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Secondly, the power to operate the scheme is available to an authority only via an order designating it as the pilot for a fixed period or by an order applying the

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powers to all authorities. Either way the powers can be brought into effect only by the Secretary of State. The amendment, although seeking to bridge the gap between the two types of orders, is not legally sound, as an authority cannot use the powers without action by the Secretary of State. Despite the intention, Amendment No. 226B on its own has no practical effect.

I understand that the intention is to avoid the dislocation between the pilot phase and the rollout phase. If there were a gap between the two, any authority running a pilot would temporarily have to unwind the scheme only to reinstate it, which would be confusing for residents and expensive for the council. It is a concern that we share, but we fully believe that we can manage the situation under the legislation as drafted. It is true that the situation could arise; it gives the noble Lord concern; we share that concern, but we are fairly confident that the proposed legislation will enable us to manage that situation.

Lord Greaves: My Lords, I am suitably admonished for my inadequate legal drafting, but as I do not claim expertise in that, I am not too bothered by it. I claim expertise in how local authorities work and how it affects residents, which is the substance of the issue. I am extremely grateful for the way in which the Minister has now understood the problem, and accepts that it has to be sorted out. I should be extremely grateful if he could write explaining how the problem would be tackled under the proposed legislation. He said in a bald sort of way that it could be dealt with under the Bill as it stands. I should be grateful if he would write to explain how. Will he do that?

Lord Rooker: My Lords, I could do it by making a longer speech if I am allowed to come back. I was just trying to make the point.

The Bill contains powers to report finally on each of the pilot schemes at a point at which we feel the evidence is sufficiently robust and capable of meeting the conditions set out in the legislation. Crucially, as we have said many times, we do not have to wait until the scheme has reached its final designated day before we report on it. Nor do we have to wait for every single designated pilot to run its course before we take an evidence-based decision on whether or not to roll out the powers more widely. The key thing is the quality of the evidence rather than tying ourselves down to a date.

This flexibility is crucial to the schemes and our ability to act responsively and responsibly. It also means that, as long as we designate a pilot for a sufficient period, it need not be the case that the powers run out before a decision is made whether to roll it out.

Lord Greaves: My Lords, I am very grateful for that, but I can still foresee circumstances in which there might be problems. General elections might be called, or goodness knows what might happen. I do not understand why it cannot be put into the Bill in an appropriate manner drafted by government draftsmen to say that this is possible to take account of problems that might occur. I am happy to have the Minister’s assurances. Perhaps people in the House of Commons

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might like to look at it again to make sure that it is sorted out. I thank the Minister and his colleagues for the consideration and care with which they have treated this part of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 [Renewable transport fuel obligations]:

Lord Teverson moved Amendment No. 227:

(a) causes or contributes to the reduction of carbon emissions over its total lifecycle from planting or production to use, and(b) contributes to sustainable development and the protection or enhancement of the national or global environment generally,qualifies as a permitted fuel under this Act.”

The noble Lord said: My Lords, I shall be brief. We now come to the renewable transport fuel obligations. We are all agreed that the whole purpose of this measure will fall if we do not ensure that biofuels and all the other types of fuel do not contribute to a reduction of the carbon footprint. The Bill does that to some degree in terms of the administrator’s duties and the way in which the measure is rolled out. However, we on these Benches feel that it is not tight enough and that is why we have tabled the amendment.

Whatever the Minister’s reply, it is highly unlikely that I will divide the House on this issue. At this stage I would be interested in understanding how the Government are going to ensure that even the requirements in the Bill as it stands are met. I ask this in the knowledge that this is not an easy subject for which there are easy answers, but it is important to understand the Government’s intentions in terms of enforcing the restrictions in the Bill at the present time. I beg to move.

Lord Taylor of Holbeach: My Lords, we are pleased that the noble Lord, Lord Teverson, has introduced this amendment and we support the intentions behind it. We mentioned in Committee that the market for renewable fuels must be genuinely renewable. We are committed to the idea that steps should be taken to ensure that we do not inadvertently cause more damage to the environment when acting with the aim of stopping climate change. We hope that this sort of thing will be covered by the principal aim of the Bill, which your Lordships’ voted to include; that is, that the policy will always be bound to an overall target and an overall impact. We do not agree with using biofuels that cause more damage to the environment and contribute to climate change through deforestation. That is not compatible with the general aim of stopping global warming, regardless of the fact that using them might offset some of our emissions in terms of our targets.

We need to be careful about focusing too much on emissions reduction with a specific goal in mind when the wider implication could be worse for the environment in the end. The important point underlying the amendment is supported most ardently on this side of

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the House. However, in the light of the general aim of the Bill, we do not see that this amendment is as necessary as it might otherwise have been, if only for the fact that it would not be in the RTF administrator’s power to ensure that the fuel meets the standard of this amendment. We would be very interested to hear further undertakings from the Minister regarding the ways in which he plans to deal with the RTFO.

