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27 Oct 2009 : Column 7WH—continued
"are currently considering whether the implementation of the Renewable Energy Directive into national law has implications for the treatment of biodiesel under the Renewables Obligation."-[Official Report, 21 July 2009; Vol. 496, c. 1625W.]
So it is obvious that the Government are fully aware of the anomaly surrounding biofuels from cooking oils, yet they do not appear to have any great impetus behind wishing to alter that unsatisfactory anomaly, and that is restricting the UK's ability to maximise the use of a genuinely sustainable resource: used cooking oils. That indecision on behalf of the Government to alter the Ofgem ruling is not without cost to the renewable energy industry. I am told that the Ofgem ruling is already having a significant effect on the UK's renewable energy industry that, alongside other challenges, could cause many small innovative producers to go out of business.
Although producers have moved ahead with the use of biomethanol and bioethanol, which are allowed under the Ofgem ruling, it is a much more costly alternative, which adds further pressure to the already struggling industry and has led to a significant number of microgeneration schemes being halted. I cannot believe that the Minister did not expect it to have a poor effect on the industry. If he can hear from the industry itself that a significant number of microgeneration schemes are being halted, are struggling or are worried about their future, I hope that today he may give us the impetus that is lacking. The negative effect of the ruling is, I am told, putting the UK at a competitive disadvantage, which is surely something that none of us wants in these difficult economic times. By comparison, other countries, such as Germany and the United States, are committed to supporting their domestic renewables industries.
I understand from talking to the industries that are interested in using such biofuel that British used cooking oil is being exported at considerable cost and use of resources. I seem to be going right back to the beginning of my speech. We are importing soy and palm oil and other oils into our country to turn into biofuel, and we are exporting what is our own resource in this country. Many companies on the continent or elsewhere are not affected by the ruling. Germany's decision was of its own making. I understand that approximately half the biodiesel used on UK roads is being produced outside the UK and mainly in the US.
It seems to me that Ofgem has been criticised for the current situation. However, it has only been interpreting the legislation as it stands. As we have learned, used cooking oil can produce significant carbon savings and is an excellent way to use a waste product and to create energy. However, it seems that it is uneconomic for many producers to do so at present, because of the bonkers anomaly that has been pointed out. I therefore wonder whether the Minister would consider re-examining speedily-in fact now-the legislation that covers the treatment of biodiesel produced from used cooking oil.
We need to iron out the anomaly. Pushing it into the long grass is, in effect, condemning this emerging industry to failure.
I should welcome a statement on the implementation of the renewable energy directive into national law. I also feel that there is an argument for a much clearer distinction between sustainable and non-sustainable biofuels in Government policy and for the Government to incentivise the production of the latter group more effectively, such as through the new proposed feed-in tariffs for electricity generation.
I want to conclude this debate by restating the views of the Department for Transport. In April 2009, it said that
"there is no case for pushing forward indiscriminately on those that [biofuels] may do more harm than good, it would be foolish to ignore any potential that they do have."
I do not believe that the Minister today wishes to be, in the words of the Department for Transport, foolish, or indeed, in the words of the industry, bonkers. I believe that he wishes to be incisive and decisive and to cut through this vague anomaly. I should like to hear from him that UK biofuels from recycled cooking oils have a rosy future and that we can look forward to a greener future, because action has been taken to do away with something that was never intended in the drafting of the legislation.
9.57 am
Mr. Oliver Heald (North-East Hertfordshire) (Con): I want to make one brief point in support of my hon. Friend the Member for St. Albans (Anne Main), whom I congratulate on obtaining this important debate. It relates to what happens if we do not recycle cooking fats, oils and greases. In my constituency in Royston, we have a thriving night-time economy. There are 30 places in which one can go out to eat a meal. In fact, there is one for every day of a typical month. Many of the restaurants, particularly the newer take-aways, use fats not just for chips but for any manner of stir frys and other meals. The proprietors of such establishments do not want to cause any environmental problem and would like to be responsible, but the issue has not been adequately highlighted.
In Royston, the main town drain became very blocked with fats, oils and greases. About two years ago, we had a flood that damaged a number of homes. A number of people had to leave their houses while they were repaired. When the blockage was investigated, it was found that there had been a build-up of fats, oils and greases and 10 tonnes were removed from the pipes at the end of the town drain. That issue has now been highlighted.
