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Lord Carter: My Lords, I have put my name to this amendment because I have been involved in Grand Committee and at Report stage. As the Minister knows, we have been trying extremely hard to find an amendment that the Government will find acceptable. Like the noble Lord, Lord Palmer, I declare an interest as the unpaid vice-chairman of the British Association for Biofuels and Oils.

In this amendment we have tried to meet the points that have been made by the Minister. We have included the other renewable fuels and biodiesel. We know that the Government are consulting and when that consultation is over they will have to produce their

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proposals to meet the directive, which has been mentioned. This amendment provides them with a way of doing that.

I have two quotations. When we discussed this matter at Report stage the Minister said:

    "I am open to discussing any alternative amendment that the noble Lord, Lord Carter, or anyone else, brings forward. But anything which appears to drive the Government to one conclusion on this matter would be somewhat difficult. With that qualification, I shall be happy to talk to anybody".—[Official Report, 29/3/04; cols. 1094–95.]

We drafted the amendment expressly so that the Government are not drawn to any one conclusion. I also have a letter from Mr John Healey, the Treasury Minister, to Mr Peter Clery, the chairman of BABFO, which states that,

    "the Government remains committed to promoting biofuels, and we are not opposed in principle to some form of biofuels obligation for road transport as this may well offer an effective way of promoting further use of biofuels in the UK. Although we must weigh up the merits of such an approach against other possible options, it could be one of a number of options to help the UK meet the targets we need to set under the Biofuels Directive".

We have drafted the amendment exactly to meet the points made in that letter.

There is one point that has not been raised before and which we believe is important. When the Government reach the end of the consultation and decide to introduce a policy on renewable and transport fuels, how will they do so unless a provision of this nature is somewhere in legislation? I am not clear that they will be able to do so even if they wanted to. I agree that if the Government accept the amendment, it could mean substantial redrafting in the Commons. It is important that there is a provision in the Bill so that if the Government wish to introduce the policy, they have the power to do so. It would be helpful if my noble friend could tell the House, should he decide not to accept the amendment, how the Government would be able to introduce such a policy.

This is the first House to consider the Bill. There will be every opportunity in the House of Commons for the Government to amend and improve this approach if they wish. The amendment is entirely permissive; it does not tie the Government's hands. I hate to say it, but it leaves the Government with the option not to do anything if that is what they choose to do. We, of course, shall be lobbying hard for biofuels as an alternative to be accepted, but the amendment does not tie the Government's hands; it merely provides a means, through legislation, for the Government to act if they wish to do so.

I hope that my noble friend the Minister will be able to accept the amendment as drafted. Then, if the Government wish to amend the drafting or whatever in the House of Commons, they will be free to do so.

10.15 p.m.

Lord MacGregor of Pulham Market: My Lords, I shall speak very briefly and follow the good example of others who have spoken before me in so doing. I declare an interest, as I have in earlier debates, as a non-executive director of Associated British Foods, which owns British Sugar.

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But it is because of the wider considerations that I support the amendment. I wish to draw attention to the point made very briefly by the noble Lord, Lord Palmer, about its impact on agriculture and the farming community. Indeed, the Minister has been extremely sympathetic all the way through in his response to the general approach. It has been generally agreed on all sides for some considerable time now that one of the ways forward for the farming community is diversification, alternative land use and alternative use of crops. It seems to me that this classically falls into this category.

Given the fact that the sugar regime is due to be amended from 2006 onwards, the possibilities for oilseed rape, for sugar beet, in particular, and for other cereals give farmers considerable cause for hope. I speak as one who comes from a part of the country which has a very strong cereal and sugar beet growing industry. That is one reason why I support the amendment.

The noble Lord, Lord Carter, made a very good point about the legislative opportunities for introducing this subject if it is not done here. If it requires legislation—as I suspect it will—as a small item it is the kind of thing that will get dropped out and not be brought forward as part of a government Bill unless there is another wider opportunity to include it. Here is this wider opportunity. I hope that it will be taken.

Baroness Byford: My Lords, I support the thrust of the amendment. I hope that on this occasion the Government will be able to accept it. As the noble Lord, Lord Carter, said, if they cannot accept the wording of the amendment, perhaps they will accept the thrust behind it and come back with something in another place.

I do not have to declare an interest with regard to BABFO but we do grow sugar beet on the farm in Suffolk.

Looking back on our debates, I should be grateful if the Minister, if he is able, would respond today to the question raised by the noble Lord, Lord Tombs, at Report stage. The noble Lord said that the Minister had commented that,

    "it is difficult to tax or apply obligations to overseas-owned companies"—

and asked—

    "Does he accept that in the electricity renewables obligation we do just that with the French, German and American-owned companies operating in this country?".—[Official Report, 29/3/04; col. 1094.]

I would be glad if the Minister could respond to the noble Lord's question because I have not yet seen a reply.

Other noble Lords have covered the issue in great depth and I shall not delay the House. The Minister has indicated his sympathy all the way through. I believe the trouble has been with the purse strings in the Treasury. We may get a fuller explanation today. I hope that we will hear something positive as this is the last stage at which we in this House can do anything about it.

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I am grateful to the Minister and to all noble Lords, who have worked so thoroughly behind the scenes between the various stages. The workings of the House are very important because not everything happens on the Floor of the House; a great deal of pressure is exerted and discussions go on behind the scenes between the various stages.

In supporting the amendment I hope that, if the Government cannot accept it, they will make a strong commitment to the House to look at the issue again before the Bill completes all its stages in another place.

Lord Whitty: My Lords, as I think the House knows—certainly those participating in this debate know it—I have been a strong supporter of biofuels making a contribution to our climate change programme through transport and also as an outlet for the agricultural sector. The biofuels directive, which we very much welcome, gives us the opportunity to look afresh at mechanisms whereby we can deliver a higher proportion of our fuels through biofuels, preferably biofuels which are produced from crops of various sorts grown in this country.

Clearly there is an obligation on us to consult on how we will deliver the biofuels directive. The Department for Transport will be issuing a consultation document on that very shortly. One mechanism that it will propose as an option will undoubtedly be the imposition of a renewables obligation of the sort outlined in the amendment. There will also be other options, but the renewable fuels obligation would be part of that approach and one of the major options to be put before the consultees.

I am gratified that the amendment before us tonight is not the prescriptive amendment that it was at earlier stages, but is more permissive. There are a number of problems about the amendment as it stands. For example, how would it operate in practice? To whom would the obligation apply? What fuels would be covered? How should the scheme be policed and administered? How would companies demonstrate compliance? What would the information requirements be? Would there be buy-outs and trading? The noble Baroness, Lady Byford, raised a point about international companies. How would the obligation operate in such a way as to minimise the obligation being fulfilled simply by imported biofuels or other renewables? That is the point at which, in this context, the international ownership of the oil companies presents a potential problem.

Some of these issues can be dealt with by secondary legislation, but some of them probably ought to be resolved, at least in principle, on the face of the Bill. The current wording would therefore require significant amendment.

I am also mindful of the point made by my noble friend Lord Carter. If, at the end of the consultation, there is solid support for a movement towards an obligation, where are the powers for us to impose such an obligation? If we do not begin to talk about it now, we might have to invent some other vehicle for this.

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While it would be true to say that the exact form of the obligation will require some considerable work and probably some more detailed attention at a later stage, in the circumstances, given the widespread support for such an obligation and the timing of the consultation, and on the understanding that what comes out of the Commons may be substantially different from the amendment as drafted, I am prepared to accept the amendment.

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