HC Deb 15 December 1998 vol 322 cc878-86

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]

10.31 pm
Dr. Alan Whitehead (Southampton, Test)

I am delighted to have been selected to introduce this debate.

Freight vehicles come in all shapes and sizes, but the bulk of them are large trucks carrying goods the length and breadth of the land. Such vehicles do not contribute as much carbon dioxide to the atmosphere as cars, but we know from the recent transport White Paper that they provide a substantial load—some 9 per cent. of total carbon dioxide emissions, against 14 per cent. of the total for cars. They are also far more responsible than car traffic for certain pollutants such as small particles emitted by diesel engines, the preferred power source for most freight vehicles.

The AA recently pointed out that the 500,000 freight vehicles on the road produce more PM10—particulate matter—fine-particle emissions than the 23 million cars that are also sliding about. We also know that they contribute to the increasing congestion on the roads, and to noise pollution, as they make their deliveries in towns. Increasingly tight emission standards—soon to be tightened further—have been laid down by the European Union for exhaust gases issuing from freight vehicles.

The White Paper and the recent Green Paper on climate change set out plans to switch transport by both cars and lorries to other modes. Plans exist substantially to increase the freight carried by rail. Even if all those plans succeeded, however, only a small percentage of road transport would be shifted. At most, a switch to rail and other modes would level out road-hauled freight in the foreseeable future.

As it is likely that the articulated truck will be with us for a long time, we should consider means by which we can make it cleaner and quieter. We need to look at three elements of emissions: carbon dioxide emissions, emissions of noxious gases such as nitrogen dioxide, carbon monoxide and sulphur dioxide, and the deposit of particulates. Progress is being made with levels of all those emissions, in terms of cleaner engines; but the continued use of petrol or diesel as a fuel means that they will continue to be pumped out in substantial quantities.

What fuels might we look at? A number are potentially on offer, but only two present themselves immediately as realistic alternatives to petrol or diesel. First, we can modify diesel itself. Ultra-low-sulphur diesel will eliminate many particulate emissions, but the process of sulphur removal itself means, according to one petroleum company, that for every tonne of sulphur removed by the processing, 20 tonnes of carbon dioxide are discharged into the atmosphere. Biodiesel looks attractive and has the advantage of being CO2 neutral—it derives from crops that fix the CO2 in the first place—but the amount grown per gallon of biodiesel makes it difficult to conceive of serious production in the United Kingdom. There are similar problems with methanol or ethanol, which can also be CO2 neutral, in terms of crop production compared with the amount of fuel produced. For that reason and others, it is very expensive to produce.

The two candidates most likely to be of practical use currently are LPG—liquefied petroleum gas—and CNG—compressed natural gas. LPG has the advantage of liquefying at normal temperatures and can be carried in a relatively compact tank. For natural gas to liquefy, a deep-freeze tank is needed; otherwise, the cylinders that contain it are somewhat bulky, and that can limit the range of a vehicle using the gas. LPG is a by-product of the petroleum cracking process, while natural gas is not and it has the advantage of being freely available—literally, via the mains. Natural gas is also essentially methane which can be derived from recycling processes such as organic waste digestion or it can be collected from the organic breakdown of landfill.

Both gases are undoubtedly much cleaner than petrol in all respects and emit virtually no particles, unlike diesel. They emit roughly the same CO2 as diesel. Although they are not by any means the perfect fuel substitute for petrol or diesel and are mineral fuels, their widespread use in cars and trucks would undoubtedly make a substantial contribution towards the targets that the Government are seeking from our use of vehicles in the United Kingdom. Conversions of petrol engines are relatively cheap, but conversions of diesel engines are substantially more expensive.

