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The second controversial matter arose under Part VII, which, as the right reverend Prelate explained, deals with the care of churches and provides for the abolition of the Advisory Board for Redundant Churches and its replacement by the statutory advisory committee of a new church building council. I mention this part of the measure because I had a number of letters from the chairman and members of the Advisory Board for Redundant Churches both before and after our hearing. The new statutory advisory committee will have seven members, four of whom will have specialist knowledge of architecture, archaeology, aesthetics, and so on. They will make up a majority of the sub-committee. They are appointed directly by the Secretary of State and are therefore clearly independent of the church authorities. That is one of the matters worrying the advisory board. I express my sympathy for the advisory board. No one likes being abolished; I have twice been abolished by statute, so I know what it feels like. But it was necessary to streamline the procedure, which is what the provision does.

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The advisory board had ample opportunity during the progress of the measure through the synod to make its case known. It sent us a lengthy argument before we heard the measure and its case was put by Sir Patrick Cormack, who was a doughty advocate on its behalf. We were not persuaded that the abolition of the advisory board made this measure inexpedient.

I support the Motion proposed by the right reverend Prelate. Perhaps in concluding I may remind him of his promise, which I am sure he has not forgotten, that as soon as may be he will produce a consolidated version of what are now two separate pastoral measures.

Lord Newby: My Lords, I declare an interest as a clergy spouse and a member of the Ecclesiastical Committee.

The House, and Parliament generally, is often accused of passing legislation in haste. No one can accuse the Church of England of such a shortcoming; this measure has taken seven years of gestation to reach your Lordships’ House. Huge amounts of detailed, thoughtful toil have been put in to bring us to this point, and the Ecclesiastical Committee has found the measure expedient. When the right reverend Prelate talks about this being evolution rather than revolution, he has it absolutely right. I suspect that most priests toiling in the vineyard will not notice any difference in their arrangements and will not find that the many significant challenges which they and the church face are much affected by this measure. However, it is useful and expedient and we support it.

The Lord Bishop of Exeter: My Lords, with the leave of the House, perhaps I may reply to the point raised by the noble and learned Lord, Lord Lloyd of Berwick. It is not only the intention but the earnest desire of the Church of England to produce a consolidated measure as soon as possible. We look forward to returning that here as quickly as we can.

On Question, Motion agreed to.

Renewable Transport Fuel Obligations Order 2007

8.26 pm

Lord Bassam of Brighton rose to move, That the draft order laid before the House on 9 October be approved.

The noble Lord said: My Lords, the draft Renewable Transport Fuel Obligations Order 2007, which is before us today, will give legal effect to the Government’s renewable transport fuel obligation, or the RTFO as it has become affectionately known. The draft is brought under Sections 124 and 192 of the Energy Act 2004. The RTFO is an integral part of the Government’s climate change programme and is set to deliver significant and immediate carbon savings from the transport sector. It will do this by reducing

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the amount of carbon from fossil fuels that is emitted into the atmosphere. The precise amount of carbon that the RTFO saves will, of course, depend on a wide range of factors, about which I am sure we will hear more during the debate.

The RTFO is due to become the Government’s primary support mechanism for renewable transport fuels. Today’s renewable transport fuels are biofuels—in other words, fossil fuels substitutes derived from crops and other forms of biomass. These fuels reduce overall carbon emissions because the carbon that they emit on combustion has recently been captured from the atmosphere during cultivation whereas fossil fuels release carbon that has been trapped under the surface for millions of years.

The RTFO has been under development since 2004, when the Energy Act gave us the necessary primary powers to introduce an obligation along these lines. The detail has been the subject of much discussion with stakeholders over the past three years, including two major public consultations during 2007. This draft order is a culmination of that work and sets out the detail of how the RTFO will work. In brief, the RTFO will require suppliers of fossil-based road transport fuels in the United Kingdom to redeem a certain number of renewable transport fuels certificates with the Renewable Fuels Agency each year, or to pay a buyout price.

The transport fuels suppliers will be able to acquire these certificates either by supplying renewable transport fuels themselves or by purchasing them from other transport fuels suppliers who have put renewable transport fuels on to the market. They may also be able to buy them from traders in certificates. Barring any unforeseen rapid changes in the economics of transportation fuel, we expect transport fuels suppliers to fulfil their obligations without significant resort to the buyout option. The buyout price acts as a safety valve to prevent steep increases in the price of petrol and diesel at the pump as a result of increases in the price differential between biofuels and fossil fuels.

