UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 965-iv

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE

 

 

CLIMATE CHANGE: ROLE OF BIOENERGY

 

 

Wednesday 26 April 2006

DR REBECCA ROWE, PROFESSOR TONY BRIDGEWATER and DR JEREMY WOODS

MR JAMES MARSDEN and MS ANNA HOPE

Evidence heard in Public Questions 202-294

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 26 April 2006

Members present

Mr Michael Jack, in the Chair

Patrick Hall

Lynne Jones

David Lepper

Mrs Madeleine Moon

Mr Jamie Reed

Mr Dan Rogerson

Sir Peter Soulsby

David Taylor

Mr Shailesh Vara

Mr Roger Williams

________________

Memorandum submitted by Biosciences Federation and the Royal Society of Chemistry

 

Examination of Witnesses

 

Witnesses: Dr Rebecca Rowe, Plant and Environment Laboratory, School of Biological Sciences, University of Southampton, Professor Tony Bridgewater, Bioenergy Research Group, Aston University, Royal Society of Chemistry and Dr Jeremy Woods, Imperial College Centre for Environmental Policy and Technology, Royal Society of Chemistry, gave evidence.

Q202 Chairman: Good afternoon ladies and gentlemen. Welcome to a further evidence session on the Committee's inquiry into matters connected with biofuels. May I welcome at the outset representatives from the Biosciences Federation and the Royal Society of Chemistry? Dr Rebecca Rowe from the Plant and Environment Laboratory, the School of Biological Sciences at the University of Southampton, you are very welcome. Professor Tony Bridgewater from the Bioenergy Research Group at Aston University, also representing the Royal Society of Chemistry and Dr Jeremy Woods, who has been a friend and helpmate already to the Committee in these matters, from Imperial College Centre for Environmental Policy and Technology and also representing the Royal Society of Chemistry. We had hoped to be joined this afternoon by Dr Maeve Kelly from the Scottish Association for Marine Sciences, but sadly Dr Kelly has had to attend a funeral and we fully appreciate why she is not able to join us this afternoon. I gather, Professor Bridgewater, that on those areas where she was going to talk to us, particularly about biomass in the marine environment, you are fully up to speed on these matters and you will be able to accept questions from the Committee; for that we are very grateful indeed and we look forward to getting to that part of our activities. I should like to start by just trying to put policy into context, take your views about that and the way the Government have arranged the deckchairs on the whole question of bioenergy. Last week, we heard from the Biomass Taskforce and I started my approach by drawing everybody's attention to an annex at the conclusion of the Biomass Taskforce report which was two pages of schemes and initiatives sponsored by different bits of government trying to promote the use of biomass. I said at the time that I thought this looked rather bitty and it lacked coherence. I suppose when one looks at some of the other areas of bioenergy, one might level the same accusation at it, bearing in mind the number of departments which are involved and the sometimes oft quoted criticism of a lack of coherence of joining up when it comes to the use of bioenergy. I wondered whether, from your standpoint, you might have formed a similar view.

Professor Bridgewater: It is true that the whole bioenergy system is a chain, starting with the planting of biomass, the growing, the harvesting, the transport, the conversion into higher value products and their utilisation in energy systems and you have therefore three government departments involved. One of the omissions or weaknesses of the whole system is consideration of the interfaces between the component parts of the chain. It is improving, but there is still a significant gap there.

Q203 Chairman: How would you see it improved?

Professor Bridgewater: By the support being given to the interfaces and by the relevant departments working more closely together to ensure that the bits are all joined up more coherently.

Q204 Chairman: Dr Rowe you are nodding; your body language suggested you agreed with my line of questioning. What are your observations on this?

Dr Rowe: I have to agree with Professor Bridgewater that we do need a more coherent policy. My experience is more with the farmers and the growers and from their experience, although there is obviously the funding for the initial planting of biofuel crops and crops like Miscanthus, they still have to wait then for four years and most of that money is taken in the establishment of the crop. They do not get a yearly income, so there is that missing and it would be helpful for them if the money were more spread out maybe. Then they also need to make sure they have a contract with somebody to take this off them afterwards. There is a need for groups to come together to form companies which can then supply, for example, power stations and if we are talking about wheat, you need a large quantity in a small place so you need companies to come together to do that and I feel that there is a gap there as well.

Q205 Chairman: Do you as a group sense that the Government are fully committed to developing the UK biofuels industry?

Dr Woods: The question to me is most clearly written in terms of the time horizons of policy. That is what emerges time and time again when you talk to industry or when you talk to any of the other sectors. The RTFO time horizon is far too short; that is pretty clear. It will not bring in industry or if it does, it will bring in half-hearted industrial involvement. It is equally true in the research and development sector that that is the case. You are absolutely right that there is not yet a cohesive strategy.

Q206 Chairman: Just to bring this opening line of question to a conclusion, following on your observations Professor Bridgewater, are there any particular recommendations that you think the Committee should be aware of where you think there are problems. You were talking about improving the interfaces. What kind of things practically could be done in your judgment to address those issues?

Professor Bridgewater: The timescale, as has just been mentioned, in that industry needs to have long-term security of funding support to encourage them to invest. They often look at a 20-year horizon: five years for planning and construction, 15 years for operation give an adequate return on investment. In a number of areas like co-firing, for example, this is extremely successful, but there is a great reluctance to invest in major plant because of the lack of assurances over the investment for that. The second area that is important on the investment side is the gap between the successful research development and demonstration and the commercialisation. There is a great risk averseness by venture capitalists and industry and purchasers and there is what we call the "valley of death"' between a successful demonstration of a technology, including the production and the conversion utilisation and its commercial implementation. More support might be given to helping that, so that we can overcome this black hole or this "valley of death".

Q207 Patrick Hall: In your collective evidence, paragraph 2 in the executive summary, you say "Carbon savings would be greater in electricity production than in biofuels and so provision of land for this would exemplify 'best use'". This is presumably referring to electricity production. In terms of tackling climate change, why should we be producing biofuels at all?

Professor Bridgewater: May I ask what biofuels means to each of you? Different sectors of the community do have a different understanding of what a biofuel is. To some people, it is the raw bios produced, to some people it infers liquid transport fuels. I should find it helpful if you could define what you mean exactly by a biofuel?

Q208 Patrick Hall: No, I am going to ask you what you meant by biofuels in your evidence because I have read out your evidence and you refer to biofuels in that.

Professor Bridgewater: Biofuels is conventionally represented by the liquid transport fuels for use in the transport sector. It is sometimes used also to refer to the primary product produced by the biomass industry and I just thought it was helpful to clarify that. The biodiesel industry is very successful at the moment. There are five or six major plants either built or under construction but the biodiesel product can be assimilated only up to a certain level without detracting from the performance guarantees given by the engine manufacturers. Bioethanol is another biofuel, transport fuel, which is also limited in its usage because of vapour pressure considerations in the distribution, handling, filling and utilisation in engines. There is also the question of compatibility between different companies who are producing conventional transport fuels, because you cannot have one company adding, say, five per cent and another company not adding it because most of the transport fuels are pooled anyway. There is a problem with compatibility between different producers in different parts of the country and different standards for biofuels. The alternative in fact, rather than looking at small percentage additives, is to synthesise entirely compatible conventional hydrocarbon fuels which is an alternative approach. You then not only get a much cleaner fuel, but you are also getting material which is totally compatible with the existing infrastructure and with the existing gas and diesel markets.

Q209 Patrick Hall: How does one do that? What are the raw materials for that?

Professor Bridgewater: You can take any biomass and you convert it into what is called synthesis gas, a mixture of hydrogen and carbon monoxide, and then this is turned into liquid fuels as in the SASOL plant in South Africa for example.

Q210 Patrick Hall: So trying to go back to your summary in your evidence where you say that electricity production is more compatible with tackling climate change effectively than biofuel production, one has to ask whether you are saying logically that the renewable transport fuels obligation is worthless and that we should not be producing biofuels in the transport sense in this country?

Professor Bridgewater: It satisfied the short-term requirement to get the industry to accept different fuels and have them accepted by the users in the marketplace. In the longer term, if you are looking at achieving more than a five per cent substitution, then there are potential problems with the vehicle manufacturers as to how they can accommodate that. So it is more of a short- to medium-term solution than a long-term solution because of the limitations and the extent of the blending.

Q211 Patrick Hall: But you are saying that any percentage presumably is not as effective a way of reducing carbon emissions as electricity production? So any use in transport is not as effective. If we are looking at this from a global point of view, we should not be going down this road. Is that a conclusion that I can draw from your evidence?

