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Lord Crickhowell: My Lords, I am very grateful to my noble friend for giving way. One should not attack one particular source of pollution. If one is to apply sensible economics, one should attack equally the other producers of that pollution. We need to have an equal attack on all the sources and not disproportionately load one source.

The Earl of Selborne: My Lords, I do not believe that there is any danger of the motorist bearing disproportionate cost at the moment. As regards motor freight in particular, if one were to calculate the external cost and the adverse impacts on society which the report tries to address, it would be very difficult to justify the present level of tax. The private motorist certainly pays much nearer the external costs which fall on society, though I suspect that one could argue that the costs could and should go up if the external costs are to be captured.

It is the toxic emissions that the report has to address most seriously. A technical fix is coming. We know at the moment that, were it not for the particulates, diesel would in many ways be a greener fuel. The problem is that they are an extreme hazard, particularly in urban areas. It is not yet possible to use a catalytic converter effectively on diesel engines. But that may well change. There may be catalysts within five to 10 years which will be able to remove or reduce nitrogen oxide emissions from a diesel engine.

However, if we continue to use fuel with a high sulphur content the benefits will be negated. Here is an immediate and obvious technical measure which can and should be imposed as the European Parliament and the committee suggest. One should start planning now to bring in petrol and diesel which contain smaller amounts of sulphur. Indeed, the European Parliament went rather further than our committee, which suggested that the European standard should be 15 parts per million for both petrol and diesel. That proposal has created great anger and consternation in the petroleum industry, which says, like everyone else, "You should hit at a different target. It is most unfair that you should expect us to spend a large amount of capital in Europe on improving our refining procedures."

The European Parliament employed consultants to find out what it was likely to cost a typical motorist if the levels were reduced to 50 parts per million. The consultants worked out that for a typical motorist--whatever that might be; but, for these purposes, the figure was deemed to be 12,600 kilometres of motoring per year--the cost worked out at a modest £5.60 per year. That figure was not accepted by the oil industry, and I am not in a position to say whether it is anywhere near accurate. However, even if it is not accurate,

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I should still be interested to see the Government conduct a definitive study into precisely what the cost might be.

I accept entirely that there will be a cost. The report suggested that it might cost somewhere between £28 billion and £32 billion to upgrade refining in this country. However, it is already happening because the companies concerned are having to spend that capital elsewhere. The question is not whether they will spend that capital around the world on producing low-sulphur fuels, but whether it will be the United Kingdom population which will benefit from it; or, if we do not protest loudly enough, whether we shall go to the bottom of the capital expenditure programme. If pressure is exerted in equal measure all around the world, there will be great demands on the oil industry's capital.

Members of the committee should not be repentant about saying that we in Britain should lead the demand that Europe should improve petrol and diesel standards with regard to sulphur. There is no problem in technical terms. Indeed, parts of Scandinavia have already imposed low sulphur standards, and we should do the same. The auto-oil programme was deeply unambitious and seemed simply to perpetuate the status quo. The United Kingdom should certainly benefit from the higher standards.

6.51 p.m.

Lord Redesdale: My Lords, I start by thanking the chairman of the committee, the noble Lord, Lord Dixon-Smith, for doing the difficult job of keeping the report to its set remit of considering low emissions. Many of us who served on the committee felt somewhat frustrated that we could not go off on flights of fancy or up the many other avenues that we could have considered. Although the resulting report may be naive in terms of some of its recommendations--the noble Earl, Lord Selborne, pointed this out--those recommendations are almost achievable. Indeed, the committee was careful to consider what is achievable over the short-term because the problem of emissions is with us all now.

That was brought home to me in a news story on local radio about somebody who tried to achieve the world crawling record. He collapsed after two miles and was taken to hospital with a suspected heart attack. However, it turned out that he was suffering from carbon monoxide poisoning from following the exhaust of his support vehicle which was in front of him. He almost died of the experience. Although that is an amusing event--but not for him--the incidence of asthma among children is increasing in this country. Indeed, my two year-old nephew suffers extremely badly with asthma and, as the noble Lord, Lord Walton, pointed out, the seriousness of the problem cannot be underestimated.

