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Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Ezra, knows a great deal about this matter. It would appear that we need the widest possible range of energy sources and we need to use our own coal in the best possible way. I can see the problems of timing, but the main point is that the Government must bear in mind the tremendous advantage that there has been to this country by exploring for oil in the deep sea. That technology has been sold to our enormous advantage across the world—to China and many other countries—because the oil industry had sufficient vision to see that, as the oil in the North Sea reduced,

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the industry's skill and technology could be sold. Surely we need to do that in the case of clean coal—and that is the noble Lord's most important point.

I hope that the Government will not just dismiss the amendment as a pipe dream—the matter should be attended to now regarding the export of expertise. We must ensure that we have that expertise to export.

Lord Whitty: My Lords, the role of clean coal technology is likely to be important in our energy policy and the sustainable use of our coal resources. Coal-fired power generation is likely to be with us for many years and if we are to meet our energy targets we need to use it significantly more cleanly than at the moment. I somewhat refute the suggestions that the Government have been doing nothing about this matter. We have recognised for some years that clean coal technology has a role to play and we have been investing in R&D in this area. In fact we have committed some 9 million of support for this programme, including 39 projects and another 4 million for cleaner coal technology over the next two years. That includes not just the cleaner use of technology and the mitigation of negative carbon effect; the DTI also has a programme under way looking at the feasibility of underground gasification of coal, referred to by the noble Lord, Lord Jenkin, which could also make a contribution. As the noble Baroness, Lady Carnegy, said, it could help not only us but elsewhere in the world.

In addition we are starting to develop, in collaboration with the energy industries, a new carbon abatement technology strategy and coal will be a key element. Some of that will be published next year. So I do not believe that the Government's commitment to clean coal technology should questioned. We have our own R&D and we learn from international R&D.

However, the amendments before us would effectively create a clean coal obligation. A mechanism for clean coal similar to the renewables obligation would be hugely more complicated. We know that renewable technologies do not create any emissions, but for fossil fuels there are not only carbon emissions but a number of other gases which can damage the environment, particularly sulphur and NOx, for which developments are also taking place. The measurement of how far the clean coal technology was contributing to carbon saving also needs to take account of what we are doing in relation to other gases. Also, it is not easily offset against the renewables obligation and other more straightforward measures that are required of industry in that regard.

We will implement some other measures that will encourage the control of emissions. The Large Combustion Plant Directive, which will primarily focus on sulphur and nitrous oxides when it is implemented in 2008, will also have an effect on coal burning. The emissions trading scheme that is due to start next year will encourage the control of carbon dioxide emissions from coal and other fuels. Both measures will help to drive the markets to more sustainable and more novel uses of coal within the technologies available—and will help us to develop

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better technologies. To express that in terms of an obligation would be difficult and complicated. It would divert from the renewables obligation and it would not be clear how much of a contribution it could make compared with other measures to support and deliver clean coal technologies that are either in place or will be in place in a few years' time, which will make some contribution to our carbon reduction objectives.

I support clean coal technology and want to see measures to speed up its adoption, but I do not think that an obligation is the way to do it.

6.30 p.m.

Lord Ezra: My Lords, I thank the noble Lord, Lord Jenkin of Roding, for his supportive remarks and the noble Baroness, Lady Carnegy. I thank the Minister for his encouraging remarks. What worries me is how we move from supportive remarks and from limited expenditure on research and development to having a plant or two in this country. I cannot see how that will happen. The way we are going, we could go on dribbling a few million pounds more here and there into research and development, which is minute compared with what is being done in the United States, for example, from which experience we should be learning.

When do we reach the point at which we can have a plant to demonstrate, to potential customers not only in the UK but in China, India and elsewhere? That is the problem that worries me, which I shall continue to explore and tackle. I hope the Minister and his colleagues in the Government will give it further consideration. The White Paper referred specifically to a demonstration plant. It states on page 92, which I quoted earlier: "With this in mind"—namely, to have a plant which can be used as a demonstration for other countries—

    "we have already put in place a programme of support for advanced traditional cleaner coal technologies which is intended to bring forward demonstrator projects that may help to showcase the relevant technology more widely".

