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Earl Attlee: My Lords, the reason that the differential is the greatest in Europe is simply because our diesel fuel is at a very high rate. But that is a minor point. Can the Minister confirm whether we are at the EU minimum for duty on gas fuels?

Lord Whitty: My Lords, the position at present is that we are at 15p. The minimum is 6.8p in sterling, so we are not at the minimum. But that is not the point. The point is indeed the differential. The noble Earl is correct. As we heard today, we are committed to increasing the price of diesel and seek to achieve a greater efficiency in road transport. That is part of a total strategy. It is true, therefore, that fuel prices in this country at present are somewhat higher than elsewhere because we are perhaps more committed than other governments to using fiscal measures to ensure reduction of pollution. The differential between diesel and gas fuel is an important feature. The differential is important. It is not possible, as the noble Earl, Lord Winchilsea, suggested to put it at a nil rate because of the European directive. But the differential matters.

These measures should send a clear signal to fleet operators, oil companies and retailers and motor manufacturers about the Government's belief in the viability of a sustainable road fuel gas market in this country.

Nevertheless, despite all the advantages of gas fuelled vehicles referred to by the noble Lord, Lord Redesdale, and others, LPG and CNG are not the only show in town. There are other fuels and new vehicle technologies which potentially offer significant environmental benefits, especially in the longer term. The emerging hybrid electric and fuel cell vehicle technologies are one example. Technological development in this area recently has been rapid, with hybrid electric production models already entering the market in some parts of the world. These vehicles offer not just air quality and noise benefits, but crucially they have substantially lower CO 2 emissions than conventionally powered vehicles, a factor which is becoming increasingly important in relation to achieving Kyoto targets.

It is also true that there have been further advances in conventional fuel and vehicle technologies--they will come on stream in the not too distant future--so that we

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have cleaner, more efficient vehicles, using conventional fuels in the market place. For example, we are already seeing the considerably cleaner ultra low sulphur diesel becoming the more standard fuel and being sold at forecourts across the country as a result in part of the introduction of duty differential in its favour. And the environmental performance of conventionally powered vehicles is likely to be improved with even tighter emission standards for new vehicles introduced at European level beyond 2005.

That is why the Government's objective is not to prescribe particular fuels or vehicle technologies. As the noble Earl, Lord Attlee, indicated, the aim is to set stringent environmental goals and then support all those technologies which can meet those goals in a cost effective way. There is not one solution to all our environmental problems. One fuel or vehicle technology may be appropriate for one situation; another may be appropriate for a different situation.

The key to creating a sustainable market for cleaner fuels and better vehicle technology involves our supporting moves in a wide range of different situations. That is why my department has been funding Powershift, a programme designed to establish sustainable markets for alternative fuelled vehicles across Britain. That programme helps private and public sector fleets with the additional purchasing costs of gas powered vehicles among others. Over 1,000 alternative fuelled vehicles have now been purchased with the assistance of Powershift grants. My colleague, John Reid, the Minister of Transport, announced last October that the programme will go forward. The focus of the programme will remain on supporting gas powered vehicles. But as this market becomes more sustainable, it is anticipated that in future there will be a shift towards sustainable markets also for electric vehicles, hybrid electric, and, eventually, fuel cell vehicles.

A number of questions were asked about how far we can go in converting fleets and how rapidly the public sector in particular should move. Questions were asked also about the relative benefits of CNG and LPG in the gas fuel area. The general position is that CNG is better for larger vehicles, and LPG vehicles can be refuelled more quickly and therefore are better suited, as the tax example indicated, to light duty vehicles such as cars and vans.

It is true, as the noble Lord, Lord Steel, made clear at the beginning, that our market has developed more slowly in that area than it has in many other countries. That is partly because the beneficial tax regime has been in place for a shorter period of time. As the Chancellor indicated, it requires a sustained period of fiscal signals for that to be built up.

However, on the latest DVLA estimate, there are 9,000 gas-powered vehicles in the UK, although the noble Lord indicated that the figure was 3,500. There are a significant number of electric vehicles, although they are still mostly milk floats. That is not exactly the cutting edge of technology, but nevertheless we are getting there.

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In terms of the public sector, several noble Lords referred to the London Borough of Sutton, even in the absence of the noble Lord, Lord Tope. The London Borough of Sutton is one of a number of councils which have committed themselves to alternative fuels. That includes the London Borough of Southwark, which has electric and gas-powered vehicles and vans. In the City of Coventry I recently drove an electric car which is being acquired for the city's fleet. Just to make the matter completely trans-party, Westminster City Council is also involved with those projects. So there is quite a commitment on the part of local authorities. Although this was slow getting off the ground, it is now moving quite rapidly.

As regards central Government, 33 cars have already been purchased and there are another 22 on order. It is not a viable option to convert existing cars, but as they are being replaced the balance is being shifted increasingly onto gas-fuelled cars. The largest departmental fleet--the Department of Social Security--announced just last week that it would be purchasing more than 200 new LPG vehicles this year. All departments are looking at those options.

The noble Lord, Lord Steel, mentioned police authorities. Humberside Police is planning to convert 450 police cars to LPG and there are also moves in Hampshire and some other police authorities.

As regards London buses and taxis, the situation is not so clear-cut. It is true that gas vehicles offer environmental benefits but there are benefits also in improving the technology in relation to conventional fuels. For example, taxis running on ultra low sulphur diesel and fitted with oxidation catalysts may also offer similar environmental benefits at a lower cost than conversion to LPG. All London buses now use ultra low sulphur diesel and many older buses are being re-engineered to improved emission standards.

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Nevertheless, we understand that London Transport is having trials of gas-powered buses in some areas of London. No doubt the balance of technologies will achieve a substantially cleaner fleet for London Transport very soon.

Therefore, we have a range of commitments in the public sector and elsewhere and a range of technologies in relation to which we wish to use fiscal and other measures to develop. Noble Lords are correct to say that the infrastructure does not exist at present and there are serious problems as regards developing that infrastructure. We are looking at that aspect as well as the vehicle aspect of introducing those new technologies.

We have established a cleaner vehicles taskforce which is considering what further measures are needed. We are expecting the first report of that taskforce later this spring. It is sure to make some key recommendations in that area.

The Government have already indicated commitment to road fuel gases by cutting the duty on them in the Budget and by giving greater certainty to the market through initiatives such as power shift.

By committing ourselves to reducing pollution across the board and supporting the various different fuel and vehicle technologies which achieve that, we have indicated our intention to pursue this as a high priority as part of our transport policy. However, it is not just a matter for government, nor just for the public sector. It is also important that government locally and nationally, the manufacturing industry and the operating industry, continue to work together to ensure that we take full advantage of all the new technologies to achieve the environmental benefits we all desire.

I thank noble Lords for their contributions to the debate. If there are any points I have not covered I shall attempt to do so in writing. I think it is probably about time that we packed up for today. Nevertheless, once again I thank the noble Lord, Lord Steel, for initiating the debate.

        House adjourned at eleven minutes before three o'clock.

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