Baroness Miller of Chilthorne Domer: My Lords, I shall speak briefly. Having served on the biofuels inquiry held by your Lordships’ House, I can say that we were depressed at how difficult the certification of biofuels is going to be. While we may talk about biofuels being certified as not having been grown in a deforested area, I can tell noble Lords that, after visiting nine countries in central and south America over the past few years, the difficulty is that the biofuel crops are grown on land that for decades was cultivated for growing food. The biofuels are certifiable, but the fact is that food growing has shifted to the newly deforested areas. Food is needed for consumption in-country and does not need to be certified. This is an easy way around the certification issue and it is very difficult to address.

I am sure that the Minister will say that this is a matter for Europe. I should be grateful if he could give me an indication of how Europe is going to address certification because the issue is important.

Lord Rooker: My Lords, my noble friend Lord Davies of Oldham has just commented that that is a tough one and the noble Baroness is right to a certain extent.

This issue is so complicated that the note I have on the purpose and effect of the amendment runs to more than six pages, but my speaking note is three pages long. I make no criticism of anyone, but it is an incredibly complex area and the House would not thank me for going through all the purposes and effects at this time of night. I shall stick to the speaking note which I hope will address most of the central issues that have been raised.

The amendment proposed is designed to place a new duty on the administrator of the renewable transport fuel obligation to ensure that only biofuels that deliver carbon savings and that contribute to sustainable development and the protection of the environment generally should be eligible under the RTFO for certificates. In Committee I said that the sentiments behind the amendment are ones with which the Government wholly agree. I also outlined why the Government believe that this is not something the UK could readily do in a way which is consistent with European Union or World Trade Organisation trade rules. We do not have agreed standards for sustainability or an agreed methodology for calculating the carbon savings of biofuels. If the UK imposed its own standards those are likely to be challenged.

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Our preferred approach has been to lobby the European Union to introduce a mandatory sustainability framework. In part it is due to these efforts that the draft renewable energy directive, published on 23 January this year,

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contains a sustainability requirement and criteria as well as a greenhouse gas saving requirement and methodology. The Government will continue to negotiate at EU level to ensure that these requirements are as robust as possible.

The proposed amendment will not be needed in order for us to implement the renewable energy directive when it is adopted. Nor do we think that it will work as intended to provide an interim carbon and sustainability regime during the period before the directive is implemented. The proposed new Section 125A(3), which the amendment would insert into the Energy Act 2004, imposes a duty without defining what is meant by sustainability or how carbon emissions are to be calculated. To avoid uncertainty, the RTF order would need to be amended to clarify the criteria for sustainability and carbon saving. The new section and the amendments to the order would have to be notified to the European Commission under the technical standards directive and would be subject to a standstill period of delay.

The initial standstill period would, we believe, be 12 months because the UK legislation would concern a matter covered by the draft renewable energy directive. The standstill period would be extended to 18 months if the Council adopts a common position on the draft directive. By the time that the standstill period is over, the renewable energy directive is likely to have been adopted and the directive provisions would supersede the proposed UK legislation.

In addition to the standstill required by the technical standards directive, further delays might arise from compliance with the Government’s obligation under the Energy Act to consult on the required amendments to the RTF order and with the affirmative resolution procedure applicable to the amending order. With the delays described, in reality the choice is either to continue with the renewable transport fuels obligation we have now, with a reporting mechanism rather than mandatory standards, until the directive, containing sustainability and greenhouse gas saving requirements, is implemented, or to revoke the order and withdraw the renewable transport fuels obligation until the directive is implemented. It is better to continue with the RTFO and its reporting mechanism, which will encourage the development of information supply chains. This will help the development of mandatory standards in the future.

On a couple of points that were also raised, it is worth putting on record that the definition of a sustainable biofuel and the methodology for calculating carbon savings are rapidly evolving. Trying to impose standards before any consensus is reached will be difficult. The RTFO carbon and sustainability reporting mechanism is an important first step towards mandatory standards. The renewable energy directive will, when adopted, provide mandatory standards on an EU-wide basis. We hope and believe that this will be generally welcomed. UK officials will be working hard in the detailed negotiations to ensure that the standards will deliver the right results.

The Government are taking seriously the concerns about the sustainability of biofuels. On 21 February the Government announced a review, led by the Renewable

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Fuels Agency, of the emerging evidence of the indirect impacts of biofuel production and what these mean for future biofuel policies and targets. The review will take into account recent studies that have suggested that the indirect or displacement impacts of biofuels have not been properly taken into account in earlier carbon-saving calculation methodologies. Initial analysis will be provided to Ministers as soon as possible, with a full report to follow over the summer. The review should help to ensure that we have the right evidence base to support decisions on the future of the renewable transport fuel obligation scheme and longer-term targets and, we hope, cover exactly the kind of example that the noble Baroness, Lady Miller, gave of land being swapped for one purpose to avoid having the certificate and used for another purpose—in this case, chopping down the trees and growing food—that does not require the certificate. Clearly, the whole chain is not right; it is not consistent with what we all understand as sustainable biofuels. The issue here is serious. My two notes cover the very point that the noble Baroness has raised, so she has scored a bull’s-eye there. We hope to cover that with what we have announced.

