HL Deb 03 May 2000 vol 612 cc1098-120

8.20 p.m.

Lord Dubs

rose to ask Her Majesty's Government what steps they are taking to encourage the use of vehicles powered by environmentally friendly fuels.

The noble Lord said: My Lords, I welcome the opportunity to discuss the fuels used by vehicles and the effect that they have on both air quality and climate change. I believe that these issues are generally well-known and understood. It is my contention that the Government are doing well but could do a little better. That is the premise of the debate.

The Government have already set up the cleaner vehicles taskforce, which will soon publish a further report with recommendations for the Government. I thought that its previous report in August 1999 was good, but how much of it is being acted upon? We have the policies, but we are moving too slowly and other countries may be getting ahead of us.

I welcome, as elements in government policy, the air quality strategy, the Energy Saving Trust's powershift programme, the climate change programme and the DTI's foresight vehicle and advanced fuel cell programme. I hope that the successful candidate for Mayor of London will agree to consider the issue as important and decide that it is far better to use a carrot than just a stick and provide incentives for cars and other vehicles which use environmentally friendly fuels and want to come into the City of London.

I believe that the use of fuels can influence not just noise levels but emissions such as carbon dioxide, benzene, carbon monoxide, particulates, sulphur dioxide, oxides of nitrogen and ozone. There are several types of environmentally friendly fuel. Some can be used immediately in existing vehicles while others have high conversion costs. We as a country should not be backing only one system, but should be examining the various systems and seeing which turn out to be the best.

There are four basic approaches. First, there are reformulations of petrol and diesel; for example, lead-free petrol, low benzene petrol, ultra-low sulphur diesel and ultra-low sulphur petrol. Secondly, there are alternative fuels of which there are two main types: liquid petroleum gas and compressed natural gas. Thirdly, there are the electric options: batteries and fuel cells. Fourthly, there are the hybrids: the use of petrol and LPG, or the use of petrol and an electric battery together in one vehicle.

The electric battery has a constraint on the distance which can be travelled before it is recharged. Fuel cells do not have that constraint, but they have another difficulty; that is, the high cost of manufacture. Developments have taken place. For instance, a company called ZeTek Power has developed a zero emission taxi which was first unveiled in July 1998. Furthermore, trams and trolley buses represent an environmentally friendly option. The costs of producing some of the vehicles which can use LPGs, electricity and so forth, are high. The people who want to use them say that prices would fall if we could achieve economies of scale.

Several vehicle manufacturers are developing their own approach to green vehicles and there are therefore many different solutions. I am grateful to those which have written to me with their suggested way forward. For example, Toyota has developed a vehicle called Prius. It is a hybrid using petrol combined with an electric motor and it is the first mass-produced hybrid car in the world. It will be sold in the UK within four or five months. Peugeot believes that diesel is the best way forward. Vauxhall believes that the fuel cell is eventually the way forward, but that in the meantime more should be done to encourage LPG in duel fuel vehicles using gas and petrol. It believes that LPG could be an important way forward, but there are high costs of conversion. Of course, there are insufficient refuelling points for people who have converted. The ZeTek company is developing fuel cells which can be refuelled with hydrogen and I understand that the operation takes just five minutes. However, charging an electric battery car can take several hours, if not the whole night.

Regrettably, because of lack of government backing or that of other agencies, ZeTak is building a factory in Cologne after scrapping plans to build in Ramsgate, Kent. However, I understand that it is talking to Rover at Longbridge, so perhaps with some Government encouragement there will be a way forward.

There are other examples of good practice. Safeway has a fleet of natural gas powered vehicles. Honda is moving in that direction. A factory in Ballymena, Northern Ireland, makes electric buses. Camden has a 16-seater community bus in which I have travelled. It takes people to old people's day centres or disability day centres and has a range of 200 miles. The battery can be charged overnight and therefore journeys can be planned. I understand that Westminster City Council has a fuel cell van for use in parks.

Nevertheless, I believe that we are slipping behind other countries. I visited Rome some time ago and saw in the city centre small electric buses taking people on shorter journeys in that area. As regards LPG, other countries are way ahead of us. The Netherlands has 400,000 LPG vehicles; Italy has 1 million; France has 150,000; and according to industry estimates we have about 15,000 LPG and CNG vehicles. It was earlier estimated that, given the right policy framework, there was a potential market in this country of 500,000 LPG vehicles by 2003. I fear that that looks unlikely.

