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5 Jun 2008 : Column 322WH—continued

What strikes me about the context of the debate is the degree to which the ground has shifted, and continues to shift very fast indeed. The context, as the Committee Chairman, my hon. Friend the Member for South Suffolk (Mr. Yeo), clearly set out, is the imperative of climate change. In that context, what has changed since Governments started to formulate policy in the area is, as the scientists tell us, that the problem has got bigger
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and the urgency greater. What has also changed is that the gloss has started to come off the UK’s performance, as it has become clearer that emissions have risen, not fallen, over the past 10 years, and that the transport sector, which we are discussing today, remains absolutely stubborn in terms of our ability to reduce emissions from it.

A further, recent, change is the mood music around biofuels, which some years ago were seen as a win-win opportunity to create benefits for the agricultural sector as well as for the environment. That has unwound dramatically over the past year. Another change is the economic context of the debate: the economic prospects for the UK and the world, and public finances.

The central theme that I shall address is the cost-effectiveness of policy, which underpins my belief that the Government must think much more carefully about biofuels, because they are vulnerable, nowhere more so than in the renewable transport obligation and the renewables obligation. I shall compare the two instruments, because they are structured in similar ways. I am encouraged to make that comparison by the Minister’s remarks in evidence to the Committee when he was pressed on whether he felt that the biofuels policy would be cost-effective. He said he hoped that it would be at least as cost-effective as the policy on wind farms. That filled me with horror, because the facts tell a different story about the cost-effectiveness of the Government’s policy on renewable energy and wind farms. That is relevant because the renewable transport obligation is structured in a similar way and has been lacerated by independent organisations such as the National Audit Office and Ofgem in respect of its cost-effectiveness.

I am afraid that the facts now speak for themselves: we have one of the lowest deployment rates for renewable energy in the European Union. It costs British taxpayers—our constituents—£1.4 billion a year. The cost per tonne of CO2 abated is estimated to run at well over £100, compared with a price in the European carbon markets of about €26. Rather than stimulating next-generation technologies, the policy is shunting public money towards mature and controversial technologies such as onshore wind. It is controversial because of the public’s limited acceptance of the technology and, in terms of overall contribution to greenhouse gas emissions, because of its intermittency and the need to have back-up conventional energy to support it.

The policy was undermined by the Government’s failure to put in place necessary complementary planning process and grid access policies. The problem is worse when one looks at what the European Union encourages us to do, quite rightly, considering the scientific context of the debate. The EU says that we need to go further and faster with renewable energy. Its targets set an enormous challenge for the country, which, as we now know through leaked documents, the Government acknowledge will be very demanding and, presumably, expensive. The Government are reluctant to reform existing policy instruments for fear of unsettling existing investors.

Mr. Robert Goodwill (Scarborough and Whitby) (Con): Is my hon. Friend aware that Denmark, the EU member state with the highest level of wind generation, also has one of the highest levels of CO2 output per capita?

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Mr. Hurd: That is an interesting intervention. While we are making comparisons with other countries, my hon. Friend might be interested to know that one town in Germany, Freiburg, deploys more solar power than the whole UK—a powerful statistic that underlines the weakness of existing policy instruments to support renewable energy in the UK.

My point is to preach caution on the renewable transport obligation, because it is structured in a similar way. On the level of subsidies, the Global Subsidies Initiative, in evidence to the Committee, referred us to its report, “Biofuels—At What Cost?”, which found that in 2006, the EU and individual member states subsidised biofuels by about €3.7 billion, taking into account all support mechanisms. The figure is set to rise, given the direction of travel of public policy throughout Europe. The GSI estimates that the cost of biofuels policy per tonne of CO2 abated is 10 to 20 times that of the carbon price in the markets. It cites, for example, the cost of obtaining a reduction of 1 tonne of CO2 equivalent, using ethanol from sugar beet, at between €575 and €800, and at more than €600 for biodiesel made from rape seed.