One of the depressing issues raised in the report is the fact that our dependence on the car and on the internal combustion engine is here to stay for the next two or three decades. That position will not easily be changed. However, there are alternatives to the car and we saw

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many interesting and diverse examples, mainly relating to the engine and the fuel supply because there seem to be very few real alternatives in terms of turning a large lump of steel into something other than a car.

We looked carefully at what is available in the market at the moment. First, we considered gas-powered vehicles, to which the noble Lord, Lord Berkeley, referred. They have certain benefits. Their NOx contribution is much lower and they are a pleasure to drive, as we discovered when we visited a local authority and drove the gas-powered vehicles that it uses at the moment. The committee looked carefully at the overall energy consumption of each fuel. One of the hidden costs of using natural gas is the cost of compressing the gas into the fuel tank. Unfortunately, that detracts from the attractions of that source of fuel.

We also considered the use of electric vehicles. Indeed, the great joys of electric vehicles were impressed upon me almost physically just around the corner from here when I was almost hit by the silent electric vehicle which is used within the Palace of Westminster. There are major disadvantages with such vehicles, however, and I do not believe that they are the vehicles of the future. They are expensive in terms of pollution. They need large batteries which then have to be disposed of. When we visited Germany, I was interested to learn that the Germans actively discourage electric vehicles because although the vehicles themselves do not produce emissions in the immediate locality, they cause vast quantities of emissions from power stations. There is an advance net deficit if one tries to recharge an electric vehicle from a coal-fired power station. The Germans provided the interesting statistic that Britain has by far the largest fleet of electric vehicles of any country in Europe. I believe that we have about 28,000 such vehicles, which is more than all the other European countries put together. The humble milk float is one of the major contributors.

The gyroscope was also considered as a form of propulsion. Although it would work well on a public transport system, especially a train system, I found slightly worrying the thought that if a gyroscope that could drive a vehicle ran away it would have the same force as an explosion of TNT.

The committee concluded that hydrogen is the only fuel that is realistic in the long term. However, it will take us 20 or 30 years to get there. Vehicles will have to be developed so that they are cost-efficient. As was shown, we are getting there in terms of bus transport, but it will still take some time and the infrastructure will have to be put in place. Indeed, the only problem with hydrogen is that electricity has to be used to produce it in the first place. Unless we use electric sources from rivers in Canada, we shall have to look at the nuclear option. I was interested to read about the work being carried out at Cern which might give us a nuclear source in the future which could use highly radioactive components and break them down into low radiation-emitting waste. That is still on the drawing board, however, and until we develop it, we shall be left with a short-term energy source which has a long-term pollution consequence.

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Over the long term, technology is important in terms of the petrol and diesel engine. One of the aspects that must be looked at carefully is mentioned on page 15 of the report. I refer to the graph which shows the cost benefits of making fuel more efficient as against the costs and benefits derived from eking out extra value from the petrol. In one respect one is reaching the very limit of what technologically can be done. Obviously, there will be improvements but, as the noble Earl, Lord Selborne, points out, the next great leap forward must lie with the removal of sulphur from fuel. Everyone speaks about the cost of removing sulphur from fuel. It is incredible that one even considers cost and that the oil companies can use it as an argument, because it is the consumer who pays the cost in the long run--even the short run. One of the great benefits of removing sulphur at source is that, although one has to do something with it, it is a better solution than having the sulphur released by car engines onto the streets of Britain.

Another area to look at is taxation. Although my own party speaks about green taxes, I do not believe that a tax can have a colour. Sulphur would be a great form of taxation. I should be interested if the Minister could confirm that in the next Budget vast amounts of money would be spent by reducing taxation on low sulphur fuel. Obviously, that is something that the Minister cannot deal with this afternoon but it would be helpful if the Minister could confirm that that was one option that the Government were considering. Taxation can be used if it gives the consumer a net benefit. If so, it is then a green tax.

