Examination of Witnesses (Questions 100
TUESDAY 20 NOVEMBER 2007
Q100 Colin Challen: The more I hear,
the more I think we have opened a can of worms. I have an article
here from Science magazine published by the American Academy
of Sciences and it says, "In all cases, forestation of an
equivalent area of land would sequester two to nine times more
carbon over a 30-year period than the emissions avoided by the
use of biofuels. Taking this opportunity cost into account, the
emission cost of liquid biofuels exceeds that of fossil fuels".
If that is the case, and I do not know if you would agree with
that or not, is it right that the Government should be promoting
biofuels as a green fuel at all?
Mr Kendall: I just think there
is no one here or I have not come across anyone in the biofuels
debate who is actually advocating one hectare of rainforest being
depleted. There is no one who actually wants to see that as an
Q101 Colin Challen: This is saying
"reforestation" not "deforestation". We all
understand deforestation, that is a different argument, but this
is saying that reforestation is better for the climate than biofuels.
Mr Archer: If we can bring about
reforestation, if the countries of the North are willing to pay
the countries of the South to reforest, if there are markets for
those forest products, then that is fine, but the reality of the
situation is that the countries of the South are looking for new
markets to create employment opportunities and create wealth within
those countries. They will only reforest those tracts of land
if there is a sound economic reason for doing so. If we put that
sound economic reason in place, then great, let us do it, but
we cannot expect them to do it, to mop up the carbon that the
northern economies have been generating for the last 100 years
and not be compensated.
Q102 Colin Challen: Well, perhaps
they could do it with a much stronger international carbon trading
system in place, and I think Brazil perhaps may like to see that
outcome. At the moment of course, the reason we want to use biofuels
is to convince ourselves that we do not have to change our behaviour
one jot. Should the Low Carbon Vehicle Partnership be saying,
"Use your car 5% less and then you don't need to worry about
biofuels" because that is a lower carbon vehicle, by definition?
Mr Archer: The Low Carbon Vehicle
Partnership argues that there is no silver bullet, that we need
more efficient vehicles, we need demand management for transport,
we need walking and cycling and we need lower carbon-intensive
fuels. You need all of those elements. The biofuels policy at
the moment will bring in 5% fuels into the UK market, something
the UK could actually supply through its own excess cereals production
at the present time. Five per cent is a very modest target. The
UK has also been arguing in Europe very strongly that we should
only move to higher targets if sustainability criteria are put
in place. The best way for the UK to influence those discussions
in Europe and to ensure that European production is sustainable
is to be operating best practice ourselves which is what is happening
with the RTFO. The reporting scheme is the best scheme of its
type in the world and the first scheme of its type in the world.
We need to be sourcing responsible amounts of biofuels in a responsible
way to influence other countries to do a similar thing.
Q103 Colin Challen: But the best
in the world at the moment is not very good because there is no
worldwide certification scheme, for example, and we have seen
in previous inquiries that that has applied to sustainable timber,
that multiplication of these certification schemes and references
to illegal logging as opposed to sustainable logging, that all
makes life very complicated. Can we be sure that, if we are getting
up to 5% biofuels in the mix, no company will advertise that product
as a green product until we can be sure that it is actually a
sustainable green product?
Mr Archer: I cannot comment for
how companies will choose to promote their products. Some will
promote them responsibly, some will promote them less responsibly.
Q104 Colin Challen: Well, would you
recommend that no company should promote the use of a 5% mix of
biofuels as a green product? I personally feel that they will
and they will want to promote their usual greenwash message, but
since we are still talking about 95% fossil fuel products and
possibly the other 5% being worse than fossil fuels, according
to this article, they should not be allowed to get away with it,
Mr Archer: One of the things that
we are currently working on is a proposed kitemark scheme that
would enable companies to demonstrate clearly on the forecourt
whether or not their biofuel was sustainable or not. It is a proposed
project which the Government asked us to undertake when they made
their announcements back in the summer. That work is not finished
yet and we will see how feasible it is to develop that kind of
certification scheme. I think until companies can be clear and
validate the claims which they are making, they should not be
making unsubstantiated claims about the greenness of their products.
Q105 Colin Challen: How long will
it take to get the kitemark up and running, do you think?
Mr Archer: I think a kitemark
scheme would probably take about a year to 18 months to get operational.
Q106 Colin Challen: And that means
all these other questions will have to be answered that we are
asking this morning.
Mr Archer: The reporting scheme
will be in operation from April and companies will be required
to report on the sustainability of their fuel from the first month
of the scheme.