Professor Bridgewater: I do not believe that is a valid conclusion. The opportunity to produce transport fuels addresses the environmental issues and also addresses the security of supply issues. Biomass is unique in that it is the only way of fixing carbon which we need for many commodities like conventional transport fuels and many chemicals. There are no other ways of producing that carbon resource in a renewable way. Therefore the optimum use of biomass needs to utilise that fixation of carbon from the atmosphere into a useful valuable resource. It is a question of economics, the commercial economics of what is the most attractive way of using the resources that we have.

Q212 Patrick Hall: I can see that Dr Woods wants to come in here and possibly Dr Rowe.

Dr Woods: There is an interesting perspective on this which is that it is too early yet to talk about the optimum allocation of land for biomass for energy. We have a short term, perhaps the next ten or 15 years, where we have to address the transport sector and clearly biofuels are the only game in town at the moment for doing that. If you take that decision or that logical pathway, then you have to ask what the best biofuels option is for that. It is obvious that biofuels can be done very well or very badly and very badly means worse than conventional gasoline and very well means some very substantial gains. You can get well below 100 grams of CO₂ per kilometre if you are talking about higher blends. Again you have to talk about the whole chain and the whole system within that perspective. To come back to the fundamental of your question, it is really too early to start picking between the sectors and to say, yes, we should in effect abandon one of the sectors in preference for the other. There is a lot of innovation to play in this area.

Patrick Hall: That is nonetheless a conclusion you have come to in your evidence to us and if that is your best assessment now, surely it is absolutely relevant to pursue this line of questioning at this stage. If we are going down the wrong road, if that is your conclusion at this stage, that this country should not go down that road and instead should go down another one, then this is the time to say it and to say it loud and clear.

Lynne Jones: We have been told by the NFU that we can meet the renewable fuels obligation for transport with all the spare land that there is, with the exported wheat and with the set-aside land, but why should we be allow the fuel obligations to dominate the biomass, the biofuels sector, given your conclusion?

Q213 Chairman: In paragraph 19 of your evidence, you draw our attention to the fact that "Electricity or heat from short rotation coppice provides between three and six times the CO₂ reduction per pound that can be obtained from rape methyl ester ... or bioethanol from cereal crops". In paragraph four, you indicate the land area which could meet the road transport fuels requirement, bearing in mind there is a finite amount of land which appears to be available for growing these crops. What my colleagues are trying to explore with you is where the investment should go at this stage because you, in your opening remarks, talked about the need for certainty and longevity of decision making. Do you spread your investment pounds very thinly on all kinds of runners and riders in the bio race or do you concentrate it where you are going to get the best bang for the buck in terms of CO₂ saving? That is what we are trying to get your guidance on.

Dr Rowe: The main point we are trying to make is that you have two options basically for making biofuels, if you wish to go down the biofuel line. We have already made agreements with the EU that we are going to do the five per cent, which has advantages as well as it makes people aware of the fact that there is already an issue; it makes the public aware, so there is a public awareness factor to it as well which you must not rule out completely. The point is that rather than using cereal grain there is the option of using biomass products and that would mean Miscanthus or even the actual waste products from cereal production, through the straw, through a separate process to make bioethanol. That is actually possible and that process is being developed. I am not an expert on how good that process is currently, but the idea is that that process may be more efficient than using cereal grain. That is mainly the statement they were discussing in those paragraphs.

Q214 Chairman: With respect, that does not quite answer the question that colleagues were posing. The colleagues were posing the question about where we get the best return. If we are going into biofuels in the widest sense of the definition of that, do we focus it on heat and use all the land to produce things we can burn or do we focus it on the production of liquid fuels or do we wait until there is more advanced technologies around the corner where we can fractionate a particular plant into food, into cellulose, into whatever? We are trying to get a feel as to where the investment should be.

Dr Woods: I agree it sounds confused in the approach and I have to say I have come in late to the process so I have only just recently read the evidence that was submitted. There is a difference in issue here. There is an issue where you could come at this with the perspective that we have the UK land area and we have X amount of pounds to invest in that land area and we shall have a maximum perfectly efficient policy which is going to allocate that land to the least cost carbon abatement option. That is a false view. First of all, we do not have in essence perfect knowledge on the best bioenergy options available and secondly, you cannot cherry-pick the sectors in that sense. Then, if you step back from that and say perhaps government policy could leverage more investment in certain areas, it is very true that the biofuels sector offers the most opportunity for levering private sector investment. Secondly, does that mean that you should say right, then the electricity and heat sectors are not as relevant or important? That would be a false option to take at the moment as well. I am afraid that if you were looking for a kind of academic purity and clarity in that approach, you are not going to get it from us.

Q215 Patrick Hall: Okay; it is just that your evidence does say that electricity production is the most effective way of reducing carbon emissions. May I then accept that you accept the renewable transport fuels obligation and the target of five per cent by 2010, leaving aside what we have just tried to explore? Would you accept the logic that once we have that target, and let us assume we reach it, that there will be pressure to say that we have produced this much, now we go on to produce more? Then, if we look at your first paragraph in your evidence, in the executive summary, you say "UK capacity to produce biofuels ... is limited to 5-10% of the total road transport fuel requirement without changes in the production of food crops but with use of exports and set-aside land". If we do go beyond the five per cent and perhaps indeed beyond the ten per cent, what do you think at this stage the effects would be on UK food production, on biomass crops for heat, for electricity and indeed land use? Just a broad view of that position, because you are looking at these matters right now, because it is in your evidence.

Professor Bridgewater: I want firstly to confirm what Jeremy has just been saying about the wrongness of picking winners now. There is still a lot of development to be undertaken, particularly on the liquid biofuels, developments concerned with performance, selectivity and costs and it would be unwise to abandon one area and pick another area.

Q216 Patrick Hall: Excuse me, but I do not know who is talking about abandoning one area in favour of another at this stage. If there are any implications that lead to that, they come from your evidence. I should like to move on from that to the question that I just posed rather than the previous question. So would you address the question I have just posed? If we do go beyond the five per cent and possibly the ten per cent, what would be the knock-on effects on UK food production and land use?

Professor Bridgewater: I am afraid I am not an expert in land use or food production. I do not know whether either of you are able to comment on that.

Dr Woods: It is very clear that if you wanted to produce more than the ten per cent of current land transport use, you would need substantial amounts of land, especially given current technologies. It would impact on land use; there is no doubt about it. Then the detail of that is, if you want to expand biodiesel production substantially and it is all done through rape seed, how that fits within the rotational cycles. I would bow to the NFU knowledge on that sector, but it is true that it will impact on food production in that sense. A more interesting question is: given the UK's approach in terms of food security rather than food self-sufficiency, does it really matter? You could take it to its extreme and say right, well let us produce very large proportions of our transport fuels or our electricity and hear from bioenergy and not produce any food and the knock-on effect of that would be that we would buy it all from abroad and then the question is what impact that would have on world food prices and that is a very complicated question. It is one that we are seeing being played out at the moment in terms of the Brazilian sugar and ethanol interchange. The reason that the sugar price is at an all-time high and the reason that the ethanol price is at an all-time high is because the Brazilians are now the producers of both and not able to produce enough of both to keep the prices as they were before, plus the impact of the sugar reform that is going on at the moment. There are some very complex economic interactions which are likely to emerge and I cannot say that I can predict what the outcomes are going to be.

Q217 Patrick Hall: No, but we are embarked upon a process and a direction and we need to question the possible implications and outcomes of that in the future. Of course the imperative is to tackle climate change and I am now not so sure whether the direction that we are embarked upon is the most effective in order to reduce carbon production in this country. I shall leave it at that.

Dr Woods: That is a shame.

Patrick Hall: I was not trying to stop a reply, I was just saying I had finished.

Q218 Chairman: Say what you want Dr Woods. We do not cut off good answers.

Dr Woods: I was asking why you had reached that conclusion. You seemed to be implying that the biofuel option was not a method for addressing climate change options in the UK as a result of what you have heard from us.

Q219 Patrick Hall: Because you say that carbon savings would be greater in electricity production than in biofuels. Because the evidence says that, I am coming back to that because it is an important statement which you have made which may suggest that we should, as a country, be thinking very carefully about the renewable transport fuels obligation.

Dr Woods: But you have to have a view of this over time periods and the scales of the markets. If you are talking about a ten-year period from now, so talking about a 2015 target, then you can say that yes, having a five to ten per cent inclusion of biofuels, if it is done well, and that is the point I was trying to make, if the target is CO₂ reduction and policy incentivises CO₂ reduction so the best biofuels are produced, then they will have a substantial impact, even at ten per cent, on greenhouse gas reduction targets. Equally, that will have used a certain proportion of the land and a certain amount of the biomass accruing on UK land area. That does not exclude, in that period, a substantial amount of biomass going to electricity, co-firing and to heat. That is the real point: at the moment we are not anywhere near the limits of the resources. We can know that in a period of time. What is really important is that policy sets out very clearly and incentivises carbon reduction, for example, and at the moment it does not do that: the RTFO does not do that, the ROCs do not do that and the signals are too short term in that sense.

