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The problems are real and serious, and they are troubling for anyone who advocates the use of biofuels, but we firmly believe that they can be minimised if good standards are firm and regulations are put in place. Like the Committee, we believe that a total moratorium on the UK’s 5 per cent. target for the use of renewable fuels
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is not only impractical if we want the UK to reach its CO2 reduction target of 60 per cent. by 2050, but also that it is not sensible if we wish to make further developments in the field of sustainable technology. The truth is that companies will simply not invest in research and development for sustainable fuels and carbon-saving measures if they do not believe that the United Kingdom Government are serious about carbon reduction.

The problems can be tackled in other ways that could allow biofuels to be used. As it stands, the renewable transport fuel obligation is not doing enough to ensure the sustainability of the biofuels that we are using. We need stronger certification and sustainability standards that will incentivise energy companies to ensure that the biofuels provided come from the best and most sustainable resources. As the report clearly indicates, carbon savings from biofuels are possible. Some UK biofuel factories already run an incredibly good sustainable business and produce high quality biofuels. According to the Renewable Energy Association, British Sugar in Wissington, Norfolk—to name but one such company—produces a biofuel from locally grown sugar beet that, including all the carbon production costs, has a 71 per cent. carbon saving over fossil fuels.

The Government should set a minimum standard of 50 per cent. carbon saving for biofuels when compared with fossil fuels, and it should be in place now. In our view, anything below that level would be unsustainable. Although we welcome the idea of rewards being linked to CO2 emissions caused by producing biofuels, such a system should already be in place and we should not have to wait until 2010. In addition, we should not—nor should the European Union—subsidise fuel from unsustainable resources, as we are currently doing.

Joan Walley: In terms of the headline report that the hon. Gentleman has given and the detailed aspects of his contribution, will he tell the House which of the Committee’s recommendations he disagrees with?

Mark Hunter: I would be delighted to, and if the hon. Lady could be a little more patient, I shall come to that point. At the beginning, I said there was a need for balance in this debate. I am trying to say that an awful lot of the report makes eminent good sense, but that there is a different side to the matter, as Labour Members have already indicated.

As I was saying, we should not subsidise fuel from unsustainable resources, as we are currently doing, for example, with most of the bioethanol we get from the United States. Energy companies have the opportunity to buy their biofuels from good suppliers, even if they are sometimes understandably more expensive. It is therefore vital that incentives are put in place now rather than in two years’ time to encourage the production and purchase of high-quality sustainable biofuels that have the highest CO2 savings and the best environmental credentials possible. The key point is that the renewable transport fuel obligation must be recalibrated so that suppliers get a better financial deal when more carbon is saved.

Similarly, sustainability standards should be mandatory from now on and should not be postponed until 2011. If the Government set strict environmental standards, the fuel companies will have no choice but to face up to
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their obligations to meet them. To delay action on that issue—like delaying action on any environmental issue—would damage the very environment that we are all trying to protect.

I shall give a further example of where regulations are too lax. Currently, when reporting on the biofuels they supply, energy companies can claim that they do not know what the land that they are using to source biofuels from was used for previously. That is not only ridiculous, but incredibly irresponsible. Companies should not source goods if they do not know the conditions in which they are being produced. To do so is the equivalent of high street retailers in the west sourcing goods from sweatshops in the far east and pretending they do not know that the workers are paid a pittance for their efforts. Will the Minister explain why that ignorance loophole exists and tell us whether he agrees that it can be used to hide where some biofuels are in reality being produced?

To ensure that biofuels are not replacing valuable natural habitats or carbon sinks, there should be a punitive presumption in the biofuels standards. If energy companies cannot confirm where the biofuels are from, they should be classed as replacing rainforest, and therefore deemed unacceptable. Such a premise would ensure that energy companies take seriously their obligation to confirm that the biofuels they are selling come only from sustainable sources that do not harm natural habitats.