Mr Kendall: The point about whether
5% is making a meaningful contribution when we could actually
improve the efficiencies of the vehicles, as Greg said, that is
an adding-on effect. If we can produce 5% and maybe go on to 10%,
I do think there is a really important driver of technology on
this, and I work very closely with the processing companies building
a bioethanol plant up in the North East, they see this as a bio-refinery
that is going to evolve over time and, if we can meet 5% and do
it in a very sustainable way, which is an absolute given on this,
that is taking one car in 20 off the road in effect if we show
real carbon savings and, if we then get 5% fuel efficiency, that
is taking one in ten and, if we then get people to manage their
cars more effectively, you will have another knock-on effect.
It is really important, I think, that we do try and drive the
evolution of green fuels. Your suggestion that we could reforest
is not helping provide us with alternative fuels that we know
are more carbon-beneficial and I do not think this is a headlong
charge, as I said earlier on, for an American-style rush, this
is about starting to drive that evolution
Q107 Colin Challen: The point I am
trying to make is that this will actually encourage people to
drive their cars more. The consistent trend in road transport
which has gone up and up and up over the last ten or 20 years
will continue. This will not discourage people from using their
cars, it will encourage them to use their cars.
Mr Kendall: I have seen from recent
figures that in the United States, since the price of oil has
gone up and the price of petrol to the United States' motorist,
they are finding that the usage of petrol has fallen quite dramatically
this fall, so I think the threat of $100 per barrel is impacting
people's use. I do not think, because it is green, that it means
we are going to spend a lot more on petrol or diesel.
Mr Archer: Given the very negative
publicity and media coverage of biofuels at the moment, I would
doubt very much that too many companies will be publicising the
fact that they are adding biofuel to petrol and diesel.
Colin Challen: I shall look forward to
Q108 Mr Caton: Can we come on to
an aspect where the written evidence your two organisations have
submitted differs quite markedly and that is on the subject of
carbon standards, and this is really for the NFU. You reject the
need for carbon standards to guarantee minimum greenhouse gas
savings from biofuels and opt just for the sustainability standards
to apply. How realistic is that position when the whole principal
aim of the policy is to reduce carbon emissions and how did you
come to adopt it?
Mr Gagen: Thank you for raising
that issue and it is something, when we wrote back to your inquiry,
where I am not convinced that we did reject carbon at all. In
fact, I think as the Committee has made very clear this morning,
sustainability is the most important thing to get right from the
first day. Carbon is certainly very important as well, but needs
to be recorded after the fact, if you like, to demonstrate your
criteria, whereas sustainability is the most important thing which
has to be set in train before a crop is really put in the ground,
so it is really a timing issue from our point of view. We certainly
are not dismissive whatsoever of carbon accounting or responsible
use of carbon or the fact that carbon needs to be saved to give
this RTFO credibility, so, if it has not been clear, I apologise,
but we are certainly not dismissive of carbon accounting at all.
Q109 Mr Caton: So do you have any
problems with the current proposed timescale?
Mr Gagen: No, but we would be
concerned if there was a very rapid ramping up of the carbon demand
from April, for example, even through 2010 beyond what was technically
possible from what we consider to be sustainable supplies, so
we are just guarding against over-ambition, I believe, in our
Q110 Mr Stuart: Should the certificates
granted under the RTFO differentiate on the basis of greenhouse
gas emissions in order to stimulate the market for more efficient
biofuels and do you think this would help bring about a new generation
of biofuels, a second generation?
Mr Gagen: The NFU certainly supports
in time, perhaps post-2010, that as a next stage in improving
the efficiency of these products, but unfortunately we have to
get an industry going first in order to be able to measure it
and demonstrate those savings.
Mr Archer: We have argued consistently
from before the RTFO, from before we began the reporting scheme,
that linking to carbon was the correct way to develop a biofuels
policy in the UK. There are a range of views within the Partnership
as to how that should be done, but my personal opinion, having
looked at this in some detail, is a simple relationship whereby
you reward biofuels with more certificates if they have higher
levels of greenhouse gas saving is the right thing to do, so,
for example, you could use a 50% saving for one certificate and,
if you have a fuel with a 75% saving, that earns 1½ certificates,
and 25%, half a certificate. That type of scheme will encourage
people not just to supply biofuels as cheaply as possible, but
encourage them to achieve greenhouse gas savings as cost-effectively
as possible. It will also enable the new generation of advanced
biofuels to potentially compete in the market because these will
generally be more expensive in the early years, but they will
achieve higher levels of greenhouse gas savings overall, and that
provides the sort of market mechanism that will encourage the
supply of fuels which have a higher greenhouse gas saving. It
is a fairly small step from the reporting scheme which we have
developed to that kind of carbon linkage and there are certain
things we will need to change, but it is entirely manageable and
my research has shown that it is probably legal under Trade Rules
if it is done in the right way.