Chairman: We might come back to seek your advice as to what the signals should be, possibly in addition to what Professor Bridgewater was saying earlier about long-term signals.

Q220 Mrs Moon: My questions were really for Dr Kelly, so I am sorry if you are going to have to pick these up Professor Bridgewater. We move off land use and we move into marine biomass. The picture that is painted by the evidence that we have received is that it is wonderful that there is a crop that can grow by ten per cent a day, a crop which can have a wonderful effect on biodiversity, not just tackle CO₂ issues but take nitrogen from sea water; it sounds wonderful. But what is the reality? How far away are we actually from the commercially viable use of seaweed as a source of bioenergy?

Professor Bridgewater: It is perhaps valuable to note that seaweed is already used commercially for making chemicals like alginates, so there is an established industry which knows how to grow and harvest and process it. For the mass production of biomass which is sufficiently low cost to be commercially viable it requires a great deal of development work, understanding about the availability of growing and harvesting and transport. That is an area which needs to be addressed but potentially is clearly enormous; the opportunity is there and we are not limited by the land resources we have that we have just been discussing. Certainly there is enormous potential there, but there are significant challenges for the harvesting and the transport and the subsequent processing, just to go back to what I said at the beginning about the importance of looking at the interface between the production and utilisation. One of the challenges is the composition, like the chlorine inevitably rising from sea water, the handling of large quantities of very wet biomass. They are not insuperable, but this has been done to address the challenges of how to harvest and how to handle and transport and utilise. That is one of the areas which deserve a lot of support.

Q221 Mrs Moon: My problem with that is, having looked at some of the figures from Japan and the States, that they are talking about a figure of £2.8 billion to do that developmental work you have talked about in Japan and they are talking about £20 million in the States; that was back in 1986 and that figure has gone off the Richter scale in 2006. What level of funding are we talking about to do this developmental work? Would it in fact ultimately be a distraction from the issues that Mr Hall has just been talking about in terms of the land use and development going down that route?

Professor Bridgewater: You are aware I am not an expert in marine biomass, I am not an expert in biomass production. I am much more involved in the conversion and the interfaces before and after. The opportunities with the UK having such a long coastline and the expertise already there, both in terms of fish and the algae harvesting and processing, would justify a serious investment to look into what would be needed to establish a system to harvest and process kelp or algae. But what the cost might be ...? I should have thought one could have got a reasonable feeling for what would be needed in a £5 to £10 million study. That is just a pure guess.

Q222 Mrs Moon: So we are working on guestimates rather than an actually worked-out plan and programme.

Professor Bridgewater: I am not aware of any research that has been done into looking at the system aspect of harvesting algae in large quantities, handling it, transporting it and processing it. I am sorry, I am not as well informed in this area as I might be and I am sure we can pass on lots of the questions to Dr Kelly. My guess is that it is an exciting resource because it breaks free of the land barriers we have just been discussing, but there is remarkably little known about what a system might look like to handle it, harvest it, transport it and process it.

Mrs Moon: Chairman, may I suggest that these really are Dr Kelly's specific areas of expertise. Could we submit those questions to her in writing?

Chairman: We shall certainly do that because I should like to add some practical questions: I do not know over what area of ocean, deep, shallow, you would have to plant, what kind of size this would be, ownership. One of the problems for example with lobster production is that people go out and seed lobsters, but to whom do lobsters belong? You put the input in but somebody else can come along and take the output. It would be very interesting to learn more about that. I have just been advised that Dr Kelly will be happy to receive further questions in writing, so we will delay our inquisitiveness to that.

Lynne Jones: We also need to ask where this is going to be located and what the implications are for shipping lanes.

Chairman: Absolutely. Although we will be talking later in our discussions about land based biodiversity, I am sure there are some interesting marine-based biodiversity questions that will be raised by it as well. You can see we are champing at the bit to get at seaweed and kelp.

Q223 Lynne Jones: Before I move on to the specific area I wanted to ask questions about, your paragraph 27 says "It is quite obvious that a roadmap of what research development and deployment is happening and needed in the UK is critical in planning future strategy and determining the real potential for UK bioenergy. That really is the crux of the matter in terms of what we have been talking about and perhaps you can go away from today and think about where we are at on that. For example, I have no ideas whether there are bids into research councils for funding for the sort of marine research which you were hinting at a few moments ago. It is also relevant to the earlier discussion in terms of the direction that we are going in. I was a bit concerned about what I thought was a lack of clear-headedness in your responses to Mr Hall's questions earlier. You had come to that conclusion and it does seem to me that the Government do need good scientific advice to help them develop effective policies and it all comes across as very muddled. For example, you have highlighted, and Dr Rowe has mentioned it, the lack of incentive for the production of short-rotation coppice, yet we know from your evidence and from other evidence that we have been given, that the carbon saving from developing that biomass is much greater than developing crops for the current generation of biofuels, yet all the policy steering now is going in terms of biofuels. To redress the balance we have the Biomass Taskforce, but there is nothing there to address this issue about incentives to farmers for short-term coppicing. Whether you want to comment on that, I do not know.

Professor Bridgewater: The UK Energy Research Centre is currently carrying out a roadmap of the whole energy scene in the UK and many of the 12 in the SUPERGEN consortium are also doing the roadmap for their specialities funded by the research council. There is actual work going on both with the SUPERGEN consortium and UKERC and between the UKERC and the SUPERGEN. That is ongoing and is recognised as extremely important and has been taken up by the consortium. That answers that point. The research community does recognise how important it is to provide a steer and to provide some advice.

Q224 Lynne Jones: Do you want to comment on the incentives for short rotation coppice?

Dr Rowe: It is not really my area. As far as the policy goes, it is not an area I am hugely aware of. I know that at the moment a lot of planting is going on, for co-firing certainly; there are incentives there and people are planting these crops at the moment. Three thousand three hundred hectares are being de-cropped to supply them for co-firing, so there are incentives there. More work needs to be done, but there are some incentives already in place in that case.

Q225 Lynne Jones: A lot of this argument may hopefully be unnecessary in future, if we have the results of further research into second generation biofuels.

Dr Woods: This is an indication of what we mean by unclear policy. The ROCs policy with co-firing right now - and it is right that activity has been stimulated with short-rotation coppice with ROCs and Drax - is one of those which has been doing that. That is likely to come to a halt right now because the cap on ROCs that can come from crops is being reduced.

Q226 Lynne Jones: That is being reviewed, but the reason for that is because you will have all the ROCs for co-firing, which really is only a short-term benefit. It is still dependent upon largely coal power stations, which is not the way to go in the long term. Turning to the point about second generation fuels, even George Bush has mentioned cellulosic digestion and I understand in Germany they are putting a €500 million investment into alternative fuel technology research over the next ten years. It does seem in this country that we are putting all our efforts into the current generation of biofuels when actually we would be better off if we put our effort into short-rotation coppice whilst we actually develop the kind of biofuels which can use that fraction of the biomass that is most efficiently used or cannot be used for other things. Where are we going? How soon can we expect to see commercially available second generation biofuels and what should we be doing to encourage that development as quickly as possible?

Professor Bridgewater: The problem is that the kind of size of plant currently considered commercially viable is around 15,000 barrels a day of liquid fuels and this requires the investment of between £1 and £2 billion. That is a very large investment for an industry to embark on with very poor appreciation of the policies which are going to be in place in 20 or 25 years' time. That is one of the problems, that the amount of investment needed to build plants of an economic scale is very, very considerable and the major energy companies, BP, Shell and so on, are probably reluctant to embark on investing in an industry which is reliant on subsidy to be viable without a clear idea how long that subsidy is going to become available for.

Q227 Lynne Jones: My point was about cellulosic biofuels.

Professor Bridgewater: This is from biomass to conventional hydrocarbon transport fuels.

Q228 Lynne Jones: When we were in California, for example, we met a company where they are developing enzymes for different purposes and I got the distinct impression we were not yet ready for commercial development; a lot of research still needs to be done. Is that a wrong impression?

Professor Bridgewater: The problem with the enzymatic hydrolysis of ligno-cellulosics is the cost of the enzymes. There has been a very concerted effort with three organisations in North America to try to bring the cost down, but they are still not economically competitive even in the USA with subsidies. The companies concerned are not building plants based on enzyme hydrolysis: it is driven by the economics. If companies are going to invest, it has to be economically attractive either with or without subsidies, and if it is based on subsidies, those subsidies need to be there sufficiently long for a profitable investment to be made.

Q229 Lynne Jones: So you are not suggesting that the research could result in must cheaper processes, you are suggesting that we have an expensive process.