I now turn to the suggestions that I want I o make to the Government. The first concerns a range of duties and charges. I welcome the fact that in the Air Quality Strategy for England, Scotland, Wales and Northern Ireland the Government said: central government has a role to play in providing the overarching regulatory and fiscal framework that promotes cleaner, more efficient vehicles and fuels". I believe that there are a number of ways forward. For example, why not allow cars which use the most environmentally friendly fuel—and by that we would mean electric cars—to park free of charge on sites where parking is allowed? I understand that Westminster City Council has such a scheme, although I have never seen the details. There are also opportunities within vehicle excise duty and fuel duty—and within congestion charges if they are introduced—to balance the situation more in favour of vehicles which are environmentally friendly.

Some of the changes are short-term and others will take longer. We might in the short term have to do more to develop those changes which can be made quickly and then concentrate on those which will take longer. Therefore, my second suggestion is that there should be a differential to support the introduction of low sulphur petrol. Next March, the Chancellor intends to introduce a 1p differential, which I believe is too low. The take-up of cleaner vehicles by the bus industry is somewhat constrained by the fuel duty rebate and I wonder whether a greater incentive could be given to the use of cleaner fuel.

However, there are serious problems when petrol stations want to sell LPG; they must obtain planning permission, which can take a long time. Can anything be done to help them? I also believe that the Government, local government and the public sector as a whole can set an example. I wonder how much the Government are doing by using some of the environmentally friendly vehicles. Even the use of ultra-low sulphur diesel would be a step forward as the change can be made easily. I believe that there is a need for a long-term commitment—say, five years—in order that any tax or duty advantages can become part of the system to encourage manufacturers and customers to make a change. For example, it would be useful if there were a longer-term duty differential between LPG and diesel. I believe that it would be right to reduce the duty on products such as LPG to the EU minimum. There is a need for capital allowances where vehicles must be converted and also a need to install refuelling points. Here, I refer to LPG but the same applies also to other fuels. We need to look at greater vehicle excise duty concessions, including those for company cars, for environmentally-friendly vehicles.

I wonder what the Government are doing with regard to fuel cell research and other research in the UK. What is being done to encourage the location of manufacturing plant here? I do not want to see all those developments take place simply in other countries. Presumably, whereas the EU exercises constraints on subsidies to motor car manufacture, there would be fewer such constraints on research spending. I wonder what the Government can do to help in that direction over and above what is already taking place. I have already referred to Rover at Longbridge, and I wonder whether more could be done to encourage this type of research there.

I turn to a suggestion which arose in the Cleaner Vehicles Task Force report with regard to grading vehicles. Perhaps all vehicles could be graded, say, from A to E in terms of their greenness and their beneficial effect on the environment, rather as white goods in shops are graded A to E. Then, benefits in terms of free parking and nil excise duty, and so on, would be possible.

Finally, I believe that the proposals that I have mentioned should be accompanied by publicity. Again, that was recommended by the Cleaner Vehicles Task Force. It is only right that where a public vehicle uses an environmentally-friendly fuel, that should be writ large on the sides of the vehicle so that people know that that is happening and that the Government are setting an example and, indeed, developing the environment. Therefore, many things can be done. I know that some are being done already. However, I believe that they could be speeded up and I should like to see more energy and enthusiasm behind the initiatives. I hope that the Government will respond along those lines.

8.31 p.m.

Lord Lucas

My Lords, I am enormously grateful to the noble Lord, Lord Dubs, for giving us the opportunity to have this debate. As several noble Lords will know, I have an interest to declare as a director of ZeTek Power, to which the noble Lord, Lord Dubs, has already referred. It is a company which makes fuel cells, some of which end up in vehicles. Therefore, in parts my speech will be biased, but I hope also in parts well informed. I am sure that the Minister will be wise enough to separate the two and respond accordingly.

This debate asks the Government to encourage the use of vehicles powered by environmentally-friendly fuels. Why should the Government do that? For the foreseeable future, the vast majority of vehicles will continue to be powered by good old petrol and diesel, and environmentally-friendly fuels will remain restricted to a small number of vehicles. They will, as it were, be a flea on the elephant of the great vehicle industry. It is far more important for most of us that the emissions from the elephant are controlled than that we should have a few more fleas on it.