As with the renewables obligation, public money is focused not on second generation technologies, but on first generation biofuels, with very little differentiation according to their carbon efficiency and integrity—if I may use that expression. As with the renewables obligation, there has been a lack of preparation and groundwork for the implementation of policy. There is a lack of mandatory sustainability standards that mean anything, and a lack of thinking through the consequences, as the Chairman put it, in relation to the impact on food prices and damage to the wider environment.

Unthought-through, badly implemented policy carries a tremendous risk of alienating the public. The mood music has shifted in relation to biofuels, and I am concerned that we run the risk of labelling all biofuels as bad and of alienating the public from the debate, as happened with genetically modified crops and other issues. The report stresses that there is room for the right types of biofuel, and we want public policy to focus on supporting them. I completely support the messages of the report, which are to proceed with caution and, just as important, to preach caution at the EU, where there has been some change in rhetoric from the Commissioners. However laudable the principles and objectives behind the stretch targets that have been set, they none the less raise important issues.

If we are to proceed, let us do so on the basis of robust standards of sustainability—not before we have them. Let us proceed on the basis of much better co-ordinated policy across Europe that focuses public money on technologies that will make a big difference at an acceptable cost. We should not see biofuels as an agenda for channelling soft subsidies to the agricultural sector, because the public will not wear that. Woolly, unthought-through policy carries the danger of alienating the public at a time when it is critical to engage them with climate change. I urge the Government and the Minister to think again.

3.2 pm

Ms Dari Taylor (Stockton, South) (Lab): It is always a pleasure to speak in Westminster Hall with you in the Chair, Mr. Amess. I extend that compliment to the hon.
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Member for South Suffolk (Mr. Yeo), whom I congratulate on securing the debate and on publishing a thoughtful paper on the sustainability of biofuels.

Many of us—not only Members of the House, but other people—are talking about climate change, transport costs, greenhouse gas emissions, land and food scarcity, food prices and deforestation. We are discussing the fact that the west is benefiting while the east is certainly suffering. Those comments have been made time and again, and they all feature in today’s debate, which is important. I support biofuels and the work that has been done to date, but I accept that there is a critical need to ensure that it is sustainable in terms of land usage, food and food prices. We are moving in the direction of achieving sustainability through the delivery of a biofuels policy that is of value to us all.

I have companies in Teesside that are very much involved in the production of biofuels. I would hate anyone to believe that a non-scientist would think that she has a very clear and careful understanding of what is going on in the biofuels world simply because she shows an interest. I do show an interest, but my companies are very informative. Some people might see that as a conflict of interest, so it is important that I state that I have knowledge of and a relationship with companies such as Ensus, Agrovista, SembCorp and Petroplus. All of them have, in their different ways, produced information knowing that this debate would take place today. The hon. Member for South Suffolk smiles knowingly, and he is right to do so. Of course, we all want to support our areas. We think that our work is important and, consequently, we want to ensure that the full facts are presented. I shall therefore attempt to produce some facts that are different from those outlined in the excellent report. I do so having knowledge of the companies that I have mentioned, but I should like to persuade the House that I am no easy pushover.

It is not inevitable that I would support companies on Teesside just because they are in an area through which I travel to work—they are not in my constituency—but the work that I have seen being done with waste products, rape-seed and wheat is based on rigorous scientific research. I am absolutely convinced that when I read scientific documents from those companies, they present information factually and carefully. I believe absolutely that those companies have integrity. Of course, they want to develop and produce, but they also want to believe that they are doing something of value in Britain. I have no doubt that at the end of the debate, either the hon. Member for South Suffolk or I, or both of us, will be presenting my companies with the information that his Committee has produced. We will also want answers. It is crucial to this complex debate that we have answers.