Professor Bridgewater: The research is addressing mostly the cost of the enzymes and the technical improvement of the processes to give high yields at lower cost and that is ongoing, mostly in North America, also some in Sweden and Finland. I am not aware of any significant activity in the UK on biological conversion processes.

Q230 Lynne Jones: So should there be?

Professor Bridgewater: When there is a finite resource, do you spread it thinly or do you focus on the centres of excellence that we have already? My view is that you build on what you have, rather than spread the same resources out over a much wider scientific area in which you firstly have to build up the capability and provide the resources for the research to be done with no assurance you will ever catch up with the competition in North America and the rest of Europe.

Q231 Lynne Jones: So we leave it to the Americans and the Germans to develop what potentially is the only viable way to produce transport fuels which are not going to have high carbon emissions.

Professor Bridgewater: That is the way to produce ethanol, which is used as an additive in gasoline. If you want to produce a synthetic gasoline or diesel which is totally compatible and miscible in any proportions with the conventional hydro-carbon infrastructures, then you go down what is called the Fischer-Tropsch route like the SASOL plant in South Africa. That would give you an entirely compatible synthetic gasoline and diesel which you can use in any proportions in any vehicle anywhere in the world.

Q232 Lynne Jones: What are the raw materials for that process?

Professor Bridgewater: Biomass.

Q233 Lynne Jones: Biomass. So it is a biomass project?

Professor Bridgewater: It is a biomass-based process. If you are interested, half of the aviation fuel in South Africa comes from the SASOL process, which is based on coal, but could equally well be based on biomass.

Q234 Chairman: How would it be based on biomass?

Professor Bridgewater: You would gasify the biomass to form synthesis gas and then you would synthesise the carbon monoxide and hydrogen into diesel and gasoline.

Q235 Chairman: What would be your biomass feed stocks?

Professor Bridgewater: It could be any biomass. It could be agricultural waste, short-rotation coppice, energy crops, forest residues or anything.

Q236 Chairman: So the same materials which have been cited as inputs to a cellulistic approach could be the same for the one you have just described.

Professor Bridgewater: Indeed, with the advantage that all of the biomass is converted to synthesis gas, whereas in the enzyme or acid hydrolysis of ligno-cellulosis, you have a significant waste stream of the lignin. You are actually not converting all of it; you are only converting maybe two thirds or three quarters at the most, in other words it improves the efficiency.

Q237 Chairman: Being simple souls, does that represent a good, next generation, best buy? What Ms Jones was trying to elicit from you, and I take the point that where there is a limited amount of investment people have to be able to see a return, but if you deduce that there is a technically established process, as you have described for the SASOL one in South Africa, which could work with a biomass input, if that gives you a better chance of producing the range of highly compatible fuels which you have just described - and interestingly one of the challenges that we have been debating is the question of how you address the aviation issue - it almost sounds to me as though you have found the Nirvana of the future in telling us that that is the route we go down because we can tick the box biofuels to power planes, biofuels to power cars. You might walk out of here and say that is where the money should go.

Professor Bridgewater: Yes. Thank you.

Chairman: It is? Is that it? We have got there.

Q238 Lynne Jones: That brings me to the point about the relative carbon savings from gasification as opposed to the cellulosic enzymatic route. Can you answer that question? How do those two processes compare in terms of CO₂ emissions?

Professor Bridgewater: I do not have the data available. It can be made available, but what I have done is to look at the amount of transport fuel yield in energy terms per unit land area. If you go down the gasification to Fischer-Tropsch or fuel synthesis route, it is about double that for the ethanol route via acid hydrolysis or enzyme hydrolysis; it is twice as efficient, both in terms of the land use and in terms of the performance.

Q239 Lynne Jones: But you are talking about land use and energy, but not necessarily the same as ---

Professor Bridgewater: I do not have those figures available. I can get them for you.

Q240 Lynne Jones: If there is anything. There is also production of hydrogen from these technologies as well and what needs to be done? Is that a way to go, to use these technologies for large-scale hydrogen production?

Professor Bridgewater: Hydrogen is one of the wonderful fuels of the future. From biomass you get about a seven to eight per cent weight yield of hydrogen through thermal gasification and there is the alternative of biological gasification to produce hydrogen. The yield of hydrogen in weight terms is very small, but the energy content of hydrogen is extremely high. The problem with hydrogen also relates to how you store it, distribute it and market it. The great attraction, in the medium term at least, of conventional hydro-carbon fuels is that you have an established infrastructure for the distribution and handling of them. You do not have to develop a completely new system for distributing them, using them and storing them. Hydrogen is very attractive, it is very clean, but when you make hydrogen from biomass, you have to lose the carbon somewhere and the carbon comes out as CO₂. You could capture it in the way you can capture it from core processing or you can release it on the basis that it is carbon neutral anyway.

Q241 Lynne Jones: If you are producing it from biomass in an efficient way, then it should be as near carbon neutral as can be; that is the point of using biomass.

Professor Bridgewater: Absolutely, of course, but you could make it even better by capturing the CO₂ into the production of hydrogen, which gives you a credit.

Q242 Lynne Jones: So long as you can store it long term.

Dr Woods: It is a good way of actually physically extracting carbon from the atmosphere

Q243 Lynne Jones: In terms of this physical infrastructure, that is being developed; we saw that in California, but it is very, very expensive.

Professor Bridgewater: Indeed.

Q244 Lynne Jones: Are you advocating that there should be mechanisms for infrastructure, for example public transport schemes?

Professor Bridgewater: If you have a dedicated distribution handling system, handled by experts who understand how dangerous hydrogen can be, that is fine. The idea of any of us walking into a garage and filling up our cars with hydrogen at enormous pressures or liquid hydrogen is a very long way away, if at all.

Q245 Lynne Jones: Obviously this is in the realms of the future and we have a lot to do in the next ten years or so.

Professor Bridgewater: Yes; indeed.

Q246 Chairman: A lot of food for thought there. Can you just explain one thing to me? I do not know whether you have observed the amount of money that British Petroleum have been spending on a campaign with the subtitle "Beyond petroleum". You have just described an attractive chemical process which ticks a lot of boxes. Do you have any thoughts as to why BP do not appear to be investing in this? If they want to go beyond petroleum, it seems, given the amount of money they have at the moment, to be a natural place for them to be.

Professor Bridgewater: I understand BP are the biggest seller of biodiesel in Germany and the second biggest retailer of ethanol in the USA. It comes down to the perceived state of the market at the moment and the attractiveness of the investment.

Q247 Chairman: So your message is "Get the market and the demand and then eventually the investment will follow"'.

Dr Woods: I can add a little bit to that. BP have invested in a German plant which does exactly what Professor Bridgewater has been talking about and which produces, at demonstration scale, Fischer-Tropsch biodiesel. The interesting question for the oil companies and the reason I do not believe they will invest in a big way in biofuels unless they are compelled to, is that it does not fit their business model at the moment. They would be interested in the production of synthetic biofuels that fit exactly with the infrastructure, not with hydrogen for example, because it does not fit their business model. However, in order for them to control the supply chain, they have to get involved with agricultural production and biomass production. For example, Shell in the 1980s used to own very large areas of forestry and withdrew from that and they are worried about getting involved with those kinds of areas. That is potentially a reason that they are not investing yet.

Professor Bridgewater: There is a company in Finland that justifies the claim that conventional hydrocarbon transport fuels, gasoline and diesel, are very attractive. They are currently spending €100 million building a plant to turn biodiesel into conventional diesel. It is a company called Neste in Finland. They are spending €100 million to turn biodiesel from vegetable oil into conventional diesel because it is easy to assimilate into the market and it is much cleaner.

Q248 Lynne Jones: What is the difference? It is biodiesel, if it is from biomass sources. What is the difference between biodiesel and conventional diesel?

Professor Bridgewater: This is the convention of language. It is quite complicated. Biodiesel is normally limited to vegetable oil derived products like rape or sunflower or palm oil. The synthetic diesel I have been referring to by Fischer-Tropsch like in the SASOL process is chemically indistinguishable from that derived from crude oil, except that the sulphur levels and contaminate levels are much lower and it is much cleaner in use. That is not what I call biodiesel and what most people call biodiesel. Biodiesel is normally limited to vegetable oil or fat derived materials which are compatible with, but limited in their miscibility to ordinary diesel. I hope that helps a bit.

Q249 Chairman: Perhaps you could just clear up one little point for me. My attention was drawn to the fact that if you take rape seed oil, you can effectively make that a fuel by crushing out the rape seed oil; you have your oil, you can put it in your tractor and away you go. That, as a fuel, because it has no processing done to it, pays a full rate of duty, but if you process it, then you get the reduction in duty which is put forward. Can you just explain to me why you have to have an element of processing? It seems to me that if you go from plant to fuel, they seem to take out rather a lot of cost. Why do you then have to do something to it?

