HC Deb 23 October 2003 vol 411 cc769-70
1. Mr. Bob Blizzard (Waveney)

What assessment she has made of the potential value to rural economies of producing biofuels from crops. [133781]

The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)

The impact of the UK meeting the reference target in the European Union biofuels directive for the substitution of 5.75 per cent. of fossil fuels by biofuels by 2010 would be to create or sustain some 6,000 jobs in the agriculture sector. Production at this scale would require a mix of feedstocks, including a contribution from waste oil and crop production from up to 1 million hectares of land.

Mr. Blizzard

I thank the Minister for that answer, but does he agree that if we are to reap the full economic benefits from energy crops such as rapeseed for biodiesel, we need to kick-start the industry in this country? The Treasury advised me that a simple duty rate cut would risk sucking in imports from established industries in other countries, so will my right hon. Friend hold urgent discussions with the Department of Trade and Industry and the Treasury to find out what can be done to kick-start an industry in this country that would be good for farmers and towns such as Lowestoft in which people want to set up biodiesel factories?

Alun Michael

My hon. Friend's constructive question partly answers itself because, of course, we want to stimulate the industry, which requires creating the market and enabling growth in production. I can certainly assure him that we shall continue to talk to colleagues in the Department of Trade and Industry and the Treasury about those issues.

Mr. David Curry (Skipton and Ripon)

The Government must decide what they want from this policy. It is quite reasonable for different Departments to have different expectations and aims, but when the Government make a collective decision they must decide where their priorities lie. They have not done so at the moment. The Treasury and the Department for Environment, Food and Rural Affairs seem to have different objectives and argue that different methods are needed to reach whatever the objectives are. May I urge the Secretary of State and her Department to hold urgent discussions with the Treasury and the Department of Trade and Industry so that we may have a clear idea of where the priorities lie? We could then decide whether the mechanisms, including the tax mechanisms that appear to be at the front of the debate, will get us there.

Alun Michael

I am grateful to the right hon. Gentleman for first criticising and then encouraging dialogue in government, which is what we have. He should remember that the Government are promoting the production of liquid biofuels through the existing 20p per litre cut in duty for biodiesel and the intention that was announced in the 2003 Budget to reduce the duty on bioethanol by a similar amount from January 2005. I assure him that we will continue to discuss with colleagues in the Treasury and other Departments how best to ensure that we pursue the issues.

Alan Simpson (Nottingham, South)

The Minister may well know that the Select Committee on Environment, Food and Rural Affairs has been examining biofuels. In his deliberations, will he ensure that there is at least a differentiation between the value of a biofuels market and the implications of a biofuels industry? One of the issues that the Committee was asked to address was the environmental impact of crop growing—the fuel growing—on the environment itself. It was asked to consider the impact of footprinting on the environment as a broad picture of the costs involved, including the relative costs of producing crops for biomass rather than biofuel.

Alun Michael

My hon. Friend gives us a valuable reminder that our approach must be based on sustainable development and that we must consider the environmental, economic and community issues that are involved in promoting the sector. However, as I said in my first answer, there are obvious benefits for jobs and the economy, which I am sure that he wants us to pursue.

Mr. Bill Wiggin (Leominster)

What assessment has the Minister made of the impact of the 20p per litre reduction in biodiesel duty, and what effect has that had on the industry?

Alun Michael

The cut in biodiesel duty has already brought forward the production of biodiesel from recycled vegetable oil, about 2 million litres of which are sold each month in the UK; half comes from that source and the other half is finished product that is imported from elsewhere in Europe. The hon. Gentleman will acknowledge that that is an important step forward.