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Baroness Byford: My Lords, I thank the noble Lord, Lord Ezra, for putting forward this amendment, which we debated at great length in Committee. I do not want to cover all of the ground that various noble Lords have touched on today. However, I would like to pose some questions. This afternoon I hope that we can persuade the Government to take a step further in their view on this amendment. Even if they are not willing to accept it, perhaps they may give us some encouraging words and return to the issue at Third Reading. I hope that adding my voice to this amendment will have that effect.

When this was debated in Grand Committee, the noble Lord, Lord Whitty, said that he had great sympathy for the arguments put forward. Later on, when talking about climate change objectives, he said:

I would like to add my voice to the hopes experienced by the various people within the agricultural community. The noble Lord will not have been surprised at some of the headlines when the Budget was announced and there was nothing in it on this matter. Everyone was hoping to see headlines on 15 March announcing a "breakthrough in biofuels". Elliot Morley said that the Government would not support the renewable transport fuel obligation amendment to the Energy Bill. He added that any decision on implementing the directive, which lays down minimum targets for member states, would also be subject to public consultation. The noble Lord, Lord Carter, also spoke on that matter. I ask the Minister very directly when consultation is due to start, when it is due to finish, and how soon it will be in the public domain.

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The Minister will not be surprised that on 17 March, after the Budget, a headline in Farmers Weekly read:

    "Fuel fury from farming leaders".

The farming community had very much expected something from the Budget. The publication stated:

    "Farming leaders have slammed Chancellor Gordon Brown for a 'short-sighted' view on biofuels and a hefty tax rise on red diesel".

The vice-president of the NFU, Meurig Raymond, went on to say:

    "Today's budget leaves the fledgling biofuel industry in limbo . . . At a time of increasing public concern towards the environment and energy supply, the Chancellor's views on biofuels can only be seen as short sighted".

I hope that the Government have taken those matters on board.

I do not wish to repeat what everybody else has said, but I shall refer to the debate that my honourable friend Michael Jack introduced—I think that it was on 11 March, but I shall not disagree with the noble Lord, Lord Palmer—during which Caroline Spelman said:

    "However, it is worth noting that in January this year, the UK trade in oil was at a deficit of 37 million for the first time for more than 12 years, and that a deficit has been recorded showing a decline of 416 million from the previous month"—

those are big figures—

    "So the situation is changing. That underlines the point that biofuels offer a strategic, if not immediately cheaper, alternative. That is another strong reason for their serious consideration".

She continued:

    "Several Members have pointed out that biofuels give the Government an opportunity to reduce carbon emissions by offering a closed carbon cycle. According to British Sugar"—

I am sorry that my noble friend Lord MacGregor is not in his place today, because I know that he would have spoken to this amendment—

    "a saving of up to 70 per cent. can be achieved through the use of biofuels".—[Official Report, Commons, 11/3/04; col. 1742.]

I accept the interesting point raised by my noble friend Lord Dixon-Smith that, even if it happens, it would be only a small proportion. I do not think that any noble Lords present say that it will solve all our crises, but I come from an era in which we want to have eggs in many baskets. The figures that I have just cited explain why I think that this is probably one of them.

In his winding-up speech, the Minister Mr Morley recognised the weight of support for the Commons debate but added:

    "A number of Cabinet Sub-Committees deal with energy policy and consider the issue of biofuels and the implementation of the energy White Paper, including this issue . . . We recognise that the biofuels directive can have an effect, although the targets are indicative—it should not be assumed that they are currently the Government's targets. Consultation will take place".

Again, we in this Chamber get slightly frustrated in this regard. Not one department but several must deal with the matter; and consultation will happen but we do not know when. One thing about which we can be certain is when the Bill will have cleared this House. The Minister went on to say that,

    "although we could not support the form of the amendment tabled in the other place, the Government are not opposed in principle to some form of biofuels obligation for road transport . . . We will

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    consider that as part of the process of consulting on the implementation of the biofuels directive. When that consultation is made public"—

and I challenge the Minister as to when that is—

    "therefore, it will include the issue of an obligation, which will be welcomed by many Members".—[Official Report, Commons, 11/3/04; col. 1746.]

That is where we are at the moment; again we are in this very unsatisfactory position, as we have been without this Bill going through the House. On certain aspects we are waiting for consultations to happen. We are being asked to legislate for something, yet we do not know the outcome of the consultation. Other noble Lords have said it; I shall not repeat it. I accept that the amendment would be only a small part, but from the point of view of farmers, the agricultural industry and others who are looking forward to using different technologies, if the Government do not respond more positively, this will be a wasted opportunity.

7 p.m.

Lord Whitty: My Lords, I think that noble Lords know that I regard biofuels as an important contributor to the climate change objectives. They are among the few aspects that are almost instantly available in the context of transport's contribution, an otherwise difficult area where the problem is still escalating, which is not the case in other sectors, as noble Lords have said. Biofuels could contribute to the agriculture and transport sectors and help to achieve environmental diversity and security.

However, the contribution must be seen as proportionate. The noble Lord, Lord Dixon-Smith, was perhaps too much of a wet blanket on the matter, but nevertheless we should recognise that it has a limited effect on the overall figures. The main way in which the industry and campaigners have argued that the Government should support the issue involves quite large tax incentives. We have already given 20p on biodiesel and bioethanol, which was confirmed for the next three years in the Budget. Although people will argue about the matter, that is roughly the same incentive as given, relative to the price of petrol and diesel, in countries that have done so much better in developing biofuels.

We have already made some substantial moves, but there is the important development of the directive, as noble Lords have said. We will consult on the options for meeting the objectives of the directive. On timing, the Department for Transport will issue the consultative document after Easter. The normal 12-week consultation period will apply and therefore we will complete consultation around the summer. Given that we cannot do everything through fiscal incentives, we must consider the possibility of an obligation along the lines spelt out in the document, perhaps meeting some of the problems that simply adopting the terms of the amendment would create. For example, how would the obligation be policed? I assume that the main method of obligation is through the fuel companies. How would it be possible to impose such an obligation on companies not based in the UK when dealing with imported oil? What would be the best way of dealing with non-compliance and the question of who is committing the offence?

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There are a significant number of practical concerns about how we would implement an obligation. Nevertheless, it is one of the means whereby one could deliver the objectives of the European directive, whether or not we agree the exact percentages within it. We certainly intend to consult on the matter. Accepting the amendment would commit us to pursuing that method of delivering substantial use of biofuels and the details of the quantum specified in the amendment without addressing some of the practical objections.

The debate in this House and elsewhere on the amendment and related matters is a useful precursor to the consultation exercise. However, it would not be appropriate for the House to persuade the Government to adopt the amendment as it stands before consultation is completed.

Lord Carter: My Lords, before the Minister sits down, perhaps I may ask some brief questions to seek clarification, even though we are on Report. If, by Third Reading, we were to persuade the Government that we could overcome the practical objections, and were able to produce an amendment that was permissive in the way that I have suggested—which would leave timing, percentages and so on in the Government's hands—would it include the principle of an obligation? I asked the Minister whether he could make any encouraging noises that would enable the Government to agree to the amendment or perhaps the approach suggested when the Bill reaches the Commons.

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