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Clauses 72 to 74 agreed to.

Schedule 3 agreed to.

Clauses 75 to 79 agreed to.

Lord Redesdale moved Amendment No. 53:

The noble Lord said: I have the happy experience of moving an amendment on an issue that should be clear to all noble Lords, because it is a main component in the plot of “The Archers”. Why I need to continue, and not sit down at this very moment, is that the Minister will stand up and say that because it has been explained carefully on “The Archers”, he will immediately accept the amendment, because it would be beyond the wit of man to do otherwise. However, just in case

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the Minister is not a great fan of “The Archers”—and it looks like we will miss today’s instalment, anyway—perhaps I should explain the purpose of the amendment.

We come to the odorous subject of biomethane—that is one of the issues in the plot of “The Archers”. It is a serious issue and it is unfortunate that it has not been dealt with in the Bill, because it needs to be dealt with quickly, as it will be a major component of many aspects of waste recycling and our use of waste and landfill in the future. The purpose of the amendment is simple, although many noble Lords, when they read an amendment, ask, “Does it actually do what you think it does?” because of the language it is dressed up in. The purpose of the amendment is that biomethane should attract renewable obligation credits. Why is this important? We are looking at a very important future source of energy; however, to kickstart that energy, we have to find a way for biomethane to be injected into the grid and for its economics to work.

Where does biomethane come from? It comes from three main sources: anaerobic digestion plants, manure—a number of farm plants deal exclusively with farm manure—and landfill sites. The importance of taking biomethane from those sites relates not just to the energy that it can produce but also to the fact that, left to rot on its own, it will escape to the atmosphere. It is a major greenhouse gas and causes problems associated with greenhouse gases. Biomethane can be dealt with by being extracted and purified, and the CO2 can be taken out of the system. The methane is not released directly to the atmosphere, but will be converted into carbon dioxide. It is not a great solution, because of the problems associated with carbon dioxide, but it is a great deal better than releasing methane into the atmosphere.

Can we describe biomethane as “renewable”? That is another issue that has to be looked at. I would argue that it is one of the major renewables, especially if it comes from manure. I have had many arguments in the context of agriculture about greenhouse emissions from the methane produced by cows and sheep. One of the major problems, which is interesting, is that it is difficult to tell what those emissions would be, unless you attached a bag to both ends of the animal. That would mean that you would end up with a dead cow or sheep, but you would know what the biomethane output was. I raise that only because the climate-change ambassador for New Zealand and I had lunch. I was surprised to hear that New Zealand claims that it has less flatulent sheep than we have here. I find that very hard to accept, because its criteria are based on the intensive rearing of sheep which means that there is a higher methane output. In Northumberland, where there is at worst one sheep in every two acres, that is not the case at all. However, we still have the problem of the methane, and biomethane removes that.

6.45 pm

As a renewable, biomethane has major benefits because it is very energy-efficient, especially if it is added to a CHP plant. We will be coming on to combined heat and power, which makes the use of any gas far more efficient. One problem, however, is that these processes, as has been expressed in “The Archers”,

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are quite odorous in their nature, so you do not want to stick the plants close to tower blocks where a district heat system could be used. You might win on one side but lose the support of many of the residents in another aspect.

Much of the methane is losing out on its major benefit through CHP because it would have to be transported from site and therefore injected into the gas grid. This is the important aspect of the Bill. The attraction of renewable obligation credits is that they would allow biomethane to be injected into the localised grid, over and above being dealt with by local energy electricity generation—or, as in the case of landfill, which is a major problem, by sometimes being flared off directly into the atmosphere. The latter has been banned on offshore oil and gas rigs, and it seems incredible that we allow it to take place on landfill sites, which are a direct result of human activity.

We need to look at the benefits of what is happening in other parts of the world. Within Europe, it has been estimated that if the sustainable production of biomethane were optimised at 500 billion metric cubic whatever it is—I love it when they give you a briefing and you have no idea what the unit you are measuring represents. I apologise; I have just realised that they have a different measuring system in my notes. The calculation is that optimisation would result in a reduction of 15 per cent of Europe’s CO2 emissions.