As to switching to large cars from small cars, if taxation is heavily weighted on the former and the advantage goes to those who run the latter it will have a net benefit. I do not speak from personal interest. I own a Ford Fiesta 1.25 which would easily fit within the 1.5 limit. I would be quite prepared to accept taxation on vehicles beyond that limit. At the moment we are caught in a trap. It is regarded as socially acceptable--indeed, it is a social icon--to have a larger, more comfortable car. I believe that my Ford Fiesta has done more off-road work than most of the very large off-road vehicles with bull bars that drive round London at the moment. We are caught in a trap because the big cars that cause congestion are designed to be more comfortable. To have a big car which is more comfortable gives one a psychological advantage. One has air-conditioning which costs a vast amount of money and one is cooled while sitting in a traffic jam. One has all of the electrical appliances that make sitting in a traffic jam that much more comfortable. Perhaps one should try to change the moral impetus to make people go for smaller cars. One interesting figure is that 80 per cent. of the energy consumed by a car is used to move the car itself, not the occupants; only 20 per cent. of fuel is used to move the occupants.

That leads one to public transport. If one is to remove the car one must replace it with something else. If there are to be green taxes they should be used to promote public transport. To say that cars must be banned from the centre of London or other places may be electorally dangerous. As this Government have such a large

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majority, perhaps with the option of another term in government, they may use that long timespan and ban cars now so that the shock does not arrive just before an election and it becomes totally unacceptable. We have transport systems that work. The London Underground, which is underfunded, is one of the greatest examples. A large amount of money must be pumped into the underground, especially the Northern Line. It is an absolute disgrace that the Northern Line should be allowed to carry on in its present form. As I use the Northern Line every day I express an interest here. However, the Northern Line is not referred to as the misery line for nothing.

There are other examples around the country. The Newcastle metro system is a very clean and efficient form of transport. It is also one that combines two forms of transport. Often one drives to the metro or uses a park and ride scheme. Therefore, cars are kept out of the centre of town. One uses one's car to get to the station but the vast amount of energy that one would otherwise use to fight one's way to the centre of town is saved. Another area that should be looked at is driving standards. I speak as a council member of the Institute of Advanced Motorists. That body has done a good deal of work in looking at fuel efficiency resulting from improved driving standards. One can save a vast amount of fuel just by driving correctly.

I turn to the subject of scrappage. One of the issues brought up was the removal of older vehicles from the roads and their replacement with newer vehicles. Britain has a very good record in this respect, mainly because the vehicles that are removed from its roads end up in scrap yards. One interesting fact is that in Germany scrapped vehicles head east and replace the fleets that are in use in Eastern Europe. In the rest of Europe there is a move to scrap vehicles, but those scrapped vehicles do not leave the road.

One issue upon which the report focuses is the removal of emissions in order to help the environment, not only from the point of view of health but from the point of view of the removal of CO 2 and global warming. One interesting idea was raised recently by a Formula 1 team; that is, planting trees to the same tonnage as it emits in carbon. That may be an interesting idea. Perhaps the Minister can give thought to the introduction of a green tax to be applied to the purchase of new cars. Instead of going to the Treasury that tax could be used for other necessary purposes. Perhaps it could be directed to a body such as English Nature or the National Forest for the planting of trees.

7.7 p.m.

Earl Attlee: My Lords, for the second time this week I find that I have the pleasure and privilege to come to the Dispatch Box in debate with the noble Baroness the Minister. Yet again I expect that we will be to a large extent singing off the same songsheet. That happy situation may not last for ever. However, there is no doubt that we have a problem with emissions both locally and internationally. The question is: how can we best solve it?

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I too should like to thank the noble Lord, Lord Dixon-Smith, and his committee, advisers and witnesses for all their hard work and for the very readable report that we are debating this evening. I looked forward to this debate even before the last election, because I knew that the speakers would be excellent. I certainly have not been disappointed.