The problem for the debate and for the scenario is that virtually no large vehicles in the UK run on either LPG or CNG. Altogether 1.1 million vehicles do so in Italy, as do 400,000 in Holland. The buses in Vienna have run on natural gas for 40 years. In the UK, the estimated total of LPG vehicles—mostly cars—is below 8,000. The number of LPG or CNG freight or large passenger vehicles is so low that they can be identified and marvelled at almost individually. There are 10 in my constituency in the shape of natural gas buses which run quietly and smoothly, emit no exhaust fumes and are very popular with passengers. Safeway runs a small fleet of CNG trucks in London, as does Marks and Spencer. There is a relatively small number of other such vehicles, but that is about it.

There is progress, but it is painfully slow. Powershift, supported by the Energy Saving Trust, has supported the Safeway and Marks and Spencer initiative, and aims to convert 1,000 vehicles, mostly cars, to alternative fuels in 1,000 days. It is exceeding that target. I recently opened a fleet of police cars converted to LPG for the Hampshire constabulary. As I said on the day, I hope that the local criminal fraternity will show equal public awareness by converting a similar number of getaway cars to natural gas. However, there is no disguising the fact that the UK lags behind other countries and that in respect of freight vehicles we hardly register.

To understand why that is so, I spent a day with Boots the Chemists, looking at the national distribution procedures in Nottingham. I also spent time at B and Q headquarters near Southampton, finding out about its distribution procedures. I have spoken to a number of companies and trade federations with an interest in the matter.

I believe that some larger companies at least would like to introduce alternative fuels to their fleets for environmental reasons and because they realise that regulation will move them in that direction. They feel constrained, for example, by curfews on deliveries in towns. Quieter vehicles may help. They certainly worry about meeting new EU emission standards with their current fleets. So why do they not convert? I believe that there are four main reasons.

First, companies are concerned about the instability of the market in the United Kingdom. They are not sure whether there is or will be an industry standard and that, if they invest in new vehicles, those vehicles will have any resale value. They need some view of a long-term future for one or more alternative fuels in the United Kingdom. To put it crudely, the market will be mature when Dodgy Transport Ltd. buys a CNG truck from a company that has, in turn, bought it from Boots when that company has had its use from it.

Secondly, companies see little or no incentive to switch. They are uncertain about the Government's pricing policies on fuels. They know that there is a fuel escalator, but wonder whether their chosen alternative fuel will escalate too and, if so, over what period.

Thirdly, companies see little or no evidence that the infrastructure that will genuinely allow them to run their vehicles over long distances and use them flexibly is coming into existence. The Safeway and Marks and Spencer CNG fleets run, in effect, as rail routes to and from given destinations with fuelling taking place in one location—their home depots.

Boots uses its transport flexibly. It attempts to maintain a high load level by undertaking triangular journeys. After delivering goods, its trucks pick up supplies for the central distribution depot. Other companies, such as B and Q and Tesco, attempt to back-fill—they pick up recyclable waste on the way back to their depots after delivering. They have regional distribution depots, which could be shared by trucks needing to refuel. Companies may even be able to pool the cost of LPG or CNG fuelling plants, although they do not yet seem to be doing so.

Fourthly, companies see no evidence that manufacturers are providing the engines they would need. Perkins Diesel has recently announced that it is withdrawing its alternative fuel production plant from the UK. Despite obtaining a grant from Powershift, Safeway had to source its engines in Canada. The manufacturers are reluctant to produce, because they are uncertain about the extent to which their products would be sold.

There seems to be a logjam, despite the fact that many people agree that progress is vital. The immediate, oft-touted and easy solution, it is claimed, is for the Government to reduce duty on LPG and CNG. The decision to freeze duty on natural gas and LPG in the 1998 Budget was welcome, but many people now believe that an important incentive could be a reduction in the price of road gas, which would have an effect similar to that of the price differential that converted the UK motorist to lead-free petrol. Such a step is necessary, but not sufficient. We need a declared policy of long-term stability to allow investment planning and a programme to create a refuelling infrastructure that gives confidence to that planning.