8.30 pm

The draft RTFO order sets out a lot of the detail of how this will work. For example, it defines those suppliers who are obligated under the RTFO, primarily UK refiners and importers of fossil fuels; it lists those fuels that are eligible for renewable transport fuel certificates—that is, biodiesel, bioethanol and natural road-fuel gas produced from biomass, commonly known as biogas; it sets the level of the obligation, which is 2.5 per cent in the first year rising to 5 per cent in 2010-11; and it establishes a new non-departmental public body, the Office of the Renewable Fuels Agency, to administer the RTFO, and sets out the powers and duties of that body. Those duties include a duty to report to Parliament annually on the effectiveness of the RTFO. In addition, it sets out how renewable transport fuel certificates are to be applied for and how they are to be used. It provides that certificates can be transferred, banked for later use or revoked. It sets out the level of the buyout price, and provides for the recycling of buyout payments. Finally, it sets out

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the penalties that may apply in various circumstances. Appeals against penalties may, in the first instance, be made to the administrator. If the appellant wishes to appeal further, the Energy Act 2004 sets out that he may have recourse to the court.

The draft RTFO order should deliver significant and immediate carbon savings from the transport sector. It will provide long-term certainty for the market, and it is, I believe, the right way for us to be supporting renewable transport fuels. I beg to move.

Moved, That the draft order laid before the House on 9 October be approved. 27th Report from the Statutory Instruments Committee and 31st Report from the Merits Committee.—(Lord Bassam of Brighton.)

Lord Hanningfield: My Lords, we support enthusiastically and want to see as much biofuel use as possible. It is very important that we reduce carbon emissions and move to different forms of energy, whether it is fuel used in vehicles or electricity or whatever it is. However, we have considerable doubts about the order, and I shall pose some questions to the Minister about the ability to achieve the sort of targets that the Government are setting. At the moment, biofuels account for about 0.6 per cent of fuel that is used. The suggestion is that it could go up to 2.5 per cent in about a year and to 5 per cent by 2010. Those are very laudable objectives but I shall pose some questions as to whether they can be achieved.

I am involved a lot in my local government capacity in how we can get rid of waste and use waste as energy, as well as how we can encourage farmers, and others, to produce bio-products that might produce energy. Over the past few months, I have done a lot of work on that; in fact, I visited a plant in Germany only two weeks ago that is using agricultural bio-products to produce biofuels. However, coming from a farming background myself, I have seen a dramatic turnaround in the price of corn cereals. I do not benefit from it because I do not farm now, but a lot of those who do farm have seen a considerable increase in the price in the past 12 months. Members of my family—cousins in Norfolk—who were going to produce wheat for biofuels are not doing so because the price that the contractors are able to offer in using wheat to produce biofuels is just not plausible now. In fact, the price of cereals for other consumption has doubled in the year and the contracts that were around to produce biofuels have fallen by the wayside. That is just one problem.

There is also the dilemma of using wheat or corn to produce biofuels given the problems of starvation and food shortages throughout the world. The United Nations recently came out against the use of corn to produce biofuels. The United Nations Special Rapporteur on the Right to Food, Jean Ziegler, stated:

The very learned Professor Brown claims that the grain it takes to fill a 25-gallon tank with ethanol just once would feed one person for a whole year. There is

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a move to remove some of the trade barriers around the world so that cereals can be traded more freely. One is very concerned about the world’s starving people. Five years ago when people began to talk about using cereals and corn to produce fuel, I had doubts about it. More and more doubts are coming to the fore about whether, in order to create fuel, we should use stuff that could be fed to starving people.

If we are not going to use cereals and wheat to produce biofuels, will we then chop down the remaining forests of the world to produce them? There is a real problem as to how we shall tackle this matter. I should like the Minister to comment on that. Although we all want to reach the target, we need to encourage people to produce new crops to achieve it. I believe that miscanthus grass could be harvested to produce these fuels. However, that will not happen in one or two years; a sustained campaign is needed to encourage people to grow these new crops. The farm that I visited in Germany produced sunflowers, which can be grown at various altitudes without ripening and used to produce biofuels. However, we are not yet ready for that. Therefore, some of the targets will be difficult to achieve. I certainly cannot support the idea of using a lot of corn that could be fed to starving people.