At first sight, it is not obvious why the Government should do a great deal, and perhaps that is why this and past governments have not done a great deal. There is a strong public wish to see something done and there has always been a cosmetic level of support for natural gas and other technologies. I believe that the Government have always understood the need to participate in this kind of public exercise in order to encourage the automotive companies and others to take seriously the need to improve their own act in reducing, as it were, the elephant's emissions. In that, I believe that over the long term the Government have succeeded.

However, I believe that there is another strong reason why the Government should wish to move further in the direction suggested by the noble Lord, Lord Dubs; that is, the probable creation of a very substantial set of new industries in this area. I believe that the recent events at Longbridge and the possible future events at Dagenham should have brought home to us all the danger of not being the country where a large industry is based and of having reached the position where we are not at the research and manufacturing heart of those industries. Thus, when jobs come to be shed and when reorganisation takes place, it is our workers and our industry that suffer.

It is important that we should take measures now to ensure that new industries are based here. We are doing that in a Bill already before this House with regard to e-commerce—a little late but, none the less, welcome. We should be doing that in the industries which will, with good fortune, come to exist in the area of environmentally-friendly fuels.

There are two important things that the Government can do to help: first, regulation; and, secondly, practice. Regulation is, of course, the stick with which they can beat people into doing what they want. However, it is also a hurdle which is placed in the way of anyone who tries to develop a new product or a new service in this country. As the noble Lord, Lord Dubs, pointed out, many hurdles stand before people who try to produce environmentally-friendly vehicles and who work on environmentally-friendly fuels. Complicated regulations surround vehicle production on anything but the tiniest scale.

As yet, there has been no great government effort to get out there and find what the industry needs by way of new regulations. Inevitably, new questions will be raised, particularly when electric vehicles become common in any form. First, they will be silent. You can no longer rely on the noise of an approaching car to warn you not to step out into the road. Secondly, they will probably be a potent source of electrical interference. These matters need to be considered well in advance One cannot wait until companies are producing hundreds of such vehicles a year, then step in and say, "Halt. We need five years to consider what is going to go on here".

If we want to encourage these industries to develop here and if we want to encourage the big North American companies which are leading some areas of fuel cell research, for example, to base some of their operations here, we need to provide the type of environment where their initial products will be welcomed. That means that we must get going now on ensuring that, as the noble Lord, Lord Dubs, said, the right regulations on vehicles and on planning permission for refuelling stations are put in place.

There is also a need to become involved in practice; that is, to ensure that the Government encourage in their own activities the use of those vehicles. As the noble Lord, Lord Dubs, said, Westminster has purchased a fuel cell van from ZeTek. Others in the local authority area may well follow, but as yet government have taken no action. While there is no distribution infrastructure for the fuels used by those vehicles and, naturally, they remain considerably more expensive than petrol vehicles, it is very important that the tax policy on those fuels none the less offers an advantage to users of the fuels.

This is the type of situation which we should like to find in this country. It is one which exists in Germany and in the United States. The welcome given there to those new technologies is of an order of magnitude greater than that available in this country. That is the fundamental reason why, having tried for several years to obtain government support for building a factory in this country, in a few short months we have found ourselves in the heart of the hydrogen infrastructure and government-funded research infrastructure in the Ruhr and hope shortly to be in a similar position in New York.

It would be wonderful if this country would wake up to the opportunities that exist. Even John Brown of BP recognised in his Reith Lecture that the hydrogen economy is coming. Of course, hydrogen is not an energy source; it is merely an energy carrier. However, it is the most likely convenient energy carrier for the medium-term future when we are beginning to rely on all kinds of different potential sources of energy. There is a big infrastructure to be developed. Hydrogen can be environmentally friendly in its production and is certainly environmentally friendly in its use. Like the Internet, we are at a very early stage when there are many opportunities, many companies and many ideas which will turn out to be failures. However, it is important that enough of them should arise here so that some of the successes also occur here.

Fuel cells are by no means the only technology. Microturbines, Sterling engines and all sorts of other things are happening, none of which seem to be receiving significant support from this Government. There are all sorts of sub-technologies associated with fuel cells: reformers, capacitors, batteries, electric control systems, material science, to mention a few, all of which would be enormously helped if there was a growing industry in fuel cells in this country. In addition, there are all sorts of spin-offs of fuel cells for end users which, should they be developed to a point where they are more commercial than they are at the moment, would make a great impact on transport, refrigeration, buildings and all sorts of other industries.

We are very well placed in this country, with a host of small engineering companies and a long tradition of engineering excellence, to make use of developments in the area of environmentally friendly power sources, if the development takes place here, so that those small companies can on their own doorstep become involved with the originating companies and the expertise, rather than having to wait for some big American company to import the finished product.