Q111 Mr Stuart: And the differentiation
you were suggesting there was once the figure for 50% and half
for 25%. Have you done any work to look at the level of differentiation
that might be required in order to incentivise, as you say, the
additional investment that might be required?
Mr Archer: It is difficult to
know what the price of advanced biofuels will be because they
are still at a very early stage. Even the oil companies would
say that, if advanced biofuels cannot compete under that sort
of system, they are too expensive and the price needs to fall
until they can compete under that sort of system. That type of
approach is most likely to be legal under Trade Rules. It is not
arbitrary, it creates a level playing field, it enables fuels
to compete on a performance basis. The EU, for example, is proposing
that there will be some kind of mandate just for advanced biofuels.
That is very unlikely to be legal, in my opinion, under Trade
Rules. Similarly, if you were to try and skew the curve in some
way, I think you would be liable to charges that what you were
doing was arbitrary and, if it is arbitrary, it is questionable
under Trade Rules.
Q112 Mr Stuart: Last week, several
witnesses told us that they felt that carbon and sustainability
standards should be brought in at the same time rather than staggered.
I wondered what your views were on that.
Mr Gagen: As I alluded to earlier,
I think perhaps bringing the sustainability ones in first gives
those producers of feedstock time to put their schemes in place,
whereas the carbon one certainly needs to come in as well, but
perhaps not so quickly.
Q113 Mr Stuart: Why?
Mr Gagen: Because it takes time
in the agricultural cycle to produce a crop, so it is just a simple
timing factor there. If you are going to emphasise something,
sustainability should be first. Sustainability also covers off
some land-use changes potentially as well.
Mr Kendall: We are having a very
wide debate at the moment with your sub-group on labelling which
I was giving evidence to last week. There is a real challenge
with agriculture about measuring carbon. We are not taking 50
tonnes of steel into a factory and producing nuts and bolts out
the other end, but we are working with the natural elements, so
it is difficult to actually and precisely pin down exactly what
we are doing. I think there is a lot of work going on at this
moment in time in understanding all the carbon impacts and there
is the work that I know Paul Crutzen has done on nitrous oxide
emissions and obviously that is a devastating greenhouse gas.
Understanding all these aspects of agriculture are really critical,
so we are committed to making sure that we demonstrate our carbon
savings and we do it correctly, but I think there is a time-lag
on making sure that this can be done clearly and, as I say, the
whole labelling issue for agricultural products is one that we
want to see pursued, but it needs to be done with the knowledge
and the science behind it.
Q114 Mr Stuart: Are you confident
then, if we look at it the other way round, that you have got
sufficient time-lag, given the practical difficulties which you
Mr Kendall: It is slightly easier
with agricultural crops than it would be necessarily with livestock,
so I think we are looking at the whole labelling of agricultural
produce, cheeses, butters, milks, et cetera, with the dairy emissions,
for example, and how we manage and, as was said before, these
are really complex interactions. I think we should be able to
deliver a better brief than I am on this, that we can show real
carbon numbers sooner rather than later.
Mr Archer: The carbon scheme which
is proposed will include direct land-use change effects, so those
will be quantified, so there is no risk that people will simply
rush for tropical feedstocks produced in an unsustainable way
because they would suffer a penalty in the greenhouse gas calculation
anyway because that is taken into account within the carbon calculation
that is done. There is a small risk of having 2010 for carbon
and 2011 for sustainability. However, the mandatory sustainability
standards are very much more difficult to do than linking to carbon
and there is likely to need to be much more international negotiation
and bilateral agreements reached with supplier countries, so the
timetable that has been set out for the Government is pragmatic.
If you wanted to introduce both schemes together, it would probably
mean delaying the carbon scheme rather than the earlier adoption
of the sustainability scheme because of the amount of work that
needs to be done. My personal view is that 2010 is achievable
and we should bring the carbon linked scheme in as soon as it
Q115 Martin Horwood: Can I talk to
you about the sort of wider agricultural impacts. Clearly a buoyant
demand for biofuels would lead to a general increase in agricultural
commodity prices. Would you accept that and, if you do, does that
mean that, as a proportion of their income, agri-environment payments
will be less important to farmers and, therefore, they would be
more likely to regard those as less important and perhaps opt
out of them and work outside them?
Mr Kendall: I am an arable farmer
from East Anglia and I contract-farm for other people as well.
My cereal prices this year have increased dramatically, which
is why I am sitting here with a smile on my face, but it is nothing
to do with biofuels, it is all to do with supply and drought around
the world in different areas and the wheat market has been really
shrunk and it is supplied by challenges globally on production.
Q116 Martin Horwood: But of course,
if it was a permanent and buoyant part of the agricultural market,
it would have that effect?