Mr. Goodwill: Is what the hon. Gentleman saying World Trade Organisation-proof, because I suspect that many of the comments he has just made would not stand up to the scrutiny of the WTO?

Mark Hunter: I thank the hon. Gentleman for his intervention. Many of the opinions of some his colleagues on this subject would not necessarily tick every box and meet every criteria of every international organisation. I could certainly spend a great deal of time citing other organisations that support the continued use of biofuels—although with the improvements to regulation and classification that I have talked about.

To allow energy companies simply to tick the metaphorical “don’t know” box turns a blind eye to the environmental problems that biofuels are trying to solve. The onus should be on the providers to ensure that their biofuels come from sustainable sources. On a connected topic—in agreement with the Stern review and the report we are discussing today—it is important that, alongside the RTFO, the Government work to promote an international commitment to investing in carbon sinks. Will the Minister tell us what, if anything, the Government are doing to further that particular suggestion from the Stern review? Does he agree that without a commitment to biofuels now, second and third-generation biofuels will simply not be developed in the future?

Second-generation biofuels, such as jatropha and cellulosic ethanol, work to extract energy from the whole of the crop and are much more energy efficient, as has been said. Such biofuels need less land and can often grow in more hostile environments where it is impossible to grow food crops. We must therefore aim to get second-generation biofuels up and running as quickly as possible. Without further investment in the biofuels industry, we could miss out on a whole new
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generation of biofuels and the role that they could play in the future of transport energy. Will the Minister confirm whether the Government are committed both to the future development of second and third-generation biofuels and to investment in them?

I said earlier that there was no single solution—no silver bullet—to the problem of transport energy. We need a package of measures to reduce CO2 emissions from transport, and first on that list would be better investment in public transport. We need more reliable trains and buses, which run on time and are affordable, comfortable, clean and accessible to all. Without investment in public transport, people will continue to use their cars for both long and short journeys even when alternatives are available. We need to invest in programmes that change public attitudes to transport and encourage people to get out of their cars and use bicycles or walk for short, local journeys. Future fuel options such as fuel cells and hydrogen need much more development and investment, but they have real long-term possibilities.

However, the reality is that we need to cut carbon emissions now. For that reason, the Liberal Democrats believe that, alongside the other initiatives that I have mentioned, biofuels have a role to play in the short to medium term, as long as they are genuinely and demonstrably sustainable. The measures that I have laid out would mitigate many of the problems facing biofuels as an environmentally friendly option for powering cars. We therefore do not agree with the statement in the report that a moratorium on the biofuels target would be the best option. Such action would do nothing to decrease our carbon footprint and could stall the development of second and third-generation biofuels, which may prove able to help to supply the world’s transport energy needs.

4.1 pm

Mr. Robert Goodwill (Scarborough and Whitby) (Con): I pay tribute to my hon. Friend the Member for South Suffolk (Mr. Yeo) and the Select Committee that he chairs for the report that they have produced. It demonstrates very well why Select Committees are so important in identifying issues and producing such good evidence.

The UK produced 652 million tonnes of CO2 in 2006, and although that fell by 0.5 per cent. the next year, that hid an increase of 1.3 per cent. in emissions from transport. It is easy to fall into the trap of thinking that if something has the word “bio” or “eco” in front of it, it is bound to be good. I think that the hon. Member for East Dunbartonshire (Jo Swinson) referred to that. There are probably many people driving round the country in hybrid cars who feel that they are single-handedly saving the planet. The fact is that there is no such thing as a car that does not produce emissions. There are good cars and bad cars.

As a farmer—I declare an interest—who has grown biofuels on my farm and currently grows oilseed rape, I can tell the members of the Committee that I was in no doubt when I produced oilseed rape that I was doing it for economic reasons. I was doing it in response to common agricultural policy subsidies. As we poured the diesel into our tractors and the fertiliser into our fertiliser spreaders, we were in no doubt that we were probably contributing to the problem of global warming, rather than solving it.