Before I make any substantive points, I should declare an interest, as I am president of the Heavy Transport Association.

I have drawn three broad conclusions from the report and today's debate. First, we need to ensure that our current liquid-fuelled road vehicles comply with the regulations and that future vehicles are made to even better standards. Secondly, we need to do much more to encourage a dash for gas in road transport. This particularly applies to vehicles that are used largely in urban areas. Thirdly, and looking to the much longer term, we need to move away from fossil fuels, which by definition must emit CO 2 , and we look towards hydrogen. Hydrogen can be used either in a combustion engine or a fuel cell. The hydrogen requires power to extract it from other common compounds such as water, and we need to ensure that the electricity used does not itself have an emission penalty from fossil fuels.

Many noble Lords have suggested that emission limits should be tightened still further. Indeed, the report advocates the adoption of stages III and IV EU limits which will come into operation in the years 2000 and 2005 respectively. Perhaps the year 2000 is now a little optimistic. As the report indicates, the progressive tightening of limits in part reflects advances in technology but it is also designed to stimulate technological advances. It is gratifying that manufacturers, particularly of commercial vehicles, are able to meet the new limits while at the same time delivering greater productivity and reliability.

It is pointless, having demanding type approval emission standards for new vehicles when the standards are not relevant to normal use. The report referred at paragraph 3.6 to tests being carried out at 25oC, which is hardly usual for a temperate European climate for most of the year. The Minister will have to apply pressure in the EU to seek an improvement in the way emission performance is measured for type approval purposes.

It is also imperative that vehicles continue to meet the standards for which they were originally designed and built. The report explores this situation and the related difficulty of older vehicles not meeting modern standards. I have a particular aversion to retrospective regulation. I am glad that the committee rejected the submission of the vehicle manufacturers that vehicles should be scrapped after 10 years, and I do not say that just because I have a collection of historic vehicles. If this policy were adopted, the cost of a new vehicle would have to be depreciated over a relatively short period, thus reducing the residual value and significantly increasing whole life costs to the first owner, which may be between £500 to £1,000 for a family car. I believe that this cost could be better put to making the new

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vehicle even more environmentally friendly. Such an expense would also seriously disadvantage those from lower income groups, who in any event tend to cover less mileage. Clearly, the Government would not want to pay for a scrapping scheme because there simply are no funds available to do so.

I hesitate to disagree with the noble Lord, Lord Porter, but I do not support tightening the standards required for the existing fleet for similar reasons and also because the suggestion in paragraph 4.11 smacked of bureaucracy in its outline and would almost certainly be so in its detailed implementation.

I feel that our annual emission test procedure is rather weak, and I would single out the free acceleration test for diesel engines. It can easily be subverted by simple adjustments being made to the engine just for the test. On a goods vehicle test the examiner is not able to check for tampering with the fuel equipment. After the test, the controls can be set back to their original position or to one that can even increase performance and probably to the detriment of emissions. Unfortunately, the report did not explore the use of rolling roads which can measure the power developed, emissions and, most importantly, fuel economy under a variety of conditions. It is quite clear from the report that fossil fuel economy is vital to minimise CO 2 emissions. The noble Lord, Lord Porter, pointed out that fossil fuels will be with us for a long time to come.

Looking into the near future we see the development of "full authority digital engine control systems". The noble Lord, Lord Walton of Detchant, touched on this subject. There is the possibility of tapping into the diagnostic socket and obtaining some sort of "confession" from the engine, including its state of wear, emissions and fuel consumption. Some systems will already automatically shut the engine down after a prolonged period of idling.

It is clear that for many applications we are restricted to using liquid fuels for the foreseeable future. Other fuels and technologies will simply not provide the range or payload required for long distance heavy goods vehicles. For this reason many noble Lords, including the noble Lord, Lord Dixon-Smith, have advocated low or very low sulphur fuels, not only to reduce sulphur pollution but also to allow the use of catalysts without their being poisoned by the sulphur. The difficulty is that a capital investment of at least £28 billion across the EU would be required, and this would have to be reflected in the cost of the fuel.