Anglian Water put a great deal of effort into looking into what happened and seeing what the way forward was. It has promised to monitor that particular area of piping annually, which is welcome. Moreover, it has started a major campaign on fats, oils and greases to persuade and explain to people who own restaurants and take-aways that they can dispose of the fats and greases responsibly. Companies have come to Royston and offered to take away the fats, oils and greases and to recycle them.
Gregory Barker (Bexhill and Battle) (Con):
My hon. Friend highlights the important issue of the illegal or careless disposal of cooking fats and greases-what one
might call fly-dripping. Ultimately, those costs will not be picked up by Anglian Water, or another water company, but will be socialised and paid by all people who have a water utility bill. Has Anglian Water estimated the cost of such clean-up activities in my hon. Friend's constituency?
Mr. Heald: My hon. Friend makes a useful point, which I will investigate. I do not know what the figure is, but I know that this problem has happened elsewhere. I believe that in Southend, a fats, oil and greases campaign was needed to tackle the problem of the night-time economy. In general, the citizens of Royston, including me, are relatively responsible in how we dispose of our fats, but there is a case for wider public information.
About a year ago, I was at the launch of a campaign that demonstrated ways in which the domestic user could use their fats to create food for birds, for example, or at least dispose of them in a way that would not block the drains. This is an issue of solidarity between people in a town. If the result of a build-up of fats, oils and grease is that people's homes are flooded, everybody has a duty to act responsibly. If we can help the environment at the same time by recycling those products, that is better still. I just wanted to make a short contribution in support of my hon. Friend the Member for St. Albans, and to say that it is important to look at ways of avoiding such build-ups and floods.
10.1 am
Mark Hunter (Cheadle) (LD): Let me say what a pleasure it is to have the opportunity of contributing to the debate under your chairmanship, Mr. Taylor. I also want to compliment the hon. Member for St. Albans (Anne Main) on securing this important debate.
This is not the first time that the House has addressed these issues, and I dare say it will not be the last. In June last year, I contributed to a debate in Westminster Hall following the production of a report by the Environmental Audit Committee on biofuels. I think I was the only person present on that day who is present in the Chamber today, and I will repeat one brief comment that I made, because it gives a clear indication of the Liberal Democrat position on this matter.
At the time, the Environmental Audit Committee called for a moratorium on biofuel development. Our stated position was not to support that call, because we believed that there was an important role for good, sustainable biofuels to play in the UK transport fuel market. Abandoning targets completely, which was being proposed at the time, would have been a step backwards for the UK's sustainable energy industry and its ability to control its carbon footprint.
That was in June 2008, but things have moved on. That debate was quickly followed by the Gallagher review, which has already been referred to. My hon. Friend the Member for Lewes (Norman Baker) said in July 2008, after the publication of that review, that
"the broad conclusion that we should not abandon but amend the policy on biofuels is correct. Clearly, some biofuels are being produced unsustainably, but we should not throw out the biofuel baby with the bathwater, as some apparently would wish."-[Official Report, 7 July 2008; Vol. 478, c. 1173.]
I would like to make three comments. The first is on the distinction between first and second-generation biofuels, which is hugely important. The second point concerns
the 20p tax differential, which is key to the debate, and my third point is on the desirability of consistency in Government policy.
I will start with the distinction between first and second-generation biofuels-a distinction that is sometimes lost in the wider debate. Those of us interested in biofuels, who have attended the debates and done the research, understand that there is a hugely important difference. As we have heard, some first-generation biofuels, such as biodiesels, are produced from animal fats. There is also rapeseed oil, palm oil and bioethanol, which is produced by fermenting any kind of food stock, including cereals such as wheat, barely, sugar cane and maize. Those are the most controversial types of biofuel, and the Liberal Democrats have said that much more research is needed on them.
There are concerns about many of the first-generation biofuels. They contribute to higher food prices due to competition with food crops. They are an expensive option for energy security, if one takes into account total production costs when Government grants and subsidies are excluded. They do not meet the claimed environmental benefits, because the biomass feed stock might not always be produced sustainably. In many cases, they accelerate deforestation, and there are other possible indirect effects on land use to be accounted for. They have a potentially negative impact on biodiversity, and they compete for scarce water resources in some regions of the world.