It would be very nice to see, for instance, the Government's Powershift project having more room in it for fuel cells. It does not at the moment seem to. Most of the money goes to natural gas, which is finite. In my opinion, what appears to be happening, namely picking winners, is not the right way to go about this. As the noble Lord, Lord Dubs, said, it is important to encourage as many alternatives as possible. We are in a ferment of opportunity. All sorts of things are happening. It is impossible to tell which technology will turn out to be right at the end of the day. There are so many different alternatives. There is so much to be done in all of them. It is important not to pick the winner but to hold the race here, so that the winning takes place in this country for the benefit of our citizens.

The noble Lord, Lord Whitty, is a Minister in the Department of the Environment, Transport and the Regions. All three areas are involved in this subject. The environment is obviously involved; transport, for the benefits that this new industry could bring to our whole transport industry; the regions, because, when it comes to clean air, the benefits of environmentally friendly fuels happen locally. One of the great observations that I bring back from Germany and the United States is that it is regional enthusiasm, the enthusiasm of the City of Cologne, the enthusiasm of the City of New York, that makes things happen. Concentrating these matters too much in central government seems in this country to have a stultifying effect. I hope that the noble Lord will encourage his Ministry to learn from this and that we might see a greater degree of delegation to enable innovative councils to make things happen in this country.

8.42 p.m.

Lord Palmer

My Lords, I, too, am grateful to the noble Lord, Lord Dubs, for so eloquently introducing this, to my mind, perhaps one of the most important debates ever to take place in your Lordships' House. I must declare an interest. I am a farmer in the Scottish Borders and I grow industrial oilseed rape, most of which goes to France and Germany and is converted into fuel.

Why do I say that this debate is so important? First, farming is in one of the worst recessions ever. Secondly, there have been no major discoveries in the North Sea in the past decade. Thirdly, OPEC will soon be back in control, and that can only lead to rampant inflation.

Every time in the past five years that we have debated agriculture in your Lordships' House, I have implored both this Government and the last one to spend more money on research and development for alternative fuels that can be more efficient and environmentally friendly. My pleas, sadly, have always fallen on deaf ears.

It is pathetic that we spend just £1.9 million per year—half of what Germany spends—on research and development. Only biofuels (biodiesel and bioethanol) recycle carbon. Cutting the penal tax rate on biodiesel, imposed illogically by the previous government, would be the obvious way to achieve crisply a useful environmental and political gain.

The price of fossil oil has more than doubled in the past year, with Brent crude currently standing at 24 dollars per barrel. It has in the last six months been as high as 30 dollars per barrel. It may be wise now to establish even a small domestic renewable source of diesel fuel prior to what seems an inevitable price hike when OPEC once again takes control of world sales and prices. It is demonstrably true that biodiesel energy life cycles and emissions are both better than those for fossil diesel taken overall.

On researching information for this debate, it is quite fascinating to realise that 100 years ago one-fifth of the farmland of England was given over to transport fuels. I refer to oats and hay for horses. In view of the changing structure of British agriculture today and the current nonsense of "set aside", it is quite possible to foresee a similar amount of land being used again for energy crops. There are about 30 million acres of farmland in England. Currently some 1 million acres are used for oilseed rape, which is used mainly for cooking oil and other food applications.

The best growers can achieve a yield of around a tonne per acre. Therefore, 500,000 acres could be put into industrial cropping for biodiesel to produce 500,000 tonnes of biodiesel itself, making valuable use of the land, the sunshine and indeed the rain to produce energy from our current account, rather than living off our fossilised capital account. Judging by the strange terms of a letter sent to BABFO recently from the Head of New Crops and Sugar Division, MAFF has no grasp of the reality of this matter but wanders into realms that would not seem to be the proper concern of an agricultural ministry. Here again, I make a plea for more funds to be made available for research and development.

In practical terms, within five to seven years British farmers could produce half a million tonnes of diesel from fields which might be relatively unproductive. This would be a 3 per cent start to tackle the problem of how to cope when the mineral oil runs short, as indeed it surely will. Given an appropriate tax regime, such production is likely to start very quickly in either Hull or Liverpool, both of which are areas in need of a vast amount of extra employment. Biodiesel cooking oil is also likely to be boosted by purification and recycling of used cooking oil, and this could amount to perhaps 50,000 tonnes per year, solving a tricky waste disposal problem at the same time. I implore Her Majesty's Government to take this on board.