The issue here is the extra cost of production balanced against the environmental benefits available. The noble Lord, Lord Redesdale, made some interesting points in that connection. It will be interesting to hear the Minister's view on the adoption of low sulphur fuel. Does she think that it is worth the extra cost of production for the UK and EU plc?

The noble Lord, Lord Dixon-Smith, and others spoke about the limited production possibilities of bio-diesel. On the other hand, the noble Lord, Lord Porter, offered us hope in the form of production possibilities arising from genetic engineering. It is early days yet but there are many possibilities.

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Many noble Lords have drawn attention to fuel cell technology. Provided the hydrogen is produced without resorting to fossil fuels, this technology will provide practically zero emissions.

There are limits as to what can be done with renewable sources of energy, and this subject was covered by many noble Lords.

The noble Lord, Lord Porter, made some interesting comments about production problems and opportunities for using hydrogen. The holy Grail in all of this is nuclear fusion, as identified by the noble Lords, Lord Vinson and Lord Redesdale. I do not know exactly where this project stands, but clearly that is a long way off.

The report raised the issue of fuel additives. I have little knowledge of chemistry, but just the names of some of the chemicals involved makes one think of carcinogenic and other risks. I am sure that the note of caution in paragraph 4.7 should be heeded. Can the Minister say whether it is an EU responsibility or a national responsibility to ensure that fuel additives are safe?

Having read the report and listened to your Lordships, it seems to me that CNG, or possibly LNG, offer the most promising, largely proven technology for reduction of emissions in urban areas. The previous Chancellor recognised this fact by reducing the duty on that fuel. I fully support the suggestion that the duty should be reduced to the EU minimum.

Natural gas is particularly suitable for buses and taxis, especially when they are depot based. Diesel engines are rather poor for particulate emissions, especially when long periods at low power outputs are involved.

I notice that in a Written Question yesterday the Minister's right honourable friend, Dr. Strang, stated that the review would look at the use of buses to reduce pollution, but he did not say that the review would examine ways of making the buses themselves less polluting. I am sure that that was an oversight and that the point will be included in the review. Many well informed noble Lords have pointed out the problem of old buses. There should be a way of providing strong encouragement to build most new black cabs with CNG or LPG fuel systems.

This close to the Budget we do not expect the Minister to say very much about fuel duty or VED. However, after the Prime Minister's contribution at the Denver Summit it seems likely that taxes on motoring will rise considerably in real terms in order to combat CO 2 emissions. This follows on from the previous government's policy of real increases in the cost of fuel.

I agree with the noble Lord, Lord Dixon-Smith, that if the Minister desired to encourage a particular fuel or technology she could do so by offering the Chancellor a package that is neutral in terms of tax take. If the Chancellor decided to increase fuel prices, the transport industry would complain that it was unable to pass the increases on to its customers. However, the transport industry is so competitive that any increase in operating cost rarely immediately transfers to an increase in rates. One difficulty relates to cowboy operators who have no interest in pollution control or even general compliance.

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That is clearly a matter for another day, but it is high on my agenda and I am sure that it will be high on the Minister's too.

We do not often have debates on technical matters, but the previous speakers have shown that when we do the result is always interesting. I look forward to hearing what the Minister has to say.

7.20 p.m.

Baroness Hayman: My Lords, I am pleased to respond on the behalf of the Government to an interesting and informative debate. The Government welcome the report of the Select Committee on Science and Technology, Towards Zero Emissions from Road Transport. It makes a valuable contribution on what is a central issue for ourselves, our children and future generations. I should like to thank the committee for its work and particularly the noble Lord, Lord Dixon-Smith, for both chairing the committee and the admirably clear way in which he introduced today's debate.