Therefore, there are many serious questions to ask about first-generation biofuels. That is why it is important to distinguish them from second-generation biofuels-about which we now hear much more-which are those biofuels produced from crop and forest residues and non-food energy crops. Second-generation biofuels include those from recycled substances, such as those that feature in this debate. In my opinion and, I guess, in that of most hon. Members, they are far less controversial. We are supportive of second-generation biofuels, not least because they do not compete with other crops.
Anne Main: The hon. Gentleman makes a valid point about the distinction between the two types of biofuel. Does he believe that the public have enough information? Have they been buying into the headlines that we have seen screeching about some of the non-sustainable biofuels? Could the public be more educated about the differences between the two? It is an important difference that I am not sure is always highlighted as well as he would like.
Mark Hunter: The hon. Lady makes a fair point. When I introduced the distinction between first and second-generation biofuels, I said that I do not think that it is widely understood by the great public out there, who have many other concerns to occupy them. It is an important distinction, and I think that more could be done. I look not only to the Government, but to industry and to all of us. We share responsibility for trying to educate the public about the distinction between first-generation biofuels, where the case is not satisfactorily made, and second-generation biofuels, which most of us in the House would agree have a future. Her point was well made.
My second point relates to the 20p tax differential. As we know, the Government have decided to abolish the current 20p per litre duty differential for biodiesel in
2010. That will make biodiesel significantly more expensive than road fossil fuels, and therefore it will become commercially unviable in many instances. In short, it will hinder the development of the biofuel market as a whole, when we should be doing more to encourage it.
Since coming into effect in 2002, the 20p mechanism has enabled the commercial supply of some biofuels to the UK market. That has given many consumers the opportunity to run their vehicles on biofuels or biofuel blends. In combination with other measures, which include regional capital grants, that has led to the construction-and planned construction-of some biodiesel plants. There are indications that the product might be exported abroad. Sales of biodiesel rose dramatically following the introduction of that incentive, but since early 2003, they have been relatively static, fluctuating between 1 million and 3 million litres a month.
The key point is that it depends on the biofuel. We oppose the abolition of the 20p differential where genuinely sustainable-that is, second-generation-biofuels are concerned. In our view, it will not help the biofuel industry to grow and might hinder its development, which will not help in the long term.
My third and final point relates to consistency in Government policy and the stopping and starting that has gone on over many years. It is fair to say that the Government's biofuels policies have chopped and changed constantly in the past couple of years. The 20p differential is one instance, and the Gallagher review is a second. I emphasise that point. My hon. Friend the Member for Cheltenham (Martin Horwood), who is not, sadly, in his seat any longer, mentioned a drop in UK sales for companies involved in the manufacture of equipment for biodiesel plants. The statistics ought to scare all of us. GreenFuels Ltd, the world's largest small-scale biodiesel equipment manufacturer, has seen a drop in UK sales of more than £1 million in the past 12 months and is now focusing primarily on exports. That is a sad statement, but it is true.
The Government cannot keep stopping and starting. It is not fair to the industry. We need more consistency. It is time for the Government to decide their line and to stick to it.
10.11 am
Gregory Barker (Bexhill and Battle) (Con): It is a pleasure to serve under your chairmanship, Mr. Taylor. This has been a short but excellent debate. I praise my hon. Friend the Member for St. Albans (Anne Main) not only for securing this debate but for clearly articulating the issues in a way that will be readily understood by people outside Westminster and the narrow biofuels debate as involving obvious and common-sense points. That is greatly to her credit, and is perhaps overdue in the debate on this issue generally. I congratulate her.
We have heard two other likewise worthwhile and sensible contributions. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) highlighted the damage that wasteful or thoughtless disposal of cooking fats and greases can do. It is often inadvertent, not deliberate, but fats build up over time and can end up not just doing damage to our sewerage infrastructure,
which is crumbling in many places and could well do without the added stress, but welling up and giving rise to floods that inflict misery and financial damage on families. I know that my hon. Friend has done a lot of work in his constituency to ensure that such families get the help that they need. I am also sympathetic to the sensible points made by the hon. Member for Cheadle (Mark Hunter), who highlighted a number of issues that must be addressed.