This matter will be debated in the Commons tomorrow and my colleagues there may address it more robustly than I have done. I shall certainly not vote against the measure, but I have considerable doubts about it. I have one or two questions for the Minister. Does he accept that the Government’s refusal to commit to maintaining the 20p tax break beyond 2009 will not ease the business climate because we need investors in this area? If we are to grow new crops and implement new initiatives, we need the security of a long-term plan. If biodiesel plants are to be built, investors need a longer-term commitment on the tax regime beyond 2009. I hope that the Minister will address that.

As well as looking at the use of biofuels, which is very important, will the Government also support vehicle manufacturers to produce more fuel-efficient vehicles, thus reducing the aggregate consumption? Improving fuel consumption by 5 per cent would do a lot to reduce carbon emissions, so we should also look at that. Sometimes the whole-life impact of vehicles is important as regards carbon usage. For example, a recent study found that a four-litre V8 Jeep Wrangler had less of an overall environmental impact than a lot of dual-power vehicles being used. Therefore, there are various other ways to tackle this matter. I hope that the Minister will comment on that.

As I say, I have doubts about the order. I totally support the concept behind it but I have doubts about our ability to deliver its requirements. How can the Government help to encourage the production of more biofuels in the way that I described?

Lord Bradshaw: My Lords, in introducing the measure the Minister used the word “significant” to describe the effects that it would have on the demand for fossil fuels. I beg to differ. I believe that the demand for fossil fuels, both in this country and abroad, is rising very steeply.

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The Minister may have had the opportunity to read the full-page article in the Guardian today; it was the first time that I have read the Guardian for months. It was a very bleak article which quoted expert opinion pointing to a steep decline in worldwide oil production. It talked about the risk of war and unrest, although I am not concerned with that now. It talked about a decline of 7 per cent a year. I also read an article today—I think it was in the Times—in which someone at Virgin Trains talks about people making provision for oil to rise to $200 a barrel within the foreseeable future.

I am not going to contest this measure; it is a good and worthwhile step. The Government may have got their incentives wrong. I endorse what the noble Lord, Lord Hanningfield, said about food crops not being available to convert into ethanol. I do not think that the Swedish Government are being very clever in their boast of burning a lot of ethanol. That has to come from South America where the very forests that the noble Lord, Lord Hanningfield, referred to have to be chopped down and then the stuff has to be transported halfway across the world. It might give other people some sort of warm feeling; it does not give me one.

The long-term scenarios that this country faces are steeply rising oil prices and competition between food and biofuel crops, with possibly some perverse incentives, unless, as we shall hear later, there is the possibility of further biofuel sources that do not deny people food. My view is that we have to harness electricity to do a great deal more than it does now. Electricity can be sourced from wind, waves, barrages and nuclear. None of those has a short lead-time. It will take 10, 15 or more years to bring those sources of power on-stream. I venture to suggest that the price of oil will rise steeply. I should like to know the Treasury’s current forecast for oil prices. If prices are forecast to be very low, then I do not believe that the forecast is at all realistic.

We have to think in terms of having as much public transport driven by electricity as possible. We have to stop pricing people away from public transport. I fully agree with the noble Lord, Lord Hanningfield, about what can be done by the road transport industry. Possibly the best source of immediate power saving is personal energy saving in the home through insulation and the installation of modern equipment. That would give us a much greater dividend than will this obligation. I am not going to vote against it, but I want to draw attention to the very serious problems that this country faces and the potential for conflict if they are not addressed.

Lord Palmer: My Lords, as one of the gang of four who managed to persuade Her Majesty’s Government to accept the renewable transport fuel obligation, I am delighted to support the order, but with a few reservations. I declare an interest as a failed investor in a biofuel company in the north-east of England and as a producer of oilseed rape, all of which is exported and made into biodiesel.

As the noble Lord, Lord Hanningfield, emphasised, the new energy crop scenario is complicated, to say the least. I strongly believe that this obligation must be

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kept under constant review, particularly given that crude oil prices are nudging $90 a barrel. If one is to believe the noble Lord, Lord Bradshaw, it might reach $200 a barrel.