I believe that many interest groups are waiting for a lead. That lead could come from the Government, who could at least broker the first moves to generate momentum. More than one of the individuals to whom I spoke during my recent inquiries asked: "Why doesn't someone get all the players together to discuss what might be done? Why don't the fuel suppliers, the major truck fleet operators and the manufacturers all sit around a table and talk about the moves that would get the industry going? Why don't you convene something?"

My contribution, I hope, will be to raise the subject in this Adjournment debate. I recognise the work of the cleaner vehicles task force, but I am not sure whether it addresses the logjam that I have described. I ask my hon. Friend the Minister whether the Government could convene such a round table. I believe that the places around the table would quickly be filled; the results could, in a very few years, be considerable.

I offer that suggestion for what it is worth. I do not expect my hon. Friend—who always seems to have the misfortune to have to reply to Adjournment debates that I initiate—to respond immediately, but I hope that she can give me some encouragement on what I consider to be an important issue for the Government's pollution targets and the general well-being of our country.

10.44 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson)

May I say to my hon. Friend the Member for Southampton, Test (Dr. Whitehead) that I do not regard participating in Adjournment debates as a misfortune? It is a privilege, especially when the debate concerns such an important subject.

Air pollution has become a matter of increasing public concern and political importance in recent years. Understanding of the medical effects associated with pollutants has also developed. A report published by the Department of Health earlier this year estimated that, in the UK alone, the short-term effects of air pollution may hasten the deaths of between 12,000 and 24,000 vulnerable people each year. Every year, a similar number of people are admitted to hospital suffering from respiratory illnesses because of short-term air pollution.

Air pollution is of concern to us all, whether we are pedestrians, drivers or cyclists. There is an assumption that, if one is in a car, one is somehow protected from pollution. Regrettably, this is not the case. Last year, my Department published a report based on a review of around 70 studies which showed that car occupants can be subject to levels of pollution two to three times higher than those suffered by pedestrians.

The Government are fully committed to improving the quality of the air we breathe. In July last year, the Government endorsed the national air quality strategy, on the basis that it would be reviewed at the earliest opportunity, with a view to delivering cleaner air more quickly. The Government intend to consult on the outcome of the review in the new year.

Road transport is responsible for a significant proportion of air pollution—for instance, an estimated 50 per cent. of nitrogen oxides come from that source. Any attempt to improve air quality therefore needs to address the problems that road transport can cause.

Increasingly stringent standards for vehicle emissions and fuel quality play an important role in improving air quality. The European auto-oil programme is the first project to propose vehicle emission reduction targets derived from a health-based assessment of air quality needs. It sets emissions standards for both engines and fuels, with increasingly tough standards being brought in from 2000. These standards are expected to halve emissions of particulates and nitrogen oxides by 2005. Although such reductions are obviously to be warmly welcomed, in the longer term those gains could be at risk if traffic growth continues unchecked. Fortunately, the Government have stated publicly that we intend to change direction on transport policy.

It is essential to improve the environmental performance of all vehicles. The cleaner vehicles task force—to which my hon. Friend the Member for Test referred—which my right hon. Friend the Minister of Transport co-chairs along with Ian McAllister, chairman and chief executive of Ford UK, has been established to do just that, through promoting the production, purchase and use of cleaner, more fuel-efficient vehicles. At the moment, it is carefully considering, among other things, measures to improve the enforcement of existing emission standards for all vehicles, and the role of alternative fuels.

Alternative fuels such as compressed natural gas and liquid petroleum gas have an important role to play in the quest for cleaner vehicles. Their use can result in substantial reductions in emissions of pollutants such as carbon monoxide, sulphur dioxide, nitrogen oxides and particulates when compared with conventional diesel. Alternative fuels can also emit less visible smoke and odour than diesel, which is an important consideration for urban areas. They have the potential to offer significant fuel-efficiency benefits.