The public likes the concept of clean, green road fuels and wishes them to be available. The present so-called "green" fuels are, by and large, phoney, as they merely reduce emissions while leaving the main greenhouse gas problem untouched. They are finite and polluting. Biodiesel and bioethanol, by contrast, are renewable, sustainable and biodegradable. Promoting these fuels would be a widely understood and popular move in the bear garden of the current debate on road fuel taxes.

The wisdom of British governments, however, has been far more damaging to our pockets, let alone the environment. Although it was Lloyd George who first taxed fuel in 1908, the increase in fuel taxes, compared with the increase in the retail prices index, did not appear unreasonable until the early 1980s. By 1993, in my view it was unacceptable, and since May 1997 it has become outrageous. Every £10 that we spend on fuel includes £8 going straight to the Treasury. Our fuel is already among the most expensive in the world and I believe passionately that expensive road fuel is the ignition light for inflation.

When Rudolf Diesel demonstrated his engine of that name in Paris back in 1908, he ran it on peanut oil. Peanut oil was effectively the first biodiesel fuel and it is pathetic what little progress has been made in the past 92 years. Biodiesel in this country is mainly derived from oil seed rape and sunflower oil. It has a sister called bioethanol derived from wheat, potatoes and sugar beet.

Although presently costing more to produce than fossil fuels, they are less toxic than table salt, less harmful to the skin than soap, are biodegradable in water, contain negligible sulphur, do not contribute to global warming and yield significant reductions in the most harmful of emissions. The tail pipe emissions from bioethanol are particularly low which make it an ideal fuel for inner-city low emission zones.

Currently eight European cities use biodiesel in public transport systems. It is growing (in both senses) in popularity in the United States and is sold at over 700 filling stations in Germany. Virtually all diesels can run on it with little or no modification, but you will not find it here because in 1995 the last government imposed full duty on it, making it uneconomic to produce, and the present Government, sadly, have kept the status quo.

If we were to reduce the duty to 10 per cent of present levels, production of this cleaner, renewable fuel would be achievable. It would reduce our dependence on the Saudis and perhaps do something to restore this Government's reputation among farmers. My Lords, does that make too much sense to be part of any British government's transport policy?

By producing environmentally friendly fuels, everyone will benefit and I urge Her Majesty's Government to take action by pump priming tax derogation now and spending more on research and development before it is too late.

8.52 p.m.

Lord Beaumont of Whitley

My Lords, I too thank the noble Lord, Lord Dubs, for initiating this extremely important debate this evening.

Some of the cleanest and most environmentally friendly transport is powered, as has already been said, by electricity. Of course, the true measure of how friendly it is depends on how the electricity is generated. But now that more and more of it is powered by wind and waves and other clean sources, transport which can use that electricity is important.

I want to take up with the Minister this evening—and I have given him notice of this—the matter of the financial and bureaucratic blocks being experienced by the Bristol electric railbus, which is one of the most promising developments in that field. I have no interest to declare except a lifelong friendship with the person behind it, Mr Jimmy Skinner, who was also for a long time a colleague of mine in the Liberal Party.

The Bristol electric railbus uses 34 per cent of the energy of a conventional roadbus and runs on an easy-to-build lightweight track. Its unique feature is a steel flywheel which acts as a rechargeable source of energy. It has been running reliably now for three years along a half-mile length of track, and its proponents, who have sunk a lot of their own money in it from a sense of public duty—I can vouch for that as the reason—and Bristol now want the opportunity to use it on a longer and eventually commercially viable track.

One of the ways in which that could be done without noticeable extra expense is by the use of derelict track owned by Rail Properties Ltd and, therefore, under the direct control of the Government, and the objections so far seem to be of a purely bureaucratic nature. I ask the Minister to see what can be done to resolve that.

On the wider scale Bristol is applying for extra money for development, but the doctrine, sound in principle, that local authorities should be responsible for their own transport systems has blocked progress. Mr Rickett, head of the Integrated Transport Task Force—another of these hybrid animals—has said, The government is not going to change its policy that local authorities should decide what forms of transport are best suited for their area". I should say in passing that I am far from clear what authority he has for saying that the Government will or will not change their policy. I should have thought that was up to Ministers. But in any case, we are not asking for that policy to be changed; we are asking for a policy of backing innovative clean transport and research, experiment and deployment for local authorities that want it to be funded centrally for the good of all.