The companies that I have mentioned are rigorous and have integrity, and I know from my conversations with them that they, too, are concerned that sustainability is an absolute. They are pinning an awful lot of their hopes to deliver sustainability on the reporting mechanism that has been put in place. That mechanism requires that, at every point, all that is being done within the science is known within the community, so that we know whether there are downsides to the science as well as upsides. I am equally aware that we have to be cautious, because the reporting is referencing the renewable transport fuel obligation, and there is a sense that the relevant body will want positive rather than negative
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outcomes. Nevertheless, reporting will be fair, accurate and comprehensive. They tell me that if Europe produces a renewable energy directive, they will support it.

We have a serious problem. There are no doubts about oil and energy scarcity, and food prices and food scarcity issues are absolute. I am aware of the problem, and know that we need answers, but I do not want a solution that might last a few years and then we are sunk again. That is the last thing that any of us in this House wants. Today, I am trying to persuade the House that my companies are careful in their scientific exploration and in their delivery—I hope that I am succeeding in part, if not in total.

I highlight in particular Ensus’s evidence on the indirect effects of biofuels in relation to a study by the Renewable Fuels Agency. The evidence that I have found has been confidently and carefully outlined, and it adds to the debate. It is factual, but what really strikes me, as a non-scientist, as being valuable is the fact that that evidence is to be scrutinised carefully by a peer review. All of us who have ever been involved in peer reviews know that if there is anything critical to be said, it will be. For most of us, there is nothing better than telling others in the same profession, “You’ve got it wrong.” The peer review is therefore very valuable.

On that basis, I want to persuade hon. Members to consider Ensus’s evidence that sustainability is a factor and that viability is an absolute factor. I suggest that they look at some of the evidence that the company produced, because the work that it has completed and the work that it is doing make it clear that biorefining wheat in the right way can already achieve greenhouse gas savings of in excess of 60 per cent., compared with the continued use of fossil fuels. That is a very real bit of information, and we must look at it. If validated—indeed, it has been today—it must contribute significantly to the debate on this issue.

The company’s information also notes that the effective use of wheat protein concentrate—the co-product of biorefining—as animal feed can significantly improve the efficiency of the food chain in Europe. That gives rise to the further belief that using wheat protein concentrate in that way can release land outside Europe that is currently used to grow soy that is imported into Europe for animal feed. Releasing that land will have a serious impact on reducing the pressure that leads to deforestation, and that is valuable information. It compares with the information in the Committee’s report and should be put into the mix when we decide whether to continue with and invest in biofuels, as I hope we will. It is clear from my reading of the Ensus and Petroplus reports that we could achieve fuel security and carbon savings if we can be absolutely reassured, as I am, that this is the way to proceed.

As I said, I will put the Committee’s report into the hands of my companies. I want answers, because this debate cannot be a one-off. I am concerned when the hon. Gentleman says that first-generation biofuels are inefficient. I am concerned when people say that carbon emissions from the machinery used in agriculture and from soil disturbance are problematic in terms of carbon emissions. I am concerned when I hear that nitrous oxide emissions from fertiliser applications and emissions from the energy used to convert feedstock into liquid fuel are problematic. I am concerned when I hear that
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the transport of feedstocks adds to carbon emissions, rather than reducing them. Those serious criticisms must be answered.

When the hon. Member for South Suffolk says that he is concerned with the change in land use, however, I find his argument less convincing. Farms in the north-east are going through a vibrant period, and they know that there is much more to come. Farmers are being given a lifeline that they have not had for years. I am not, therefore, awfully convinced by the hon. Gentleman’s criticism.

The report says that food security and demand for biofuels have led to higher commodity prices, but I would ask the hon. Gentleman to put other things into the mix. How about poor harvests? How about animal diseases? How about demographic changes? How about the fact that we in Great Britain waste 40 per cent. of our food? If we are to state the case, let us do so completely, not in part. It is important for us all that we do that.