Professor Bridgewater: Because the crude vegetable oil is very viscous, it does not flow well in cold weather, it will settle out if you have a frosty night and block the filters. It is processed to become lower viscosity, easier to use and more compatible and there are now some European standards so it can be traded more easily. It is really processing to remove impurities and to turn it into a fuel which is more compatible with the environmental conditions in which we live.

Q250 Patrick Hall: It has been mentioned a number of times that the environment, in this country at any rate, is not clear enough or welcoming enough for long-term investment to take place in the areas that we are talking about. What more then should Government do beyond the renewable transport fuels obligation which surely does set down very clear markers as to the direction in which we are going which is a clear signal to industry.

Professor Bridgewater: It is the timescale that is the problem. In the meetings or discussions I have had with different companies, the concern is that the lifetime of the current obligations are not sufficient to justify large investments. That is what I am told.

Dr Woods: I can add to that for the renewable transport fuels obligation at least. The way the obligation may work with the buy-out fund is that if, for example, with the five per cent target the suppliers only achieve a 2.5 per cent target, they have to buy out the remaining 2.5 per cent and that buy-out would be set at 30 pence a litre, so they would pay 30 pence a litre for each of those litres that they have not made from biofuels and that would go into a buy-out fund. As a potential biofuel producer in the UK, you might think that buy-out fund is going to provide a revenue stream for you providing indigenously supplied biofuels. However, actually, for example, BP think that they could provide all of the five per cent by 2010, which is a volumetric basis, by putting raw vegetable oil through a hydrogenation unit at the front end of an oil refinery and so meet the entire fractions using straight vegetable oil and therefore there would be no money accruing to the buy-out fund. Secondly, from a biofuel supplier's perspective, that introduces an aspect of uncertainty into the value of their fuel. The duty derogation is on a three-year rolling reconfirmation. That is due to run out in 2008, so if you were to put in your plant, you would have three years of 20 pence duty derogation. You know from the way the RTFO is currently set out that the duty derogation will go down and the buy-out price will go up, so if you are a potential biofuel supplier, you are guaranteed that 20 pence derogation no matter what at the moment, but only for three years. You are then into a second-guessing game about what is going to happen to meeting the target and the value of the buy-out fund in the following years and yet in the RTFO, even in its current constituency, that buy-out price is due to decrease and that has been clearly set out. Then there are some question marks into the box as to what the value is beyond 2010. That is only a four-year horizon for them to be working with and a huge amount of uncertainty in terms of the value of their product.

Q251 Mr Vara: May I move on to the subject of research? You will of course be aware that recently the Natural Environment Research Council proposed that four of the eight sites for the Centre for Ecology and Hydrology should be closed to save money. By way of background, up to 200 people will be made unemployed at those four sites and some of them are world-class scientists. The issue is that some of them will be relocated to the other sites, others may move on to universities and other academic institutions, some will be enticed to go abroad. The facilities themselves, for example at Monk's Wood, have been going on for 40 years; a lot of the equipment has been built up over the years, a lot of expertise, contacts with the local environmental agencies and so on. One of the environment ministers, Elliot Morley, says and I quote "... the restructuring that the Natural Environment Research Council has proposed for CEH would not reduce the amount of independent research into climate change nor reduce capabilities for the long-term collection and analysis of environmental and ecological data". Do you agree with the minister?

Professor Bridgewater: I am not so familiar with the work of NERC or of these institutes, but the funding from the research councils for some of them is partly to support the infrastructure of the establishment's laboratories and it partly goes to supporting either consortia like TSECBIOSYS [?] that James is involved with, which come about from corporate proposals or by anybody applying for funding from the research councils. They claim that if the amount of money that is to be spent is not reduced, it is possible to see how centres of excellence could be maintained which are not necessarily based at the laboratories.

Q252 Mr Vara: Professor Bridgewater, with respect, you are almost behaving like a politician in that you are avoiding answering the question. The issue is not one of funds. As far as funding is concerned, the argument that is put forward is that there will be a saving of £7 million every year and the cost is going to be £43 million. There is an argument to say that that does not make very good mathematical sense, but we shall not go down that route. The question specifically was: will the closure of the sites affect environmental research? You say you do not know much about what these sites do; you do not need to. Take my word for it that they are involved in the business of ecology and hydrology, environmental research, climate change and so on. That is the field that you are familiar with, so that is the subject: the closure of four out of eight sites at a time when the world is waking up to the issue of environment, when everyone says we need to do more research. Do you feel that Britain is not actually helping itself in this area by reducing 50 per cent of its sites, its world-class scientists going abroad and so on?

Dr Woods: I am aware that I am probably walking into a deeply political area with this, but I would say, stepping out of that ---

Q253 Mr Vara: May I just say that it is a political area, but you are not here in your capacity as politicians, you are here in your capacity as scientists. Let science answer.

Dr Woods: In the light of that, one of the big spin-offs of climate change will be the impacts on hydrology and some of the hydrological models that have come out of CEH are underpinning hydrological models to a lot of the science work that exists. I should say you would have to look extremely carefully at the unified capacity to understand soil hydrology, which is an extremely complex area. I have a view, much like Jonathan Porritt's view, that the recent history of under-investment in production from the land and in agriculture will be looked at in ten or 15 or 20 years' time with a kind of absolute amazement, but at the moment climate change is going to affect our ability to produce food from land and now we are looking at bioenergy and running out of options as to other energy resources that we can exploit.

Mr Vara: Dr Woods, I am not putting words in your mouth, but are you saying, in laymen's terms, to use language that the Chairman used earlier on, that in 10 or 15 years' time, we shall regret the decision to close these centres which are important for environmental research?

Lynne Jones: I understand that posts are being lost from the Institute for Grassland and Environmental Research too? Perhaps you could take that on board in your answer.

Q254 Mr Vara: I should repeat that I am not asking you to get involved in politics. You are here in your capacity as scientists; your fields are going to have four out of eight centres closed, up to 200 people. It is a very simple question. Forget the money side. Do you feel that this is a good decision or a bad decision for your specific area? Forget the arguments of the politics; a yes or no will do.

Professor Bridgewater: I can comment on the Rothamsted one; I am aware of that merger. It does create some good opportunities for better synergy between the research going on which is currently 200 to 300 miles apart.

Mr Vara: So you are quite happy for world-class scientists to go to the US.

Chairman: I hate to temper the enthusiasm of a colleague, but, in fairness, our panel are not involved directly in the decision-making process to shut these institutions.

Mr Vara: Chairman, I am guided by you and I take note.

Q255 Chairman: I understand what you are trying to get at. What we need to understand is which are the important areas for science and scientific research, so that when the minister who is going to take these decisions comes before the Committee, with the benefit of your advice, we shall know what questions to ask him as to how he is justifying a decision. It would be helpful to have your response on that line of inquiry.

Dr Woods: The critical issue is whether it enhances or loses the capacity to understand those areas which are deeply complex areas.

Professor Bridgewater: Absolutely.

Dr Rowe: The professor I work under has quite a lot of contact with the CEH as part of our work and she has actually prepared a statement on this which I am willing to give to you as a note. To give you the summary of that, she is saying that much of the short-term work done by CEH could possibly move to be done at universities. The advantage of CEH is their long-term ability to collect data sets over long periods of time and that we need and we do not want to lose. Also at the moment, they are involved with our research into looking at assessing the hydrological implications with SRC, which will be important in the future with climate change, looking at how this crop is growing. They are involved in a coordination role with the UK Energy Research Centre for a roadmap for future research priorities, which is what you were discussing earlier. We are saying that we are aware that extreme care should be taken and if these closures are to go ahead, we must not lose key personnel who are involved in maintaining either these long-term models and research and also people who are going to be looking at future policy planning. How that can be done is obviously something we need to discuss.

Chairman: Mr Vara, when the minister comes before us, you have now had your card marked as to the areas of the questions you must ask him, as to how he has come to the conclusions which we are quite rightly questioning. May I thank you very much indeed? You have whetted our appetite in a number of ways and, again, the one thing that is apparent is that this subject is a deal more complex than I had thought when I first embarked upon taking evidence on this inquiry. There is quite a balance to be struck between getting the biorenewables, let us use that term, off the ground and perhaps eventually attaching that industry to some of the interesting new processes or not so new as in the case of the Fischer-Tropsch process, which you described earlier. You have certainly given us a lot of food for thought. If at the end of this, there is anything else that you can think of - and Dr Rowe I am grateful to you for your kindness in agreeing to forward the statement - that you want to communicate to the Committee, as always we are very happy to receive a note from you. The only thing I can guarantee is that whatever you have said cannot, as they say, be undone. Thank you very much for your contribution and thank you for your evidence.