I hope not to go over the same ground too much but to examine some of the issues behind this debate. [Interruption.] The reason why I am struggling is that I am trying an environmental innovation by printing my speech on both sides of the paper. If I keep getting confused and muddled as I go through, Mr. Taylor, I hope that you will understand that this rather fumbling performance is due to a commitment to the environment rather than just my ineptitude.
We hear increasingly frequently from politicians and the media about the opportunities of climate change, the benefits from a shift to a low-carbon economy that will come to investors, innovators and entrepreneurs alike and the dangers of climate change if we do not act decisively. It is easy to imagine that the starting gun has only just been fired in the scramble to beat climate change and develop new low-carbon business sectors, but that would overlook the small but world-class UK cooking oil recycling business, which has been going for quite a long time. As my hon. Friend the Member for St. Albans said, it produces approximately 40 million litres of biodiesel from spent cooking oil each year. Entrepreneurs up and down the country have seen the opportunities that lie in exploiting clean, safe energy from waste technology.
I believe that in the 21st century, resource efficiency-by which I mean the careful and efficient economic use of all resources, including waste resources-will be a key benchmark of a globally competitive and successful economy. Many of the wasteful business practices of the last century simply will not be sustainable economically, let alone environmentally, in this century. I hope to have the chance to put a couple of innovators into the context of the broader challenges and look ahead to their future.
Ultimately, both ethanol recycled from industrial processes and biodiesel recycled from cooking oils perform the same essential functions: to extract the energy value of what would otherwise be waste products, reduce fossil fuel-derived emissions and make a profit. It must be worth while. Whether it involves reclaimed energy from household waste through anaerobic digestion, which the national grid estimates could supply up to 50 per cent. of our space heating needs, or wood pellet-fired heating and electric generation-a by-product of the timber industry that is undergoing huge growth-energy from waste will have a large part to play in decarbonising our economy.
Recycling cooking oil and ethanol has little potential for the controversy that many energy-from-waste technologies seem to attract. It is just a no-brainer. I am told that buses powered by cooking oil may emit a faint but pleasant aroma-perhaps of Mum getting the tea on-rather than the heavy and poisonous diesel fumes that it replaces. UK companies are now marketing products to allow large institutions such as schools to recycle their waste oil on site to power things such as
minibuses and lawnmowers. If we could end up with fully or partially closed-loop energy economies, what a step forward it would be.
Such technologies also weigh favourably in the biofuels debate. The Conservatives have supported the renewable transport fuel obligation and would consider a more progressive extension of its obligations given satisfactory sustainability criteria, which has been a concern. We understand that investment in the development of the all-important second generation of biofuels needs optimism and boldness in our approach to the first. We all know that the first generation has not been without its problems, but that is not the endgame.
The Government's launch of the sceptical Gallagher review only months after the start of the RTFO did much damage to the growing sector and caused untold damage to a field of research and development in which the UK has a genuine global lead. However, land use and agriculture are increasingly at the forefront of the international climate change debate. They form the focus for much of the disagreement around the Waxman-Markey Bill in the US Congress, and at the Copenhagen summit next month rainforests will be an issue which is one of the most important and hardest to pin down. It is clear that we do not fully understand the carbon dynamics of large shifts in global agricultural production and land use. As a result, biofuels will continue to be a highly controversial and challenging policy area globally.
However, recycling our ethanol and cooking oil sidesteps all those bigger and wider concerns. It is simply not part of the same debate. Perhaps the only sustainability question it poses involves how much fried food we consume as a nation, but that is a question for another day. Biofuels will become a key technology in aviation and industrial petrochemicals only through the widespread adoption and requisite understanding of less high-tech biofuel technologies such as recycled cooking oil. When will the Minister respond to the Industrial Biotechnology Innovation and Growth Team report that was launched earlier this year by the First Secretary of State? Biofuels and the nascent use of bio-feedstocks in the chemical industries must play a vital role in a decarbonised UK economy. We must not lose sight of the importance of that.
The development of transport biofuels must not be used as a vanity shield for a lack of clear direction and leadership on electric vehicles. Only the Conservative-controlled Westminster council has delivered a serious number of electric vehicle charging points. The Mayor of London is driving that agenda at a city-wide level. Meanwhile, the much-needed plan to implement a nationwide network of charging points has disappeared from the Government's list of priorities.
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