Mr Kendall: It will change the
dynamics of how I relate to agri-environment schemes without a
shadow of a doubt and quite a point in a speech I gave at the
Cereals Event in June this year was to make sure that farmers,
as they see better times, invest more in their wider messages
of bringing consumers on to farms and explaining what goes on,
but also making sure our biodiversity targets are met is absolutely
critical. I do not see farmers, having put in field margins and
different management techniques for hedgerows, suddenly abandoning
them to try and get a small amount of extra production. Of course
it is going to be difficult because we have a real challenge on
rural development funding in the UK to actually pay people more
for taking land out of production for biodiversity measures, but,
when I look at the key measures on farm issues, hedgerow management,
timing of trimming, alternate hedgerow trimming, alternate size,
leaving margins on the outside of fields, these are ones that
impact quite lightly on my actual output, but I think they will
over time have quite a big impact on biodiversity measures. Having
areas, for example, like six metres next to watercourses, because
of restrictions on products and materials I can use, I will never
remove those six-metre margins next to watercourses, so I believe
that the benefits of those margins will be there for ever and
not be removed because grain prices have gone up.
Q117 Mark Horwood: Your financial
incentive to do so will be less to maintain them, will it not?
Mr Kendall: I have less if I do
not. Of course there is an incentive to remove them, but because
I also have regulation which stops me applying a certain amount
of plant protection products within six metres of a watercourse,
I will leave those agri-environment schemes and whatever the financial
imperative is because it is not the most productive land. I think
the NFU certainly pushed very hard on things like the voluntary
initiative on the responsible use of land to try and make sure
the message gets across. We need to address issues like pollutants
in water, and chasing a small percentage of additional output
will be short-termism of the worst kind.
Mr Archer: One of the things the
NFU has done is modified the criteria within its own assured combinable
crop scheme in order that the feedstock produced under that scheme
is deemed sustainable under the RTFO criteria. Therefore, what
we are seeing is the development of a sustainable biofuels market
is starting to strengthen the kind of practices which are happening
on a farm. That will then be applied to all cereal production
irrespective of whether it goes for food or fuel.
Q118 Mark Horwood: That brings me
on to my next question, which is about the wider issues of sustainability.
We have talked a lot about relative carbon impact, but if we set
that on one side for a minute and look at some of the other concerns
the previous witnesses expressed. They could include an overall
intensification of agriculture and, therefore, more use of nitrates,
for instance. It could mean perhaps jeopardising our ability to
meet the Water Framework Directive and it could mean a loss of
biodiversity. How do you respond to that?
Mr Kendall: I would love to put
an invitation out to the Committee to come and visit me on my
farm. I contract farm for a number of people as well. I would
like to see us intensify in the science of farming in the way
we use inputs smartly. We now scan the top of our sprayer with
a photographic machine which looks at the green canopy of the
wheat crop and it varies fertiliser use as it crosses the field
and we now soil analyse all of our fields. I took some more land
this year where we mapped the whole area and we then put phosphate
and potash in the right areas, in the right quantities, at the
right time, so we are trying to prevent those leaching impacts.
I think there is a revolution of smart precision farming technology
going on in farming which is going to make sure we can meet the
challenge of producing more in the future but with a smaller environmental
footprint. That is not widespread at the moment. I think with
better prices we can see this sort of technology kick in because
just not doing anything is not an option, we need to find smarter
ways. There is some really good science out there which is going
to help us do that.
Q119 Mark Horwood: If there is a
huge expansion in the use of land and it is not necessarily land
which is in food production now, surely that is inevitably going
to mean more fertilisers, more water extracted from the water
table and less biodiversity, is it not, even if that is as well
done as you can manage with all the smart tricks you can muster?
Is that inevitable?
Mr Kendall: We know we are going
to lose set-aside going forward for obviously CAP reform issues
and changes, but what we should see is what has gone on over the
recent years. We have seen decoupling through CAP reform in 2004-05.
We have now got cross-compliance measures which impose restrictions
on how close we can cultivate and how near to ditches you go.
Helen Phillips was giving a presentation yesterday on farming
futures for the Defra Forward Looking Conference for 2020. She
rather disappointingly said we only had 60% of our land in agri-environment
schemes. That has come from nowhere in three years. I think there
is an explosion of environmental management which has come into
practice over the recent three or four years which will more than
offset the decline of the set-aside disappearing. What we have
to doand this is a message you will get loud and clear
from the NFUis as we farm our whole farms again, with caution
to the agri-environment schemes at the same time, do it in a responsible
way. The prospect of the Government or the CAP saying we should
leave 8% of our land idle is not one which I think fits with the
message of decoupling or allowing farmers to respond to the challenges
of the marketplace.