watch Mission Report, Energy from biomass-a mission to Austria and Denmark, March 2006 Back

219 Ev 189 Back

220 Department for Trade and Industry Global Watch Mission Report, Energy from biomass-a mission to Austria and Denmark, March 2006 Back

221 Ev 230 Back

222 Q 10 [Mr Kendall] Back

223 Biomass Task Force, Report to Government, October 2005 Back

224 Defra, news release 'Government signals a step-change on environmentally sustainable behaviour', 258/06, 12 June 2006 Back

225 Defra, News Release 183/06, "Getting the best out of biomass", 27 April 2006 Back