When is that going to be done? When will we see the hardware? When will we move from talk and limited amounts of R&D to having a bit of plant in place? It was stated in the White Paper, but lacking in the Minister's remarks. He did not indicate when we might see the plant in operation. That was the purpose of my amendment.

However, I would like to reflect on all that was said and consider whether to return to the issue at the next stage or in some other way. In the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 193 to 195 not moved.]

Lord Ezra moved Amendment No. 195A:

    After Clause 109, insert the following new clause—

(1) In order to comply with EU Directive 2003/30/EC, which requires Member States of the European Union to demonstrate how biofuels are to be placed on their markets in increasing quantities to 2010, and to comply with the further requirement

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that Member States shall inform the Commission by 1st July 2004 of their initial targets for December 2005 and how they plan to meet these, there shall be a renewable transport fuel obligation for the United Kingdom.
(2) The obligation shall require all producers selling road transport fuel in the United Kingdom to show that over the course of a calendar year a specified proportion of such fuel was biofuel.
(3) For the calendar year 2006 this proportion shall be 1 per cent by energy content and this proportion shall increase annually by 1 per cent until 2010.
(4) Producers, blenders and other relevant companies and persons shall make such returns to Her Majesty's Customs and Excise as may reasonably be required to demonstrate such compliance with the obligation both as to the amount of biofuel produced and used and the origin of the relevant feedstocks.
(5) Biofuel producers, blenders and other relevant companies and persons shall receive the biofuel duty rebate due to them on fulfilment of their obligations under this section.
(6) A shortfall on their obligation shall incur a proportional loss of such rebate as set out in subsection (5).
(7) Any shortfall on the obligation shall in addition incur a penalty in proportion to the shortfall and this penalty, expressed as pence per litre, shall be fixed annually.
(8) Any such penalty payments shall be pooled and the total amount distributed annually to compliant suppliers pro rata to supplies placed by them the market.
(9) No fuel shall be recognised as a biofuel for the purpose of the obligation unless the carbon dioxide saving on a full life cycle analysis can be shown in the returns made under subsection (4) to be in excess of a 60 per cent improvement compared with the relevant fossil fuel comparator and in the case of biodiesel this shall be ultra low sulphur diesel and for bioethanol it shall be ultra low sulphur petrol.
(10) For the purposes of the obligation, biofuels shall be defined as fuels produced from the biodegradeable fraction of agricultural products, wastes and residues (including vegetable and animal substances), forestry products and waste and the biodegradeable fraction of industrial and municipal waste.
(11) The power conferred by this section on the Secretary of State and the Treasury to make an order or regulations is a power exercisable by statutory instrument under the affirmative procedure."

The noble Lord said: My Lords, this amendment, which deals with biofuels, was moved in Grand Committee. It is an important element in energy policy and it would be an important addition to the Bill. It proposes a renewable transport fuel obligation. From what we have just discussed I imagine that the Government do not particularly like the term "obligation", but it is appropriate in this case.

I have taken full account of what was said in Grand Committee. The revised amendment refers specifically to the EU directive 2003/30/EC, which has been available for some time—I believe that it was published last July—and on which consultations are meant to be taking place.

The proposal before us is to introduce legislation that would support the application of that directive. There is no doubt, both in the Government's mind and elsewhere, that there can be a big contribution to their objectives on reducing emissions by introducing progressively a proportion of renewable fuels into the energy consumed by transport. Through the development of biofuels that objective could not only be served but it would give an additional outlet for the agricultural industry, which is going through so much difficulty at the present time.

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Many countries are already introducing an element of biofuel into their petrol. The biggest example is Brazil, where up to 20 per cent biofuels have been introduced into petroleum usage, but the Brazilians have substantial amounts of sugar at their disposal which creates biofuels. We are talking in much smaller terms of increasing annually by 1 per cent until 2010. That could be an enormous benefit both in the achievement of the environmental objectives and for the agricultural industry. We believe that the amendment is in line with the EU directive and we hope that the Government will be able to support it. I beg to move.

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