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In the same way, I am sure that the companies referred to by the hon. Member for Stockton, South (Ms Taylor) are motivated by the best possible reasons, but we need to examine the scientific evidence, and the evidence in this report demonstrates that, in very many cases, biofuels are not helping us to reduce CO2 and they are often contributing to the problem. It is important that we consider the scientific evidence, rather than putting a wonderful green halo around ourselves when we think that we are doing something that is helping the planet.

Farmers lobbied for the introduction of biofuels. That was very appealing because many of us were growing nothing on 10 per cent. of our farms; it was free land. This was something that we could do with land that was available. As a former Member of the European Parliament, I know that member states with big agricultural communities lobbied hard to get biofuels on the agenda, as a way of funnelling cash to their farmers rather than necessarily in every case considering the sustainability of every single aspect of the policy. In many ways, of course, the EU policy tends to be farmer-driven—perhaps not as much as it was, but certainly that has always been an aspect of it.

Europe is not the only region where biofuels are on the agenda. The United States is pushing for biofuels, for very different reasons. For the Americans, it is all to do with non-reliance on the middle east and with energy security. Certainly the ethanol produced from maize in the US is not sustainable at all, but it is produced for other reasons. I suspect that, as long as the US remains addicted to energy, it will continue to produce more and more CO2, despite what we hear about Americans falling out of love with the Ford pick-up.

Since the policy was formulated in the European Commission, two things have changed. The first change relates to the sustainability of the fuels, and the evidence in that regard that the Select Committee very assiduously collected is well worth reading. Also relevant is the world picture. We can be as sustainable as we want in producing a biofuel in the UK, but if rain forest is being chopped down to produce that, we are causing damage. I saw figures that suggest that when rain forest is cut down, between 100 and 200 tonnes of carbon are emitted per hectare in the first year. That means that if 2 per cent. of the world’s biofuels were produced in that way, it would wipe out the benefits of everything else, even if it was 100 per cent. efficient.

We need to examine the sustainability criteria—the hon. Member for Stoke-on-Trent, North (Joan Walley) referred to that—but I am not sure whether it is credible that that can be made to stick. For example, if a boatload of rapeseed comes across the Atlantic, how do we know that every grain of rapeseed on that boat was produced sustainably? Even if it was produced sustainably, how do we know that the displacement—the food that was produced on new land—was sustainable? It would be very difficult to have a blue-chip sustainability measurement that we could use and feel certain that we were producing sustainable fuel.

With regard to the point that I made to the hon. Member for Cheadle (Mark Hunter), I can remember when Margot Wallström, the EU Environment Commissioner, was dispatched to Seattle, to the World
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Trade Organisation, charged with ensuring that there was an environmental aspect and an animal welfare aspect to the negotiations. She was sent away with a flea in her ear, having been told firmly by the WTO that it would not look at aspects such as child labour, environmental sustainability and animal welfare. The WTO was not open for business in that way.

The second big change occurred last August in the world food supply. As a wheat producer—not a barley baron, I hasten to add—I can say that we had had 10 or 20 years of very depressed grain prices, but they went up dramatically within the space of 10 weeks. Wheat that had been trading the previous year at £70 a tonne was trading at £170 a tonne. That has provoked a number of effects around the world. Forty-three countries have seen food riots. There have been food riots in Mexico, where the price of grain maize has gone up dramatically. The price of oilseed rape has also gone up. People are looking at paying £340 a tonne next harvest for oilseed rape, as opposed to £150 a tonne only a couple of years ago.

I suppose that one good side effect is that that has priced out the freelance people who dosed their tanks with cooking oil from the supermarket. They have been almost priced out of the market, so I do not think that we will see too many repeats of what happened in Swansea in 2003, when there was a run on cooking oil at Asda. The report in The Guardian suggested that the people at Asda did not raise their eyebrows at what was happening. According to the report, the store manager said:

I am pleased to say that the police set up a squad to target that dosing of fuel—it was called the frying squad. I almost did not dare say that, but it was in The Guardian, so it must be true.