The Government have already demonstrated their commitment to putting environment concerns at the heart of the decision making process. This was reflected in the Prime Minister's decision to bring together the environment, transport and the regions in one department headed by the Deputy Prime Minister. To further co-ordinate consideration of environmental issues within government, the Deputy Prime Minister will chair a new Cabinet Committee on the environment on which Ministers from all key departments will sit. Noble Lords, like the noble Lord, Lord Vinson, who called for British leadership in this field, will have been heartened by the Prime Minister's international leadership on environmental issues at the second Earth Summit in New York.

The Government regard air which is fit to breathe as a right of every citizen. Transport is a major source of pollution, particularly in urban areas, where it is the dominant source of NOx--oxides of nitrogen and particulate emissions--for which the health risks are of most concern. That was graphically illustrated in the tale told by the noble Lord, Lord Redesdale.

I am pleased that over the next 10 years we are expecting air pollution in urban areas to improve significantly to less than half 1995 levels largely as a result of tougher standards for vehicle emissions and fuel quality. Nevertheless, these gains could be partly offset by predicted road traffic growth, with air quality set to deteriorate after 2010 or so. Moreover, meeting air quality objectives in the most polluted urban sites will undoubtedly require further action. We must recognise that air quality is as much a local issue as a national and an international one. In many cases, local measures may be the most cost-effective.

A national air quality strategy was published by the previous government in March 1997. We are committed to taking this strategy forward and to look for more rapid improvements in air quality wherever this is feasible. I can tell the noble Viscount, Lord Simon, that we will be looking at setting air quality objectives for small particulates in taking that work forward.

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Climate change has perhaps been a less obvious and manifest threat than air pollution. But it is a perilous long-term risk and, in all likelihood, we are already experiencing its effects. We need to act now to reduce emissions of greenhouse gases. We have set ourselves a challenging domestic target of reducing carbon dioxide emissions to 20 per cent. below 1990 levels by 2010. This will require significant reductions from all sectors of the economy, including transport. Indeed, it was interesting that we discussed combined heat and power in your Lordships' House early this week and the contribution that that can make in limiting CO 2 emissions.

Climate change is a shared problem, as the noble Lord, Lord Porter, and others pointed out. The UK has taken a lead internationally and, together with our EU partners, will continue pressing for significant reductions from other developed countries at the UN Climate Change Convention in Kyoto this December.

But it was the field of transport that the Select Committee covered in its report and which we have dealt with in today's debate to which I would like to turn. As the committee recognised, reducing emissions from road transport can not be the whole story. We need to reduce our reliance on the car and encourage a shift towards more sustainable modes of transport. I say to the noble Lord, Lord Crickhowell, that perhaps the carrot of improved public transport will prove more effective than he suggested the stick of taxation had been.

To take that forward, we are undertaking a fundamental review of transport policy and aim to produce a White Paper next spring. I am sure that the possibilities for rail freight, raised by my noble friend Lord Berkeley, those raised by the noble Viscount, Lord Chelmsford, of telematics, which is a fascinating and potentially important area, and the possibility of "clean" buses making a high contribution in terms of public transport improvements will be included in the White Paper. I am tempted to follow the noble Lord, Lord Vinson, in discussion about the roads review, in which I have a personal interest, but I should be diverted too far from the topic that we are properly covering tonight.

I should make two general remarks relating to today's debate. First, the Government have not yet formally responded to the committee's report. We welcome the opportunity to have this debate. I hope that I will be able to cover many of the issues raised, but that noble Lords will understand that we have not finalised our thinking on all the detailed aspects of the report.

Secondly, with regard to fiscal measures, I have been tempted by noble Lords to go beyond the correct behaviour for a Minister and discuss what the Chancellor might say next week. I shall not do so; we must all contain ourselves for a little while longer. However, I am able to comment on some of the fiscal measures introduced after the committee's report and included in the 1996 Budget to improve air quality. I refer, for instance, to the proposed cut in tax on ultra low sulphur diesel, for which we are awaiting the derogation, and the 25 per cent. reduction in tax on road fuel gases.