Memorandum submitted by English Nature

Examination of Witnesses

Witnesses: Mr James Marsden, Head of Policy and Ms Anna Hope, Biotechnology Adviser, English Nature, gave evidence.

Q256 Chairman: Can we move onto our evidence session with English Nature? May I welcome once again Mr James Marsden, Head of Policy and Anna Hope, Biotechnology Adviser? You have had the benefit of sitting in on our earlier witness session, so you will know some of the things that we are very interested in. In your evidence to us, you highlighted some of the potential incompatibilities between developing the rural economy and the climate change of bioenergy. You counselled us that "... attempting to tackle both climate change and rural development using the same funding stream may result in the inefficient delivery of both objectives". That is an interesting observation on government policy. If you were advising the Government, how would you tell them to avoid that potential downfall?

Mr Marsden: We advised them to take an integrated approach. In earlier evidence you heard about the disaggregation between, on the one hand, approaches to tackle efficiency and demand management, on the other, a push on bioenergy and renewables. The overall arching integrated approach to energy policy, which is the subject of the current review, would be our starting point and from that flows how you incentivise, through the market within appropriate safeguards for the environment and other benefits to society, the approach to achieve the policy objective.

Q257 Chairman: You are talking about an incentivisation. One of the odd things about biofuels' production is that the discussion has focused on two things: one, the use of set-aside land and the other, the use of land which currently produces versus UK requirements, a grain surplus. The set-aside land effectively is made attractive for biofuels' production because currently by definition it is not used for anything, but you make some points about there being gains in biodiversity from set-aside. On the other hand set-aside land has money paid to it for being in that state. Is that a perverse incentive? The farmer gets money for set-aside, but he also gets something if he puts a crop on it.

Mr Marsden: We should like to put that in some context for you. The very high big picture context is that climate change is the biggest threat we face to the natural environment, therefore English Nature now and Natural England from October will care a great deal about that. As a result, we would wish to work with others to promote bioenergy and biomass production. We would do that within a hierarchy and we are developing our position on this, so what I am going to tell you is a work in progress. If we start from the position that there are going to be certain areas of the country where there will actually be a positive benefit in the developing of these resources, to give you an easy example, there are acres of unmanaged coppice woodland in the wield of Sussex and Kent that, if the appropriate, taking account of transport and so forth, end user points were brought closer to the market and the production of the coppice wood could be got there at low cost et cetera, could be of positive benefit, both in terms of the bioenergy it produced and to the natural environment. There are some other areas of the country where it would be neutral. There are others where it would be marginal, but the long-term gains in terms of the climate change effect would still lead you to go down the bioenergy route and there would be others where it would be very much on the negative side. So you would need to work down that hierarchy and incentivise accordingly and obviously you could start to put some numbers on that in terms of the hectarages of land involved in a spatial sense.

Q258 Chairman: Do you want to add anything to that Miss Hope?

Ms Hope: I could comment more specifically on set-asides. I suppose our view of set-aside is that although it is not there to deliver environmental benefit, incidentally it does deliver the benefit. While we do not say that we must keep set-aside as such into the future and we accept that it may be phased out at some point, there does need to be a recognition that by promoting production of bioenergy and biofuels and non-food crops and so on, it is going eventually to result in quite a significant change in land use patterns. We really need to plan for that and make sure that any kind of incentives which promote those, do not incidentally create other kinds of environmental impacts, such as loss of biodiversity, whether that is on set-aside or elsewhere in the countryside, such as increases in pesticides and nutrient consumption, because you are growing more crops, you are growing them more intensively and so on.

Q259 Chairman: Do you think that the Government's climate change review, which was produced after you had sent your evidence to us, has changed your perceptions on any of these matters?

Mr Marsden: I have not actually read the climate change review, so I am not in a position to answer that. I have read Sir Ben Gill's report on bioenergy, but I have not had the time to read the climate change review.

Q260 Chairman: Obviously it is interesting in terms of balance because the report still puts strong emphasis on biofuels; I just wondered whether you had formed a view as to whether in fact it got the balance between that and say the energy saving right.

Mr Marsden: In terms of the balance, we have said quite clearly we are for biofuels and biomass production within some parameters and we have given you a hierarchy and we no doubt may go into the detail of some of that. In essence it is about scale, it is about location and it is about how the resources from which biofuel and biomass are derived are managed. That is how it will impact on the natural environment and that is what we care about. Within the energy balance, there is a great deal more work to be done in terms of addressing demand and efficiency, because, particularly on efficiency, it is neutral as far as carbon is concerned, it is neutral pretty much as far as the natural environment is concerned, so it is going to deliver real benefits in terms of the impact on CO₂ reduction and it is going to have a negligible potential impact on the natural environment.

Q261 Mrs Moon: I am intrigued by what is being suggested here. Are you in fact saying that what you are looking at is mapping which areas of the country would be best appropriately used for different crops in terms of the impact on biodiversity and looking at where we can focus which crops should be grown and utilised so that not only would they have less impact in terms of biodiversity loss but also have less impact in terms of global warming, by looking at distances to end user?

Mr Marsden: That last point is outside our remit but we care about it. We can use geographic information systems to present what needs to be done for the natural environment in a spatial context. We can say what the current resource is, where it is, what some of the pressures are and we can also map some of the targets of where we should like it to be. In future Natural England will set out to provide that data spatially to everyone that we work with in a clear framework. That is what, as Natural England, our first corporate plan will set out to do. If you then place that into the broad knowledge of the land that is currently "semi natural", the land that is currently in arable cultivation, the land that is in permanent grass et cetera, you can begin to paint the picture that you have described, yes, and you could begin to say it would be better done there rather than there.

Q262 Mrs Moon: So you are going to add to the complexity of the matrix in one sense and also simplify it in another. You are adding another dimension which, to be honest, I have long felt was missing and it is going to be interesting to see your output. When do you think you are going to have this completed?

Mr Marsden: It will take some time. We have set out to put this in place over the next period of years, but that is not multiples of years, it is 18 months to two years. I do not have the exact date because I do not have the corporate plan immediately to hand, but there is a target date attached to it and we can provide that to you. There is a further bit of complexity and I am pleased that you raised that. There are no hard lines around some of that hierarchy. I used the coppice or the woodland management example, where we could be talking about an ancient wood that is a protected area here that needs managing and coppice management is the right prescription. So we are not saying that protected areas are no-go areas; that is the message I want to give you. It is complex and it is ultimately about the sustainability bottom line and from our perspective, the environmental sustainability bottom line.

Q263 Mrs Moon: It does seem that the further we get into this whole inquiry, the more complex it becomes in terms of getting that delicate balance right between the cost implications of understanding which route you need to go down to offset the carbon omissions but also what the implications are in terms of the cost of reducing that carbon emission over here and what you are setting up in terms of the consequences of the route you are going to follow over here. I just wonder, in a very simple solution, if you had 100 acres of arable land and eight per cent of it was set-aside, what you would do.

Mr Marsden: I shall give you a simple answer and then I shall pass on to Anna who may add some complexity. If it is arable ground and it has been in arable for years - I am taking your example - it is likely to have pretty limited biodiversity interest. So anything is going to be better than the rotation of oil seed rape and wheat followed by potatoes, possibly followed by a silage crop of grass. It has to be better. It depends how you manage the biomass or bioenergy crop that you put in place and, in terms of a set-aside, if that were to go into Miscanthus and short-rotation coppice, which have already been used in evidence this afternoon, again how is that to be managed? What is the scale effect, what is the location effect?

Q264 Chairman: One of the things which comes out of what you are talking about is how we value certain things. There was, in some earlier evidence, a discussion about the social costs of greenhouse gas emissions in trying to work out what the costs would be to society of over-emissions. In the same sense you are talking about protecting biodiversity, but we do not know how we value that, we cannot put a monetary sum on it. Just following on this business about land use, you heard the earlier discussion where we were looking at alternative ways in the liquid fuels market of producing biofuels which would not involve a rape seed monoculture. One of the questions I would ask you is whether you envisage giving guidance to Government as to what they should be doing by way of incentivising the production of biofuels in whatever way the end game is, taking into account potentially some of the downsides of having a monoculture of one crop as opposed to the more sophisticated processes which would have a diversity of sources of raw material which may have an upside in biodiversity. However, at the moment we cannot impute a monetary value to that, we could not give an investor something to say that the Government are giving them something because we think it is good to do this because it is good for biodiversity.

