Low CANCER-RISK PART-RENEWABLE BLENDED DIESEL (Hansard, 11 March 1997)

§ Sir Michael Spicer
I should say that I am president of the Association of Electricity Producers. I am not quite sure what that might have to do with amendments on fuel, but I have been advised to make that declaration, just to be absolutely safe. I am raising the issues on behalf of a constituent, who has asked me to do so.
The amendments would give a small additional tax incentive for the use of diesel which is blended to reduce a specific group of pollutants—polycyclic polyaromatic hydrocarbons, known as PAH—which are suspected of inducing cancer. Later this year, the Department of the Environment is expected to classify PAH as a priority pollutant.
In this instance, the pollutant is attacked by blending diesel fuel with methylester, which is produced from rapeseed. Therefore, as well as attacking emissions suspected of being cancerous by reducing PAH compounds by a factor of 60, the blended fuel has an interesting renewable element. My amendments treat that low-cancer-risk compound in precisely the same manner as the Bill treats ultra-low-sulphur diesel in clause 7—all my amendments relate to clause 7—and simply tag on an additional exemption to the standard rate of tax.
In a letter dated 10 December 1996 to my constituent, Mr. Charles Fraser, of Dove International Ltd., the Treasury rightly expressed concern on two matters. First, it states: The objective of clause 4 is to secure improvements in air quality, particularly but not exclusively in urban areas". I completely agree with the objective of improving air quality, and my amendment, like clause 7, simply furthers it.
Secondly, the letter states: it was not our intention to favour any particular brand or formulation of fuel over another. That is a perfectly reasonable constraint on the Bill. That intention is also why my amendment No. 37—a proposed schedule 2B—has been devised very precisely to define fuel generically, in terms of its low-cancer-risk effect. There is a generic element—certainly not a brand element—to the proposal, and it is based not on any particular compound but on the generic effect of reducing diesel's potentially dangerous emissions.
215 Therefore, there is no real difference between my proposals and the Government's proposals in clause 7 on low-sulphur fuel. My amendments build on the Government's proposals, thereby enhancing them. I therefore very much hope that, on reflection, the Minister will be able to accept them.

§ Mr. Oppenheim
I am entirely at one with my hon. Friend the Member for South Worcestershire (Sir M. Spicer) in focusing on the need to reduce air pollution. An important part of the Budget's strategy has been to try to provide fiscal advantage to those using low-polluting fuels, such as low-sulphur diesel and liquid petroleum gas. We feel that one of the greatest detriments to people's quality of life, particularly in urban environments, is smoke emanating from vehicles. Much of that smoke is unnecessary, particularly because it comes from badly maintained diesel engines.
The changes to the tax system to reduce tax on low-sulphur diesel by 1p, and the very significant tax reductions on liquid petroleum gas, provide real opportunities for commercial vehicle owners and fleets to reduce emissions over the next few years. Those changes were made with a great amount of support from all parties, and because they were pushed in successive Budgets by hon. Members from both sides of the House. I was pleased to make some progress on that matter.
8.15 pm
We do not feel that the amendments are the appropriate way forward, because of the cost. By concentrating available funding on low-sulphur diesel fuel—which is relatively cheap to produce compared to the fuel mentioned by my hon. Friend the Member for South Worcestershire—we will be able to maximise the benefit.
The problem with the fuel produced by Dove, which is a mixture of refined rapeseed oil and low-sulphur diesel, is that it is much more expensive than conventional low-sulphur diesel, and does not provide a perceptible gain in emissions. The fuel's extra production cost is about 3p to 4p, and it would require a subsidy of about 2.7p to bring it into line with regular low-sulphur diesel.
There is no clear evidence that Dove fuel is any less carcinogenic than other low-sulphur diesel fuels. That was another point in our consideration of the matter.

§ Sir Michael Spicer
I understand the point about cost, but might it not be worth considering the matter—not now, but later—in relation to the money spent on renewable energy that does not necessarily produce a beneficial effect on the environment? In those terms, one might reconsider a form of renewable energy that potentially does have a very beneficial effect on the environment. In future, could not the matter be considered within the context of renewable energy and beneficial effect on the environment?

§ Mr. Oppenheim
I accept my hon. Friend's point that we must consider all fuels of that type. The problem with the fuel he has mentioned is that it is significantly more expensive than other low-sulphur fuels, without offering significant benefits. Therefore, from the point of view of 216 the taxpayer and the environment, it would be wrong to concentrate funding on one fuel when others would be more cost-effective, and would achieve the same, and possibly better, results.
If the cost gap can be narrowed, there may be an opportunity to re-examine the matter. We will always keep an open mind on it. However, my hon. Friend the Member for South Worcestershire should realise that the fuel is produced partly because of the common agricultural policy. Particularly in France and in Italy, the policy is to reduce rapeseed surpluses by refining some of it into fuel.
In the long term, once technology improves and costs are reduced, it may be a feasible solution. We have not yet reached that stage, although I can certainly give my hon. Friend an absolute assurance that we will keep an open mind on the issue. If in future the fuel is a cost-effective way in which to reduce emissions, we will certainly reconsider it.

§ Sir Michael Spicer
When my hon. Friend throws the CAP at me, I feel a little on the defensive.
I do not think that my constituent will be particularly pleased with my hon. Friend's response, although he has opened the door for the matter to be thought about in future. It has been useful for my constituent to have the opportunity for the matter to be aired on the Floor of the House. I beg to ask leave to withdraw the amendment.