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I turn to the issue of alternative fuels, which was raised by several noble Lords. Road gas fuels, and in cases electric power, can have a valuable role to play in reducing pollution, particularly in urban areas. We have been impressed by the number of studies and trials being undertaken in this field. The Government are also sponsoring its own trials of alternative fuels, including bio-diesel. The possibilities outlined by the noble Lords, Lord Porter and Lord Walton of Detchant, must be investigated properly because of the potentials that exist. We will be publishing the results later this year.

A problem for local authorities and operators is to keep track of all the information that is available. To fill this gap my department has published a booklet, now available on the Internet, providing information on trials of alternative fuels and technologies. This will be regularly updated. We will need to consider what further liaison arrangements might be useful.

As regards the cleaning up of buses and the potential of gas powered buses, for example, referred to by the noble Earl, Lord Attlee, the Government are also supporting the Energy Saving Trust's Powershift programme with funding of more than £6 million. This is establishing partnerships with local authorities, businesses, fleet operators and trade associations to develop procurement groups for purchasing gas and electric vehicles and to support complementary fuelling infrastructure.

I am happy to be able to tell the noble Lord, Lord Walton, that the Government Car Distribution Agency has recently introduced several gas-fuelled cars and an electric car. It was possibly that car which the noble Lord, Lord Redesdale, encountered. Perhaps wearing another hat, I should ensure that it is fitted with a bicycle bell so that it warns him in future when it is coming. We are also exploring the scope for Ministers to make greater use of alternative fuelled cars.

Many noble Lords, including the noble Lord, Lord Walton, asked about the area of enforcement of emission standards in the existing fleet. That is crucial to improving air quality. Almost all vehicles are now subject to an emissions inspection at their annual roadworthiness test. In addition, enforcement checks carried out by the department's vehicle inspectorate have helped to ensure that commercial vehicles and buses do not emit excessive smoke levels. Those checks have been expanded over the past few years.

The Government are also intending to introduce regulations which give local authorities the power to issue fixed penalty notices for vehicles failing road side emission checks. We are aiming to consult on draft regulations during the summer months, with a view to setting up the scheme on a 12-month trial basis by the end of the year.

Emphasis was rightly placed in the Select Committee's report and in the debate tonight on longer term technological developments. The Government are keen to see our industry continue to build a strong, competitive position in new markets for environmental technology. That can achieve both economic and environmental benefits for this country. It is important

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that we share some of the developments that are made in that regard throughout the world, given the international nature of the problem.

We agree that cost and efficiency are critical issues for the development of commercially viable fuel cell systems. The Government, in collaboration with industry, have been supporting research on fuel cell technology through the DTI's advanced fuel cell programme, part of the new and renewable energy programme. My colleague at the DTI, John Battle, recently announced a wide ranging review of policy in this area. Among other things, it will need to consider fuel cell technology. I am pleased that the review will now be able to draw upon your Lordships' deliberations this afternoon as well as the committee's conclusions, and I will ensure that the debate is drawn to my honourable friend's attention.

Perhaps I may turn now to vehicle emission and fuel standards and the auto-oils issue. A number of the recommendations and points today cover emission standards for new vehicles and fuel quality. These are being considered under the European Commission's auto-oils programme. We have sought standards that give us a high degree of environmental protection, without imposing excessive or unjustified costs on our vehicle or oil industries. I am pleased to be able to relay to your Lordships a successful outcome to the most recent negotiations.

As noble Lords have said today, it is important not to discount the ongoing developments in conventional petrol and diesel technology. In 1993 emission standards were introduced which resulted in catalytic converters being fitted to all new petrol cars. This had a major impact in reducing the main pollutants--carbon monoxide, hydrocarbons and nox--typically by over 75 per cent. The 1993 standards have already been tightened in a second phase during 1996-1997. A third and fourth phase is planned for 2000 and 2005 under the auto-oils programme.