Mr Marsden: On the first point, we do intend to provide a clear framework for assessment. I cannot put a timescale on it, but we do intend to provide that framework for assessment of energy crops on both biodiversity and on landscape. That will be part of Natural England's role and we shall provide that and you will find those words that I have used in our corporate plan when it is published. In addition we shall wish to encourage biomass energy positively and production from wood fuel products, energy crops and indeed from agricultural waste. We shall set out and go out to work with people to help the Government achieve those targets; that is our baseline, we shall provide the framework. The valuation one is trickier and I am not able to give you a clear answer on that one.

Ms Hope: May I add another perspective to that? Ideally what we should like to do is to deliver a range of different benefits. We should like to save carbon emissions, we should like to increase biodiversity, we should like to cut nutrient pollution, we should like to deliver beautiful, attractive landscapes which are historic and so on. What you have to come back to, in my view, is that land management is critical to enhancing biodiversity. Land management is critical to that, whereas there is a whole range of ways that you could save greenhouse gas emissions, so why focus on delivering the greenhouse gas emissions while following a policy that is actually risking harm to biodiversity because there are not many ways you could actually mitigate that harm? Let us try to internalise the value of those public benefits that can be delivered if appropriate management practices are followed, if you plan it, if you make sure the crop is in the right place and so on. Then you will automatically deliver all those benefits that Government are trying to deliver anyway.

Mr Marsden: It picks up on Mrs Moon's point. You can actually do that if you incentivise and get the right things in the right place.

Q265 Mrs Moon: Many years ago I read a book called the Tanstaafl Principle. I do not know whether you know about it. It actually talks about the issue we are looking at here which is weighing up priorities and costing our priorities and putting costs against losing natural habitats and losing biodiversity and the fact that we do not ever cost that and put that into the financial equation. What you seem to be suggesting is that we are looking at actually doing that and finding a way of moving forward on that. What worries me is, given that we do not seem to have an end date for the policy and the production of your report, that we could actually get out of sync as Government are moving to drive forward on these issues. What I should hate to see is that your report comes out, but the Government have already made decisions and you are two years down the line, but Government are going to have to make decisions in a shorter timeframe.

Mr Marsden: You have given us a firm push; thank you.

Q266 Mrs Moon: Good. I do think the Government are having to weigh up those concerns now and clearly those concerns have to be addressed in terms of carbon emissions, but also loss of biodiversity. So please do move forward on that. We have also today had another issue raised; sadly we were not able to look at it with Dr Kelly because she has not been available. The issue of tackling bioenergy from seaweed is something that was put down to us as being very attractive with a huge potential for tackling CO₂ emissions, but what we have not been able to look at is what the implications are for marine biodiversity and marine habitat. Is that something that Natural England and your report are going to look at? Is that something you are also putting on hold?

Mr Marsden: Let me start by saying that when we had notice of your questions, we had to do some fairly rapid research into this area ourselves because English Nature has not done much work in this area. The work that has been done has been done in Scotland by our colleagues in Scottish Natural Heritage, so I can refer a little bit to that. Before I do so, our position would be, going back to the framework hierarchy that we gave you earlier, better do it on East Anglian arable farmland, than do it at sea. That would be the starting point in terms of the approach to risk biodiversity. What we know about how to create and plant and manage bioenergy crops on arable land is a great deal more than we know about the harvesting at sea and therefore a risk-based approach suggests that if you can do it on arable land and meet the targets, you do it there first and you work through the rest of the hierarchy we gave you before you look to the sea, but you also need to do the research. Within that set of constraints, there are some things that, in the Scottish research, we can say need to be looked at. I have used the example of woodland coppicing before and there are one or two similarities in terms of how you might harvest seaweed in particular, but you want to look at the harvesting methods, the rate of regeneration, the cutting height, whether or not the mechanical harvesting removes the hold-fast of the seaweed on the substrate which it is on, because, if it does, that affects the regeneration rate. Of course, we would want to understand the effects on the biota that both feed and use the seaweed as their habitat. There are also some issues about return time. It is a complex area and we do not yet know the answers, but a bit of work has been done in Scotland.

Q267 Mrs Moon: You say that "a bit of work" has been done. In terms of costs, figures that we have had have been in the billions and several millions to do this research in relation to bioenergy from the sea and from seaweed. Would you comment on whether or not, if you are putting, let us say £50 million into research, in terms of energy crops, you would put your £50 million into looking at energy crops from the sea or would you put your £50 million into energy crops from the land?

Mr Marsden: The straight answer is the one I gave you earlier: I would do it on land.

Q268 Lynne Jones: You, like many other people, have called for a carbon energy environmental sustainability certification scheme. You have made reference to voluntary schemes being developed, but you are clear there should be a link between the certification scheme and the renewable transport for fuel obligations certification scheme. Could you perhaps tell us a bit more about how you envisage that would work and who would be responsible for administering it?

Ms Hope: I should first of all say on the overall concept behind the accreditation and sustainability on the carbon, if you look back to the RTFO, that we were happy for the RTFO to be introduced. How we see it is that it offers the opportunity, in a sense, to control the biofuel sector in that any kind of incentive that is going towards biofuel production can potentially be linked to some kind of quality standards that will provide environmental assurance. So for us the bottom line really is that any system of production for biofuel, that is whether it comes from agriculture or whether it comes from re-use of existing raw materials, by-products et cetera, has to meet certain baseline sustainability criteria. Once that has been met, we should then like to have a carbon accreditation scheme that would be able to incentivise improvements in carbon savings. That is the overall context. If we were to talk specifically about how the mechanism would operate, we are very keen for it to be linked to the RTFO because otherwise essentially you have a scheme which will probably incentivise the cheapest biofuel production. At the moment the Government's proposal for the RTFO is that there should be mandatory reporting on carbon savings and mandatory reporting on environmental sustainability. What that essentially means is that companies are free to source their biofuel from wherever they like and although they have to admit it, maybe that will not make much difference. They are very keen for them to take a further step and say, for example, the more carbon you save, the more certificates you will get under the scheme and that provides a financial incentive because of the buy-up price and so on. In terms of how it would work in practice, we have been working mainly through the forum of the low carbon vehicle partnership, with which you may be familiar, and that body has been commissioning some research into developing a system for how the carbon accreditation would work, the kind of measurements you would need to take, how the calculations would be performed. Secondly, they are doing some research into what a sustainability standard might look like. Ultimately the intention is that that would be passed onto an official body like the British Standards Institute, which would be able to develop it further into a standard which industry can sign up to.

Q269 Lynne Jones: Would this be a UK standard?

Ms Hope: In the first instance. If you look at the European Union, the UK has really been a pioneer in this whole area. What has been interesting is that since the Commission and other Member States have started to hear about the work we have been doing in the UK, they have all become very interested in it; and the low carbon vehicle partnership has given presentations around Europe and there has been a lot of interest. Now we have seen, through the European Commission's communication on biofuels, that there are now moves within Europe to establish some kind of central accreditation scheme.

Q270 Lynne Jones: How has the low carbon CVP been funded? How has their work been funded? Is that an industry scheme?

Ms Hope: I believe that the actual piece of research has been funded by a number of different bodies which are members of the low CVP which have put in money towards it.

Q271 Lynne Jones: So commercial organisations.

Ms Hope: Plus some NGOs. It has buy-in from a whole range of stakeholders.

Q272 Lynne Jones: You obviously support an international scheme, but you have expressed concern about the feasibility of such a scheme under WTO rules. Can you perhaps explain your concerns and do you have any ideas about how those problems could be overcome?

Mr Marsden: The concerns are fairly self-evident and I am sure others will have raised the issues of natural resource depletion offshore, because it will be very difficult to meet the existing targets in the UK or England alone and we shall need to import. If we import from countries which have standards which are less than our own in terms of environmental sustainability, there are all sorts of examples: you can point to Soya bean in the Amazon and you can point to palm oil in the Far East. Yes, there is a clear difficulty in relation to that with WTO. The proposition we would put to you would be that there should be some kind of equation between what we import and the incentive advice support that UK Government, or UK PLC, offers to the developing countries or to the countries from which we import that bioenergy to do it in ways which are environmentally and socially sustainable.

Q273 Lynne Jones: You do not see any potential for the WTO agreeing that carbon emissions and sustainability are issues which should be able to be taken into account in deciding in terms of trade?

Mr Marsden: My limited experience of WTO matters suggests that it would take a very long time and we do not have that time and the answer still would possibly be no.

Q274 Lynne Jones: So it is a question of intelligent customers really.

Mr Marsden: Yes, intelligent customers.