8.45 pm

According to the European Commission, even a 10 per cent biofuel target will not disrupt agricultural markets. We must not forget that in the United States of America there is already a 10 per cent level for bioethanol in all gasoline sales, which will rise to 15 per cent by the end of next year. It is worth remembering also that the pump price in the United States is a quarter—I repeat, a quarter—of what it is here. It has always worried me that this country is way behind in biofuel production in comparison to most of its European partners.

The recent high fuel prices here have produced a staggering £240 million-a-month windfall for the Treasury, as the AA said at the weekend. Her Majesty's Government must do more to kick-start the home biofuel industry. As other noble Lords have said, it is sheer madness to cut down the Brazilian rain forests to grow sugar and export the ethanol three-quarters of the way around the world.

All noble Lords would agree that biofuels must be produced from wholly sustainable resources and that the fuel duty rebate must be kept at least at 20p per litre for the foreseeable future. I sincerely hope that Her Majesty's Government will look very carefully at the crucial buyout price. I have long advocated that at 15p per litre it is far too low. If we really want to kick-start our home industry, the rebate ought to be increased by at least 5p per litre.

The market desperately needs confidence and I fear that only Her Majesty's Government can create that confidence. I sincerely hope that they will do their best to do that.

Lord Bilston: My Lords, I seek also to ask a question on this order. Tallow is currently used without subsidies in the oleochemical and soap industries and in industrial heating plants. Can my noble friend respond to that industry’s assertion that the introduction of subsidies to biodiesel fuels to encourage the use of tallow in these products, as envisaged in this order, will produce serious unintended consequences—massively distorting existing markets and possibly leading to the closure of important oleochemical and soap-manufacturing companies in the UK, with no environmental benefits?

Viscount Eccles: My Lords, I am a member of the Merits Committee. I wish to raise two questions; the first is technical. The statutory instrument closely follows Section 5 of the 2004 Act and spells out the effect of Sections 124 to 130, but it leaves out Section 131. The scheme tells stakeholders what the civil penalties might be if they do not conform and what rights to object they have, but fails to spell out the appeals procedure. The Minister may say that everyone knows that they can go to the High Court if they are in any kind of civil penalty procedure, if they have objected and are not satisfied with the response. However, it would have been helpful if the appeals

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procedure under the same Section 5 of the Act had been spelt out in the draft statutory instrument. Will the Minister consider an amendment to include that, as opposed to assuming that everyone would know that they could go to the High Court if they were dissatisfied, as he said in his opening remarks?

The second question arises from our discussion, and the comments of my noble friend Lord Hanningfield, about feedstock to bioethanol plants. The Explanatory Memorandum to the draft statutory instrument says that the Government are considering changes to address the concerns about sustainable feedstock production. How will the Department for Transport go about assessing such sustainable production? I take the example of palm oil, which may indeed affect the feedstock to plants making soap. Palm oil, soya bean oil and rapeseed oil are the chosen feedstocks for biodiesel. I interpolate here that the prospects for biodiesel in the UK market are much more promising than the prospects for bioethanol.

Palm oil raises controversial and complex issues, however, as do so many other things about the obligation. To what extent will other departments than the Department for Transport be involved in assessing sustainable feedstock production? Indeed, will there be a definition of sustainability that can be debated and agreed? Finally, upon what sources of scientific research will the Government rely in what is at the moment a highly disputed area of both science and environmental studies?

Lord Bassam of Brighton: My Lords, this has been a useful and interesting short discussion on a subject that raises considerable interest and passion. Like the noble Lord, Lord Bradshaw, I read the Guardian newspaper article today. I confess that I am a daily Guardian reader. I am addicted; I have been since the age of 14 or 15, and I cannot give it up. It is a current and present debate, and I recognise the powerful emotions it generates. The breadth of the debate is quite interesting; the subject generates widespread concerns across the generalised debate about environmental issues. I pay tribute to the noble Lords who have contributed. The debate underlines the benefit of the consideration given by your Lordships’ House to these matters, because noble Lords bring a great deal of knowledge and expertise—greater than mine, I am sure—to the issues involved.

Both opposition Front Benches wanted to support the order, but with qualifications. We need to start from somewhere, and that is what the order tries to do. To take on board the point made by the noble Lord, Lord Palmer, we need to kick-start the industry, which is in essence what the Government intend to achieve in bringing the order to fruition. I pay tribute to him for his earlier role in ensuring that we had an RTFO to consider in the first place, along with other noble Lords such as Lord Carter, who is sadly no longer with us.

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