HC Deb 20 November 2003 vol 413 cc939-40
4. Norman Lamb (North Norfolk)

If she will make a statement on the impact of the development of a biofuels industry on the rural economy. [139831]

The Minister for the Environment (Mr. Elliot Morley)

Our assessments indicate that if the UK met the reference target in the EU biofuels directive for the substitution of 5.75 per cent. of fossil fuels by biofuels by 2010, that could create or sustain up to 6,000 jobs in the agriculture sector. It would imply production from up to 1 million hectares of land, taking into account the contribution from waste cooking oil.

Norman Lamb

I am pleased that the Minister recognises the potential beneficial impact of the biofuels industry on the rural economy, as well as on the environment in meeting our Kyoto targets. Will he encourage the Chancellor to take the opportunity in his pre-Budget report to end the ludicrous situation whereby the duty reduction on liquefied petroleum gas—LPG—fossil fuel is double that on bioethanol and biodiesel? Surely, that must come to an end.

Mr. Morley

I understand the hon. Gentleman's point. However, he should bear in mind the 20p per litre reduction on biofuels. On top of that, there is an additional payment for farmers who grow biofuel crops, and they gain extra advantages from being able to grow biofuel crops on set-aside land. Switching to biofuel crops has a range of advantages that do not apply to LPG. The argument for the differential on LPG relates to the fitting of LPG equipment at garages and of conversion, which have considerable costs that do not apply to biodiesel and biofuel vehicles. Nevertheless, I shall certainly bear the hon. Gentleman's point in mind.

David Taylor (North-West Leicestershire)

The existing rate of duty derogation of 20p a litre has clearly been insufficient to stimulate domestic production. The Select Committee on Environment, Food and Rural Affairs, of which I am a member, has described the Government's biofuel policy as muddled and unfocused. If that is true, will the Minister tell us how the muddle can be clarified and the impact sharpened in the near future?

Mr. Morley

That is not necessarily a fair description. We have taken note of what the Select Committee report has said, and we take it seriously, as we do all its reports. It has made a very helpful contribution to this debate. There is no doubt that the current duty cut has stimulated the use of biodiesel, in particular, from the use of waste oils. That has been quite beneficial, but we need to examine whether the amount of duty cut is appropriate. We also need to consider the whole ecological footprint of the industry, to see whether such cuts are, in the end, justified.

Mr. Keith Simpson (Mid-Norfolk)

The Minister will be aware of the Environment, Food and Rural Affairs Committee report on biofuels, one of whose conclusions was that it was disappointed that there appeared to be no sole Department taking the lead on this issue. We know that there are various interests involved, but the fact that five major Departments or organisations are involved without having one lead Department obviously means that biofuels are not getting the attention that they deserve. Will the Minister tell us whether, as a consequence of the Select Committee report, one Department has now been nominated as the lead Department to deal with biofuels?

Mr. Morley

That is not the situation at the moment. As the hon. Gentleman rightly stated, a number of Departments and a wide range of issues, including energy, fuels and transport, are involved. Biofuels are a matter of major interest for DEFRA, and we spend a lot of time discussing the issue. We understand the reasoning behind the Select Committee's recommendations, and we are considering its report, of which we will take careful note.

Mr. David Chaytor (Bury, North)

There is considerable frustration among drivers of diesel cars about the slow pace of development of biodiesel. Why is it possible to drive down to Devon and buy from a private supplier a load of fuel made from waste cooking oil, but not to go to a normal fuel station and buy biodiesel? Is it not the case that there are costs involved in developing the infrastructure for the use of biofuels, and that that is why the question of duty needs to be revisited?

Mr. Morley

My hon. Friend makes a good point, but I was surprised by his comment that people cannot buy biodiesel in normal garages, because they can. The local garage in my village has a biofuel pump, and I make use of it myself. We want an extension of that availability and for the use of biofuels to be encouraged as an alternative to other fuels, particularly because of their contribution to climate change.