Ms Hope: I believe that the opinion of the Department for Transport's legal team was that because of the wording in the Energy Acts linking biofuel specifically to cuts in carbon emissions there is a potential for there to be a mandatory scheme which would take into account carbon savings because that is what we are trying to do. Environmental sustainability would be more difficult, but we believe that could still be further investigated. However, certification, which we want to see, can only deal with part of the problem and the other part of the problem is really the kind of wider land-use issues of general global demand for these crops increasing. That is going to mean an intensification of existing farming systems and potentially massive loss of natural habitat and some of those natural habitats being incredibly important for providing habitats for biodiversity, ecosystem services and so on and buffering against climate change. What Mr Marsden was referring to also was, for example, if we were to see further increases in the target from five per cent upwards we would be very concerned if that were not accompanied by some kind of assessment, some kind of impact assessment which would look at where those fuels were likely to come from. We shall not be able to produce more on our own land and if we can identify that then are there ways in which we can help to mitigate any adverse impact or support those countries in developing their systems to be more sustainable across the board.

Q275 Lynne Jones: To what extent do you think membership of a voluntary body such as the Round Table on Sustainable Palm Oil can influence the environmental production methods of non-food crop production overseas?

Mr Marsden: Yes, that one, but the other routes are through the education of the consumer to the risk we have been talking about and also the investors. Investors' fund managers are taking an interest, particularly in palm oil but also in Soya. That is another route to achieve this.

Q276 Lynne Jones: So you approve of the efforts of such organisations. You think they are well worth it or are they just fronts?

Mr Marsden: On the face of what you have told us, yes. In the hierarchy of importance in the framework we painted for you earlier you would have to put rain forests in the Amazon or the Far Eastern countries ahead of anything we have here.

Q277 Lynne Jones: Is there a role for Government in terms of mandatory information schemes, for example, such as energy rating schemes on appliances? Should there be some kind of requirement to declare the environmental impact on carbon emissions?

Ms Hope: That is already proposed under the RTFO. They have proposed mandatory reporting; that is essentially what it is. I am not familiar with how it works but presumably every year a report might come out where each country had to say where it had sourced its biofuels from, whether those suppliers were certified in any way, what level of carbon savings they had achieved on average and so on. What we are saying is great, that is a good start, but we want to see it taken further and incentives given otherwise what is the incentive for moving towards the kind of second-generation technologies the previous witnesses were talking about? Where is the incentive in that? It will probably cost more money, at least to start off with.

Q278 Lynne Jones: I was thinking more of information to consumers, so if they are filling up at a petrol station they should be told that kind of information.

Ms Hope: Certainly the consumer needs to be made aware of these issues.

Q279 Lynne Jones: Has that already been proposed?

Ms Hope: I am unsure whether it has been proposed quite yet. We are not quite at the stage to be able to offer that anyway because the information is not there.

Mr Marsden: We would wish to say that if it can be done for fish, why not for biofuel.

Q280 David Lepper: I was interested in how effective you thought the Round Table was and we have explored that. May I go back to the issue Madeleine Moon raised and what she described as the mapping exercise that you are involved in? Did the impetus for that come from English Nature as part of your ongoing work or was it something government asked you to do?

Ms Hope: English Nature, in collaboration with a number of other agencies, including the Forestry Commission, the Environment Agency, the Countryside Agency and English Heritage, asked for a meeting with Defra, probably about a year or 18 months ago. We said we had some concerns about some applications there have been for some fairly large biomass generation plants and we do not necessarily think they are in the right place or maybe the scale of them is inappropriate to where they are proposed to be. What we should like to do is to propose a system, initially just for mapping our energy crops in terms of where the most and least suitable areas might be. That would help in a number of ways. It would help the developers of those plants to have an indication of where they might have a better potential for getting planning permission through because availability of feed stocks, transport links and so on are very important. It would also help us and the other agencies involved in doing the environmental impact assessment for the individual crops which we have yet to see in terms of the cumulative impact which is quite difficult to assess. You could look at one crop of willow and say it is okay to go there because there are no particular environmental impacts, it is not close to a designated site. However, what happens when you start getting in 100 or 1,000 applications for crops in that area and you might not be expecting it? It is this whole anticipating, helping us to plan ahead.

Mr Marsden: That bit of work is the new bit. The existing bit is the mapping of countryside character and of natural features, biodiversity, across England and not only the protected areas but the UK biodiversity targets which need to be met and where they need to be met. That is the ongoing bit.

Q281 David Lepper: You and others went to Defra initially.

Mr Marsden: Yes.

Q282 David Lepper: Defra signed up to what you are doing. Are there other government departments as well or is that not a question you have asked?

Mr Marsden: I am not equipped to answer that. We talk to DTI regularly on energy and particularly other renewables.

Ms Hope: They may have been involved with discussions on Defra with us but Defra is essentially leading on that. We have also sought to involve the regional development agencies and government offices in that work. It is the kind of work which is more appropriately done at a regional level.

Q283 Mr Vara: If you had a wish list of three things you would like in terms of being able to do your research and work better what would you advise us to try to obtain from Defra when we have ministers before us to allow you to do your work better and more efficiently?

Mr Marsden: That is in the round. In the round we should like Natural England to be resourced and equipped to succeed in the mission it has been given, the purposes it has been given and to be resourced to achieve the outcomes it will set out in its first corporate plan.

Q284 Lynne Jones: Are you not?

Mr Marsden: That is still a matter of debate between our chief executive designate and the department.

Q285 Mr Vara: By resource do you mean money, equipment, centres and research personnel.

Mr Marsden: Yes, there is that. The next on my list would be a favourable outcome to the ongoing discussions about modulation and co-financing in relation to the England rural development plan because if we are not adequately resourced to roll out environmental stewardship, both the entry-level scheme and the higher-level scheme, we are going to be in a very difficult place. That big item flowing out of the deal which was done just before Christmas in Europe, through into the England rural development plan, the negotiation Defra will need to have with Treasury in the context of the spending review, is very high up on our list.

Q286 Mr Vara: There are two there. Do you have a third one? You do not have to have one.

Mr Marsden: I am happy with that.

Q287 Mr Vara: Do you feel that closure of the four CEH sites is going to impact on biodiversity research and climate change given the urgent nature of research in that area?

Mr Marsden: We are very, very disappointed by the decision. We think it is a very significant loss. Despite the assurances which have been given that key research on biodiversity and long-term monitoring will be retained in strength we find it difficult to understand how that can be achieved with the closure particularly of two centres, the Winfrith site and the Monk's Wood sites, with whom we have very, very long-standing relationships and long-term research. The point was well made by the earlier evidence. We are worried about possible impacts on some very important research projects. We do not yet have the answers but there is a long list of things which we could talk to you about which are very much on our worry list as far as that decision is concerned.

Mr Vara: I am grateful for that answer. I have to confess that I am particularly grateful for the candidness with which you got off the fence.

Q288 Chairman: Who did the work which came to the conclusion that there should be a reduction in the number of sites?

Mr Marsden: I do not know the answer to that.

Q289 Chairman: Was it done by Defra itself?

Mr Marsden: My belief is that it was done by NERC.

Q290 Chairman: At the request of Defra.

Mr Marsden: A proposition was put to the NERC board. English Nature made a submission into the consultation, the gist of which I have given in my answer.

Q291 Lynne Jones: They did respond to that consultation by reducing the loss of posts.

Mr Marsden: Indeed.

Q292 Lynne Jones: Do you think that response was inadequate?

Mr Marsden: It still involves the closure of three of the site and the risks I have highlighted will be evident.

Q293 Lynne Jones: Could you let us know the specific concerns you have? Could you comment not just on CEH but IGER and Silsoe as well?

Mr Marsden: What I should be very happy to do is to share with you the response we gave to the NERC consultation. It is something we should be very happy to send to your Clerk in full. We shall take that away.

Chairman: That would be very helpful indeed. Obviously the issue has been raised as to whether we have the necessary knowledge base to tackle some of the fundamental scientific issues which CEH have been involved in in this area and it is quite clear that knowledge and understanding is the key to making good decisions in this area. It is something the Committee will want to come back to.

Q294 Lynne Jones: There are institutions funded by BVSRC as well if you wanted to comment on that. Also the actual internal research capabilities of departments, not just Defra but perhaps other departments, if you have any comments. When we had the Environment Agency before us they were saying that they had difficulty in actually recruiting environmental scientists. I do not know whether that is a problem for you and these closures, these changes would impact on the potential for young people going into these areas of scientific research.

Mr Marsden: My view would be that it will undoubtedly impact. To answer the first part of your question, historically the Nature Conservancy Council and English Nature have had little difficulty; it has been seen as a job people want to do. Indeed the people inside those organisations have a passion and a personal belief in the purposes of the organisation and that tends to be why they joined. They are very good scientists first, but if you look at the number of scientific degrees which currently exist inside English Nature there are a great many and many of them have second degrees as well.

Chairman: Thank you very much indeed. You have given us some very interesting perspectives, particularly in terms of the relationship between the practical world and the world of research which the Committee will want to follow up. Thank you very much both for your written evidence and for your oral evidence this afternoon and thank you for agreeing to share your own submission about CEH with us.