I cannot defend the delays, by the way. That is the procedure under the EU for this legislation, and there is no way we can change it. These enormous delays are due to the technical standards directive. In a way, one can see why that process is there: if you come along with a EU-wide standard, you do not want all 27 members going off and doing their own thing. You would end up with a standstill. The alternatives are that we pull back from what we have been doing and do nothing, which would not send the right signals, or that we do what we have been doing to create a reporting mechanism and gather some better information. Of the two courses the latter is preferable, and that is the one there would be consensus for.

Lord Teverson: My Lords, I thank the Minister for his extensive reply, which I have to admit was very persuasive. For the second time this evening I am fully persuaded. The irony, as the Minister well knows, is that the whole biofuel debate moves at a faster rate than political dialogue. To be frank, I am not sure that there is an easy answer. I am persuaded by the Minister and by the momentum we have had in terms of the European Union to ensure that we do as well as we can in that route. That becomes particularly important within a single market.

At the end of the day, though, the only way that this can be solved is through a price mechanism that values the rainforest that would otherwise be chopped down. There will be an economic incentive if there is a greater economic benefit from rainforests not being cut down for other uses, and the system will solve itself through the market. Otherwise, as with anything else, the market will find a way around and rainforests and other important carbon sink areas will disappear, whatever artificial constraints we put on it. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 228:

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The noble Baroness said: My Lords, the amendment aims to deal with reporting authorities and who should be reporting. Some time ago, in Clauses 12, 13, 14 and 15 in the Bill, we discussed accounting and what should be accounted for. We discussed the emissions that the UK itself emits and the reductions that the UK buys in terms of carbon units from abroad. The only area we have not discussed is emissions that occur overseas but are actually financed by the UK. That is where the Export Credits Guarantee Department comes in. Through that department we are financing some £1.8 billion worth of support for UK exporters. I have tabled the amendment because much of that support is for very carbon-intensive industries.

The amendment requires an additional section to be inserted into the Act governing the operations of the ECGD to make it a statutory obligation that it should publicly report on the greenhouse gas emissions associated with the activities of that department and the projects that it supports—as outlined in Sections 1, 2 and 3 of the Act that set it up. I am not asking for a lot in this amendment because the department currently measures the levels of its greenhouse gas emissions caused by the projects that it supports. However, although that information is already gathered, it is not publicly available. The fact that the department already collects all the information on greenhouse gas emissions associated with the projects it supports from the questionnaires that it sends out to its customers, means that to require it to report that information and be transparent in its operations is a very short step.

The purpose of the amendment is therefore to ask the Minister whether the Government will require that to happen. I beg to move.

Lord Dubs: My Lords, I support the amendment. It seems to me perfectly sensible. It is not asking the ECGD to do anything extra in collecting information. All we are asking that body to do is to publish information that it already has. I understand that the German equivalent—the German export credit agency—already has to publish such information. It would not be very difficult for us to do so. It represents a commitment in line with the commitments that various government departments have made on climate change and I urge the Government to be sympathetic to the arguments in the amendment.

Lord Rooker: My Lords, unless I have completely misunderstood the background note to this amendment and the speeches from my noble friend Lord Dubs and the noble Baroness, Lady Miller of Chilthorne Domer, who say that they are not asking a lot—actually they are asking quite a lot and they probably do not quite appreciate it. My noble friend raised an issue about what they are doing in Germany, which has figured a

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lot tonight. If Germany is doing what I am about to say, and it is the reason why we could not accept this, further and better particulars need to wing their way down the Corridor.

The noble Baroness is absolutely right to raise the issue. Looking at the broader impact, what the UK is funding through taxpayers’ money and the activities of UK companies is very important. It is a complex area and there are some difficulties with the approach taken in the proposed amendment. It would place a new statutory purpose—as well as a significant burden of work—on the Export Credits Guarantee Department. The ECGD’s role is to benefit the UK economy by helping exporters of UK goods and services to win business, and UK firms to invest overseas, by providing guarantees, insurance and reinsurance against loss.

Where appropriate, the department undertakes rigorous environmental and social impact assessments, as required in its business principles. These cover the environmental impact of projects on their surroundings, the effects upon local populations, and the sustainability of the development. Like all government departments, the Export Credits Guarantee Department monitors its own sustainability through its Sustainable Development Action Plan. In 2007, the Sustainable Development Commission declared the department the most improved government department across a range of sustainability indicators.

However, the role of the Export Credits Guarantee Department is not to measure the emissions of all the projects it supports and we do not believe that it should do that. The controlling owners or managers should report those projects’ emissions. But the Export Credits Guarantee Department neither owns nor manages projects: it provides insurance to UK enterprises. No international rules call for export credit agencies to report emissions. I also suggest that an amendment to the Climate Change Bill is not the right place for this. The Export Credits Guarantee Department is subject to an Act which can be amended with proper scrutiny by Parliament. Dropping it in the Bill at this stage does not allow for that, with all due respect. Care and attention must be exercised before we rush into a new primary purpose for a government department, which is what we would be doing, and the costs and benefits must be assessed in advance.

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