The first part of this programme, dealing with emission standards for new cars and fuel quality, was given a first reading at last week's Environment Council. By unanimous decision, the Commission's proposals were amended in a number of key areas, especially on the sulphur level in petrol and diesel, an area highlighted this evening by many noble Lords but in particular by the noble Lord, Lord Redesdale, and the noble Earl, Lord Selborne.

Noble Lords will be well aware that I am no technical expert, and I can reassure the House that I have no intention of attempting a chemistry lecture particularly in the distinguished company of the noble Lord, Lord Porter. However, it is important for all of us to recognise that sulphur does have an adverse effect on catalyst efficiency. I can say to the noble Lord, Lord Walton, that the reductions agreed in Luxembourg will bring an immediate benefit by reducing all the main pollutants from existing vehicles as well as helping manufacturers to meet tighter standards for new vehicles. We very much supported that amendment to the Commission's proposals. It provides a signal to the oil industry on the

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need to reduce sulphur in both petrol and diesel from today's level of 500 parts per million to not more than 50 parts per million in 2005.

The noble Earl, Lord Attlee, asked whether the costs of low sulphur fuel were justified by the benefits. It is important to note that as well as the immediate effects that I have described, demanding standards on sulphur will give the motor industry the confidence that the right fuel quality will be available. That is what is required for the new technology being developed to meet the indicative 2005 vehicle standards. The two issues are inter-related and sulphur levels in fuel are absolutely central.

The standards agreed in Luxembourg last week will improve emissions from new cars by 30 per cent. to 40 per cent. from 2000, with a further 50 per cent. improvement from 2005, if the 2005 standards come into force. I say "if" because the petrol and diesel technology does not yet exist that can meet these standards, so the 2005 standards are subject to confirmation following a further auto-oil review in 1999.

Hydrocarbon and nox and diesel particulate emissions will have been cut by over 80 per cent. since the introduction of the catalyst standards in 1993. This would bring us major air quality benefits, and petrol and diesel vehicles will be able to compete effectively with other near-zero emissions technology.

The Committee recommended that the EU vehicle emissions testing cycle be amended to more accurately reflect average European ambient temperatures. That point was raised by the noble Earl, Lord Attlee, and the noble Lord, Lord Walton. Noble Lords will be pleased to hear that this view was endorsed unanimously at last week's Environment Council. As a result, from 2002, new cars will be required to undergo an extra test carried out at minus seven degrees Celsius. It should ensure that catalysts are much more effective at limiting emissions especially on short journeys. I think this is a very positive step forward.

To conclude, I should like to repeat my welcome call for the report and the extremely valuable contributions by noble Lords today. Reducing the emissions from road transport--both in terms of pollution and carbon dioxide emissions--is a challenging and crucial task. New vehicle emission standards and new technology offer us the prospect of air that is clean and safe to breathe and sustainable road transport as well. We need to take full account of the costs of those measures; but equally it is clear that we cannot afford not to act.

7.37 p.m.

Lord Dixon-Smith: My Lords, it would be very tempting to respond in detail to this debate but I do not believe that Members of the House would thank me for doing so. It is interesting that in many ways the debate has reflected the discussions which we held in the sub-committee as we were attempting to draft our report.

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The report was of course tightly focused and we thought that it had to be that, otherwise we might have produced rather diffuse results instead of something which I hope, in the light of this debate, will be seen as positive and helpful.

I am most grateful to all who have contributed to the debate, in particular members of the committee but interestingly, of course, the non-members of the committee who have widened our perspective. Indeed, for those of us who are interested in the subject, we should be wise to pin the Hansard record of the debate to our copy of the report. I am particularly grateful to the noble Baroness, Lady Hayman, for responding on behalf of the Government. As the Minister said, we have not had a formal response, but without the benefit of that formal response she has gone as far as she possibly can in answering many of the points which the committee raised and she has defined those areas which I am well aware--as I am certain everybody else is aware--cannot be answered at this point. It has been a most successful debate. I commend the Motion to the House.

On Question, Motion agreed to.

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