A less well known benefit of using alternative fuels is the potential reduction in noise compared with that generated by conventional diesel vehicles. My hon. Friend the Member for Test referred to that matter in connection with buses. For example, Safeway has a number of articulated lorries powered by natural gas which it uses for deliveries in the Hammersmith and Fulham area. Because the vehicles are so quiet, the local authority has granted them extended delivery times. A further spin-off benefit is that deliveries can now take place outside the peak rush hours, so reducing congestion.

If we are to develop a truly sustainable transport system, we must consider not only road fuel gases such as LPG and CNG, but a whole range of cleaner fuels and technologies. For example, electric hybrid and fuel cell technologies offer the possibility, in the longer term, of significant reductions in the emission of both local air pollutants and greenhouse gases.

In addition, one must not forget that improved diesel and petrol technology means that those fuels are becoming cleaner and more efficient. For example, the increasingly widespread use of ultra-low-sulphur diesel, which now comprises around 17 per cent. of total diesel supplied, is to be welcomed because that results in significant reductions in particulate emissions.

Indeed, vehicle and fuel technology is generally developing so rapidly that the relative merits of different fuels can change almost from day to day. Government support for alternative fuels and vehicle technology must therefore remain even-handed.

Urban freight distribution raises difficult tensions between business, environment and amenity. The Government support the retail industry, and we certainly want vital, economically healthy town centres; but we want our town centres to be vital from every point of view: attractive places to live, to work and to visit, whether for business or pleasure.

Quality partnerships for freight between the road haulage industry, local authorities, business and the local community will help to develop an understanding of distribution issues and problems at a local level and to promote constructive solutions that reconcile the need for access for goods and services with local environmental and social concerns. Alternative fuels could have a useful role to play in such quality partnerships. For example, Safeway and its CNG delivery vehicles provide an example of a constructive solution that allows goods to be delivered while reducing the environmental impact.

We are committed to encouraging the use of cleaner fuels such as CNG and LPG through a package of measures, including fiscal incentives. My hon. Friend touched on that point earlier. In the most recent Budget, my right hon. Friend the Chancellor froze the duty on road fuel gases for the second year in a row. We are also committed to retaining the differential in duty rates between gas fuels and diesel that existed at the 1997 Budget, to provide some certainty to the market. I hope that my hon. Friend will take comfort from that.

There is now a substantial difference between the duty on CNG and LPG and that on conventional fuels, providing a significant incentive for operators to switch from diesel to gas fuels. Indeed, the differentials are among the largest in the European Union. There are also other cost savings associated with road fuel gases; for instance, in lower maintenance costs.

The Government car service showed that there is a strong economic case for fleet operators to use gas fuels when it announced last year that the economic grounds for using road fuel gases, along with the environmental benefits, were strong enough to persuade it to convert its entire car fleet to run on CNG or LPG over the next five to six years. In a similar vein, the London borough of Merton has estimated that it will save around £5,000 a year for each of the natural gas refuse trucks that it currently operates.

The Government are offering operators of lorries and buses an incentive to adapt their vehicles to a higher environmental standard. From 1 January 1999, the reduced pollution scheme announced by the Chancellor in the March Budget will be implemented by regulations laid before Parliament last week.

Under the scheme, vehicles adapted to meet strict emissions standards will obtain a reduced pollution certificate that will reduce the vehicle excise duty by up to £500 a year. There are two ways in which the standards are likely to be achieved: by re-engining the vehicle to a higher environmental standard—including conversion to run on alternative fuels such as LPG or CNG—or by fitting a device that reduces particulate emissions. The Government believe that the scheme will encourage operators of lorries and buses to improve the environmental performance of their vehicles.

The price premium on larger gas-powered vehicles, such as buses and lorries, is more significant than for cars, partly because not enough vehicles are currently purchased to introduce significant economies of scale. To develop further the market for alternative fuels and to encourage people to buy gas and electric vehicles that are more expensive than their conventionally fuelled counterparts, my Department has funded the Powershift programme, run by the Energy Saving Trust.