Although I have a number of examples from within Europe, the scale of this should be looked at with regard to the situation in America. Huckaby Ridge in Stephenville, Texas, claims to be the largest biogas production facility in the world with an output of approximately 650,000—whatever it is you measure biogas in—which is the equivalent of 1 billion cubic feet. That is the energy equivalent of more than 4.6 million gallons of heating oil, and it uses the manure of 10,000 dairy cows and waste from the agriculture industry. That is important; if the manure were not being treated in that way then that methane would be released into the atmosphere. It is such a successful scheme that they are looking to introduce it in other, vast areas.

I find it incredible that, with the industries we have in this country such as the dairy industry, where so many farmers could benefit from that scheme as an added source of income, we are not looking at adopting it. It might cause a problem for the renewable obligations credits but would have massive benefits, not only for the country but in our fight against climate change. I beg to move.

The Duke of Montrose: I declare an interest as a farmer who might consider getting involved in the production of biomethane, but my question is on a separate subject—a question to the noble Lord, Lord Redesdale. I am interested that he has limited his amendment to biomethane, because, presumably, the same problems and opportunities arise on the question of naturally produced methane. In fact, the methane from waste sites needs no incentive to be captured and fed in to the grid if the power is there to do so. If he reconsiders his amendment, he may consider whether to include coal mine methane, which comes out in very

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large quantities, from both operating coal mines—not that we have many—and abandoned coal mines. Perhaps that should be considered further in the amendment.

Lord Jenkin of Roding: I have listened with great interest to the agricultural nature of this debate, but I think that it is now recognised that methane from abandoned coal mines is in fact biomethane. Those are not discrete pockets of methane lying there to be tapped but are the result of biological activity on the environmental coal faces. Here we have a considerable potential source of energy that, at the moment in this country, is hardly being tapped.

To compare that with the position in Germany, the Germans have for some years given significant support to their coal mine methane industry, with the result that firms have invested substantially. I do not have a figure, but I have always been told that that is making a significant addition to the energy requirements of that country. This is not a carbon-free source; on the contrary, it is clearly carbon; but at the same time, it is a source of energy. It is a source that in effect utilises the coal without the deleterious consequences of burning the coal which, as we discussed the other day, until we have a proper economic carbon capture and storage process, gives rise to substantial emissions.

Why are the Government so chary of giving support to what is at the moment in this country a fledgling coal mine methane industry? I have pursued this on an all-party basis with the noble Lord, Lord Ezra, and other noble Lords who, sadly, are no longer with us. We got enormous encouragement from Mr Michael Meacher, who was then the Minister—not at Defra. The noble Lord, Lord Whitty, will put me right. He was not shouted down, because they do not do that, but the civil servants sitting with him made it absolutely clear that there was no way that he could be allowed to support the coal mine methane industry in this country. We should be able to have an effective coal mine methane industry. If not, why not?

My only other point, following up the points made by my noble friend, is that when the Liverpool Garden Festival site was prepared, it was on the site known in Liverpool as the Cassy, otherwise the cast iron shore. It had been the dumping ground for waste of all kinds over centuries. When it was covered up to build the Liverpool Garden Festival on top of it, the methane generated by that waste was sufficient to provide a supply for 20 years.

I am sure that the same happens elsewhere in the country, but the noble Lord, Lord Redesdale, is right to say that methane could be an important addition to our armoury of energy sources—one which would be significantly less damaging than burning coal and which could, I believe, make a significant contribution to our well-being. I should like an answer from the Minister to the following question. If he cannot give it today, perhaps he will be kind enough to write to me. Why cannot the Government provide the same sort of support to the coal mine methane industry in this country that the German Government have given to their industry in that country?

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Lord Oxburgh: I cannot speak to the detail of the amendment, but fundamentally it is very sensible and we ought to do something along these lines. It is unfortunate that methane is flared off, but we have to bear in mind that methane is a much more potent greenhouse gas than CO2—depending on the circumstances, somewhere between 20 and 60 times more potent. Therefore, if there is no way of using it locally, it is much better for the methane to be flared off rather than allow it to escape directly into the atmosphere. However, at root I agree completely with the noble Lord, Lord Jenkin.