There are very serious effects around the world in developing countries. Already in countries such as China, people are switching from meat, which they were becoming used to eating, to eating grain instead, which has meant that they can continue to sustain themselves.

I am pleased that the Prime Minister has taken an interest. On 23 April at Prime Minister’s questions, I asked what his views were of the renewable transport fuel obligation. In fact, I asked him whether his priority was to put bioethanol in a Range Rover’s fuel tank or to put bread in an African’s stomach. For once, I got a very good answer from the Prime Minister, who had the previous day had a food seminar in Downing street. He said that the policy on bioethanol must be reviewed, and he was determined that we should do more to increase the supply of food to the world, particularly because of the way in which China and India are pushing up demand for it. I am pleased that the Prime Minister is taking a personal interest. The Minister remarked to me recently that he had been hoping to get a chat with the Prime Minister on the subject, but I have beaten him to it. I am pleased that our debate is based on science, not on politics and rhetoric.

There have been other effects on subsistence farming in developing countries. We might think that the price of wheat does not matter to those who produce grain in the fields behind the house and consume it themselves, but it has had a dramatic effect on many of the other
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inputs in agriculture. There is a waiting list for John Deere tractors in this country; the price of fertilisers has more than trebled, with an even greater increase for phosphates; and there will be increasing pressure on water resources, which are under great pressure in the developing world.

I welcome the report. We need to look carefully at second-generation biofuels. We must bear in mind that they are often a long-term project for farmers. They can grow rape this year and something else the next, but willow coppice and miscanthus are permanent crops. Farmers will need some degree of certainty about the future level of subsidy were the Government or the Commission to go ahead.

Ms Dari Taylor: Is the hon. Gentleman saying that the Conservative party will support a moratorium but not the continuance of biofuels?

Mr. Goodwill: We agree in essence with the report and its conclusions. We believe that many of the biofuels now being used are not sustainable. We therefore need to be sure that all biofuels are contributing to a reduction in CO2 and not making the problem worse. The report is valuable as evidence, as it will enable us to come to a firm conclusion. I agree with the majority of points made during today’s debate by members of the Committee. The issue has also been raised by a number of other Committees and on the Floor of the House. Our severe concern is that we are locked into a target despite the environmental evidence given in the report.

There other ways of improving the carbon footprint of transport. We need to consider greener cars. As we heard yesterday at Prime Minister’s Question Time, the way to encourage people to use greener cars is not to tax them on decisions that they made seven years ago when they bought their cars.

We should consider car sharing. My car has a CO2 production of 214 g/km if I am on my own. If I am with my wife and three children, it produces 44 g/km for each of us. Car sharing could make a valuable contribution. This morning, I met some people from iTrans, a company that is looking at formalising car sharing in a way that will allow them to participate in carbon credit trading schemes—so when Mr. Branson’s aeroplanes fly across the Atlantic, they will be offset because someone at home is sharing the car to school.

I was concerned to hear that Pindar, a company in Scarborough that wanted to set up a car sharing scheme among its employees, was told that data protection rules meant that it could not communicate to them where their colleagues lived. We should also consider car clubs, another way of getting people out of their cars and on to public transport, but still giving them the convenience of having a car at weekends or in the evenings.

I look forward to hearing the Minister’s response. In particular, I would be pleased to hear whether he has had any communication with the European Commission or his 26 colleagues in the Council. I have some experience of the way things are done in Europe, particularly in relation to the nitrates directive. Once something is written into the European Union statute book, it is very hard to get it changed—even if subsequent evidence shows that not everything that has been written in stone is what people would wish.

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I would be interested to hear what communications the Minister has had with the Commission and, just as important, with other member states that are not as pinned to the farmers’ shirt-tails as others—about which we know all too well. I want to see whether we can turn around the supertanker of the European movement, and get a little bit more science into the debate and a little less of people merely sounding green.

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