Powershift's aim is to create a sustainable market for alternatively powered vehicles by pooling different companies and local authorities interested in purchasing such vehicles into partnerships to increase economies of scale; it provides grants for up to 75 per cent. of the additional cost of purchasing alternatively fuelled vehicles.

To date, Powershift has offered grants to assist in the purchase of more than 1,000 alternatively powered vehicles, including heavy goods vehicles, the majority of which have been ordered in the past year. For instance, the additional conversion costs of the Safeway lorries were partially offset by Powershift grants. Powershift has helped to secure more than £40 million-worth of orders to date.

My right hon. Friend the Minister of Transport recently announced the Government's intention to support Powershift beyond its original three-year time scale. Although the detailed content of the next phase of Powershift's work has yet to be finalised, the programme will continue to support the move to gas-fuelled vehicles but will in addition explore more fully the potential environmental and energy efficiency benefits offered by other emerging technologies such as electric hybrid and fuel cell vehicles.

Under the new system of local air quality management, local authorities must put in place action plans to deal with poor air quality. As air quality tends to be poorest in urban areas, some local authorities may look to introduce low emission zones, areas in towns or cities into which only vehicles producing very low emissions would be allowed to enter. Since gas-powered vehicles are significantly cleaner than their conventionally fuelled counterparts, it is likely that they would be allowed to enter low emission zones: those zones could therefore provide a further boost for clean fuel vehicles.

A closely related project is Alternative Traffic in Towns—or ALTER—which my right hon. Friend the Deputy Prime Minister launched in April. Local authorities participating in that Europewide initiative will commit themselves progressively to replace their public vehicle stock with new lower emission vehicles, and to allow access to designated parts of their areas only to vehicles that meet stringent emission standards.

The Government are aware that a number of barriers remain to the further uptake of clean fuel vehicles. Some of those barriers are inherent properties of the fuel. For instance, the tank required to store CNG is large and heavy enough to reduce a bus's capacity by one passenger, or a lorry's payload by around a tonne, as my hon. Friend the Member for Test mentioned. However, there are also other problems, and the cleaner vehicles task force has set up a working group to look at the role for alternative fuels, and the barriers hindering their wider introduction into the marketplace.

One of industry's main concerns is the current limited refuelling infrastructure for both CNG and, to a slightly lesser extent, LPG. The situation is improving, however, in that there are more than 150 public LPG and natural gas refuelling points nationally, and more are being built on petrol station forecourts as demand for those fuels grows. In addition, the Powershift programme has targeted depot-based fleets where refuelling points can be most easily provided.

The Government have played their part in providing certainty to the alternative fuels market through their commitment to retaining the differential in duty rates between gas fuels and diesel that existed at the 1997 Budget. We must now look to industry to resolve any difficulties surrounding refuelling infrastructure. However, I am encouraged by recent announcements from fuel suppliers. For example, Shell has announced a £10 million plan to provide a nationwide network of 200 LPG sites by 2001. Other suppliers such as BP and Mobil are also scaling-up their involvement.

The Government have shown their continuing commitment to clean fuel vehicles through fiscal incentives and by giving greater certainty to the market through initiatives such as Powershift and the cleaner vehicles task force. I am pleased to say that some parts of industry are also playing a full and active role through the provision and use of cleaner fuel vehicles and the provision of refuelling infrastructure. However, reducing the pollution produced by road transport in the face of increasing levels of traffic is a continuing challenge, and we cannot afford to be complacent. Government and industry must continue to work together to ensure that we take full advantage of the environmental benefits afforded by cleaner fuels and vehicles.

I will respond to the question put to me by my hon. Friend the Member for Test by ensuring that his remarks and mine are brought to the attention of my right hon. Friend the Minister of Transport, so that he may convey them to the other members of the cleaner vehicles task force.

Question put and agreed to.

Adjourned accordingly at one minute to Eleven o'clock.