It is sensible to trap coal bed methane—biomethane—not only for environmental reasons but also because it is a valuable source of power. The thing about coal bed methane is that it continuously seeps into the atmosphere in a diffuse way. If we were to take steps to trap it and pipe it up from underground, we would get a double benefit by reducing the national greenhouse gas burden and acquiring an extra source of energy. I hope very much that something can be done in this general direction.

Lord Whitty: I was not going to intervene in this debate but the noble Lord, Lord Jenkin, reminded me that I was present at one of his meetings with Mr Michael Meacher. He is absolutely right that there was some deep resistance, particularly in what is now my noble friend’s department, to what seemed to me to be a very sensible proposition. I support the biomethane approach outlined by the noble Lord, Lord Redesdale, but the Government need to look again at the broader issue of methane. A number of prejudices seem to have been overcome in government departments in relation to renewable and low-carbon energy, but some remain. Like the noble Lord, Lord Jenkin, at that meeting I was completely bamboozled as to why the officials advising us took such a strong line. I do not expect my noble friend to respond today but perhaps he will make a few inquiries.

Lord Redesdale: Perhaps I should answer the question put to me by the noble Lord, Lord Jenkin. The amendment talks about how to deal with the renewables obligation and biomethane, and it does not actually exclude coal-based methane. In fact, it could be described as biomethane. I just did not mention it, which perhaps I should have done.

Baroness Carnegy of Lour: This has been an interesting discussion. The noble Lord, Lord Redesdale, spoke at length about biomethane from manure, which surprised me slightly because if you do not return manure to the soil, you have to use artificial manure. On the farm where I live, all the manure is returned to the soil. I know that dairy farmers have to get rid of a great deal of slurry, but it is strange to hear the Liberal Democrats, who are so green, suggest that manure should not be returned to the soil but be turned into biomethane.

The uses for manure are rather limited. The noble Lord confused us by talking about flatulent sheep in New Zealand. That is a different issue and concerns how methane gets into the atmosphere. We have a responsibility to try to alter what cattle eat so that less methane is released into the atmosphere, but that is a different point.

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Lord Redesdale: Perhaps I should mention that once the biomethane has been extracted, the rest of the manure can be used as a fertiliser.

7 pm

Lord Davies of Oldham: As ever, I have enjoyed the debate, although I am not sure that I will engage in “The Archers” dimension of it too much, despite the fact that the definition of a traffic jam when I was young was outside broadcasters going to the village next to us to film Grace’s wedding for “The Archers”. I have some historic link to the programme but I shall not complete my submission before the programme is over this evening, so I cannot adopt the novel suggestion of the noble Lord, Lord Redesdale, on how I should reply to the debate.

I am also reeling from the shock of my noble friend Lord Whitty suggesting that departments harbour prejudices. Informed judgment, which may differ from the one that he follows is one thing, but the idea that departments harbour prejudices is deeply shocking, and I hope that I can prove to him that our position is not established on the basis of prejudice but a real concern about the implications for the renewables obligation of accepting this amendment.

Let me start on points of disagreement before getting on to the more difficult issues. We accept what the noble Lord, Lord Redesdale, maintains as his major proposition that biogas is renewable when it is derived from plant and animal matter. It is therefore already eligible for reward under the renewables obligation. We are not in conflict at all on that part of the issue. I shall come to the difficulties that we have in a moment, but I emphasise that we have always recognised the importance of biogas and its versatility, which is why the Department for Environment, Food and Rural Affairs announced earlier this year that £10 million would be made available for the construction of new commercial-scale anaerobic digestion plant. The Government are acting towards stimulating development.

Electricity generated from biogas will be eligible for two ROCs per MWh under the proposed changes to the renewables obligation, and biogas can receive support under the renewable transport fuel obligation. It can also be used to generate heat, as noble Lords have indicated in this short debate, and therefore may be eligible to receive support under any future mechanism to support renewable heat, which will be the subject of later discussions in Committee.

By removing the carbon dioxide and other impurities, biogas can be used to make biomethane, which could be injected directly into the gas network. It is theoretically possible to inject biomethane directly into the gas network in the UK provided that the biomethane can meet gas quality standards and the pressure requirements of the national grid.