Jo Swinson (East Dunbartonshire) (LD): The hon. Lady is right to identify the reasons for recent rises in food prices, but in the evidence that we received, the UN special rapporteur on the right to food described the production of biofuels in terms of a crime against humanity. Does the hon. Lady not accept that if someone in an expert position takes that view of the issue overall, there must be very serious concerns, which cannot be dismissed?

Ms Taylor: I am sorry, but I am far too old to accept experts per se. The hon. Lady said what she did with serious integrity, and I respect that absolutely, but I am far too old—I will not say how old I am—to be taken in. Over the past 40 years, I have seen many expert reports that have been shelved. I do, of course, take note, but I am not absolutely convinced.

To conclude, I cannot support the Committee’s recommendation that a moratorium should be placed on the work and research that is being done on biofuels or on their usage. The technology is persuasive, and I am looking forward to much more being achieved. We have an urgent problem. On the whole, climate change is destructive, and it is time that we put our minds to tackling it. Our energy demands are increasing significantly, but supply is decreasing. We must therefore press ahead with biofuels and hope that they achieve all that they are capable of achieving.

3.17 pm

Jo Swinson (East Dunbartonshire) (LD): As always, it is a pleasure to serve under your chairmanship, Mr. Amess. I congratulate the hon. Member for South Suffolk (Mr. Yeo) on introducing the debate, and it is good to see many members of the Committee here. It is also good to have the input of hon. Members who are not on the Committee. I always think that it is useful for Select Committee reports to have a wider airing in such Westminster Hall debates and for us to have contributions not only from those who have sat through all the evidence sessions.

This is a timely debate, although that is perhaps fortuitous, rather than necessarily by design. The Committee’s inquiry took place at an important time in
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terms of the issue of biofuels. As we took our evidence in the months leading up to the publication of the report in January, there was a huge amount of public and scientific debate about the issue. More and more organisations came out and reached some of the same conclusions as the Committee. Whether it was the Royal Society, the UN, the OECD or the Government’s own chief scientist, more and more people and organisations questioned the wisdom of our relentless pursuit of biofuels.

I joined the Committee last July, and this is the first time that I have served on a Select Committee; indeed, this is one of the first full inquiries that I have sat through. Having spent two years without being on a Select Committee, I found the experience incredibly refreshing. In politics, we generally take a position and then justify it. What I enjoyed about being on a Select Committee was that we took an issue in which we were interested, listened to all the evidence and then took a position. If there were more debates like this, and if the work of Select Committees got more publicity, the reputation of the House might be somewhat elevated in the minds of the general public.

I am interested in the environment and I am keen to tackle the problem of climate change. Before the inquiry, my general view on biofuels—I was not particularly informed, beyond reading the newspapers—was vaguely positive. They seemed quite a good idea, because we have major problems with pollution from road transport, and there seem to be few easy ways to wean ourselves off our addiction to the car as a means of getting around. Biofuels would seem to be a sensible way to solve part of the problem.

My only other experience of biofuels was about seven years ago, when I was living in Yorkshire. A friend was involved in a company that produced biofuels from used and waste cooking oils and was lobbying the Government to introduce a lower fuel duty on biofuels and make them a viable prospect. I thought that that was a very good idea and was delighted when the Government made that tax change and enabled such companies to prosper and sell their product to the market.

That was my initial view as I began the inquiry. However, I have been quite surprised by the evidence and the conclusions I have reached on biofuels. On a superficial level, we can all agree that the idea is sound, and that there are many biofuels, as we learned in the inquiry, that are in all ways good for the environment. Used cooking oil is one such instance. Rather than being treated as a waste product to be sent to landfill or pollute our waterways it is reused, and there are not the negative effects of land use change. That is definitely the type of product that we should support. Similarly, Brazilian sugar cane seems to tick all the boxes for sustainability and the efficiency of the product. The evidence that we heard was to some degree mixed, but there seems to be some cause for optimism about second or third generation biofuels and the possibility in future of harvesting more of the plant and getting a much better carbon reduction for the same amount of crops.

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