So far, so good. We recognise the advantages that biogas could bring across electricity, heat and transport, but there are difficulties with this amendment that I hope are based on rational judgment and not prejudices within the department. If accepted, the new clause would mean that biomethane gas was fed into the gas grid and then an equivalent amount of gas used by a specified consumer could be treated as renewable—even

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if it had been supplied from a gas-fired station—for the purposes of the renewables obligation if used to generate electricity, or the road transport fuel obligation if used as a transport fuel.

Such a move would widen the definition of a renewable source of electricity but break the direct link with the award of ROCs for actual generation. That is a fundamental principle of the renewables obligation. Even if it is contended that this is a well-known prejudice of the department, I shall defend the principle against the amendment.

Lord Redesdale: Far be it for me to say that the department is not principled in its objection, and it is certainly steadfast in it. However, I take issue with the generation of electricity from renewables being fed into the grid and somehow moving immutably from a wind turbine offshore, of which I am a great supporter, to the consumer buying that green electricity, who might be anywhere. You cannot tell where electricity is because you feed from renewable sources into the national grid. There is no colour coding system to make the electricity come out green. Even though ROCs are being used for wind turbines, the electricity could have been generated from a nuclear power plant, coal power station or gas power station. It could have been generated from a wind turbine, but that cannot be proven, exactly like biomethane. If you feed biomethane into the grid you do not know what will come out the other end. I find it interesting that the Minister is saying that there is a direct link between green electricity production and use, and biomethane production and then biomethane use.

Lord Davies of Oldham: No, I am saying that there is a direct link between the actual generation and the award of ROCs and I worry that this amendment would abrogate that principle, which is crucial to the Government’s strategy. Far from conceding the point, I am enthusiastic about the contribution that biomethane can make.

Let me say to the noble Lord, Lord Jenkin, that we have problems with the coalfield position. There is obviously an issue of how clean the gas is in terms of carbon dioxide, and that is why it is not supported under the renewable obligation. But we are offering an incentive through explicitly exempting coal methane from the climate change levy.

Lord Jenkin of Roding: We have heard that before.

Lord Davies of Oldham: I am aware of that. There is nothing new under the sun and certainly not from this Dispatch Box. I know that the noble Lord wants us to move on and I will listen carefully to his argument, but I am not sure about the noble Lord’s case to change the concept of the renewable obligation in order to produce this particular stimulus as far as coal methane is concerned. That is the nature of the problem. The noble Lord will recognise that the Government and the noble Lord, Lord Redesdale, are on the same side of the argument about how we can generate electricity from increasing numbers of renewable resources,

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but I ask him to recognise that this amendment is flawed because it breaks the link that is crucial to the Government's position.

Lord Oxburgh: Could the link be maintained if the injector of methane made a deal with someone who burned gas to generate electricity to claim a ROC equivalent on the electricity generated by the equivalent amount of gas that had gone into the system?

Lord Davies of Oldham: Let me seek to elaborate the principle—or, as my noble friend Lord Whitty might say, the prejudice—of the department in this area. We believe that it is important that the consumer does not support generation that is not from renewable sources. For other plants which burn fuels such as biomass, the renewable obligation has always required both delivery of the actual fuel to the station and that the biomass content of the fuel can be determined on the site. Breaking that link opens significant scope—and I hope that this answers the noble Lord, Lord Oxburgh—for double counting or even fraud, as audit of the arrangements would be very problematic indeed. For example, it would be possible for the renewable biomethane gas in theory to be shipped and premixed with fossil fuel from overseas as part of the load from a liquefied natural gas tanker. How would Ofgem tell whether that was the case? Arranging for the shipping might also be a low hurdle to clear to benefit from the renewables obligation and it would be difficult to audit to ensure that consumers received value for money. It is possible that those issues may be resolved, but we do not think that that is the case at present. We are not sure that we would be able to control the operation of the renewables obligation.

The noble Lord, of all people, ought not to seek to occasion the Government to pursue a strategy which might open the door not to the increased consumption of renewables but to their substitution through the subsidy and to the destruction of the crucial relationship between the renewables obligation and the generation of electricity. Once we depart from that point, we come up against difficulties.

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