I say that the doctrine that it should be done locally is sound in principle, but local authorities are strapped for cash and innovative systems which could have a national, and indeed an international, use should surely be funded nationally. I understand that when Glenda Jackson was the Minister responsible there was such a fund but that it appears to have disappeared.

When publicly minded individuals and firms come up with ideas which they test satisfactorily and which everyone except the immediate competition—in this case buses—can see is a very good thing, it is appalling that those ideas should be frustrated.

In addition to my first question about the use of rail owned by Rail Properties Ltd, I make a further plea to the Minister that he will apply himself to seeing that the main principle is addressed. He has a reputation in this House and far beyond for being a man not tied down by shibboleths and bureaucracy. I beseech him to urge the Government to apply themselves to the realities of progress in this field.

8.56 p.m.

Lord Stoddart of Swindon

My Lords, I too thank my noble friend Lord Dubs for raising this very important Question. Indeed, I hope that the Government will listen to what he said and take heed of his suggestions and, indeed, of the many other suggestions which have been made by other noble Lords this evening.

There is no doubt that traffic fumes from all sources are certainly a health hazard and, indeed, some estimates have put the annual death toll from traffic fumes at some 10,000 in London alone. So there is certainly a health aspect to this problem which should be addressed. Indeed, on that count alone, the issue is important.

Traffic fumes also create a smelly, unpleasant environment which interferes with people's enjoyment of facilities, and especially shopping in towns. Let us take Oxford Street, for example. Oxford Street is probably one of the finest shopping streets in Europe, if not in the world. Cars are banned. But large numbers of buses and taxis belching diesel fumes make shopping for many, especially asthma sufferers and others with breathing problems, a nightmare indeed.

That is a place where we should certainly be using environmentally friendly fuels of various sorts, or at least of one sort. The electric fuel is the one which I favour. A start should be made in converting to environmentally friendly fuels for all vehicles.

Many suggestions have been made this evening. Liquid petroleum gas—my noble friend Lord Dubs mentioned it—is certainly a fuel which should be considered as an alternative. Of course, biofuels should also be considered, as was suggested by the noble Lord, Lord Palmer. All I would like to say to him is that I believe that in Reading there was an experiment with one of those fuels in the public transport system and the whole town smelt of fish and chips. Of course, some people like fish and chips; others do not. Nevertheless, it is an idea which certainly needs consideration.

Lord Palmer

My Lords, perhaps the noble Lord would give way. We are both familiar with the town of Reading. Indeed, I was born there. Would the noble Lord agree that the smell of fish and chips is different from the smell of ginger nuts that for many years used to permeate through the entire town of Reading?

Lord Stoddart of Swindon

My Lords, Huntley and Palmer's ginger nuts, and indeed their breakfast biscuits, were renowned throughout the world. I am sorry that they are no longer made in Reading. Unfortunately, they are not made anywhere.

Apart from the other fuels that I have mentioned, there is electricity. In my view, that is undoubtedly the most environmentally-friendly fuel. We have not yet reached the stage when electricity can be used extensively for cars, but there are certainly possibilities for urban public transport, as has been mentioned by the noble Lord, Lord Beaumont.

I want to concentrate my remarks on public transport. I have the honour to be the president of the British Trolleybus Society and the chairman of its trustees. That is an organisation whose dedicated members have kept the interest in trolleybuses alive for many years and who have maintained and restored many trolleybuses from various parts of the country at the Sandtoft Transport Centre near Doncaster. Indeed, last year I had the privilege to re-launch a rebuilt Reading trolleybus—number 113—and I had the opportunity to drive it. I had never driven one before and it was certainly a different experience from driving my car. Noble Lords will be glad to know that I had no accidents and I managed to stop the trolleybus at the right stop. That was a good experience.

My interest in trolleybuses stems from my experience as chairman of the Reading corporation transport undertaking in the 1950s and 1960s when I came to realise that the trolleybus was a fine vehicle for urban stage carriage bus services. They are clean, fumeless, quiet, smooth riding and they have superb acceleration which is needed for stage carriage work and an efficient braking capability. Although they are silent, if someone steps out in front of a trolleybus, the driver can brake quickly because they have retroactive brakes. They are superb vehicles. They have a long life and low maintenance costs.

With such great advantages people may ask why they were discontinued. In my view, the answer is that there was enormous pressure from the oil lobby, although other factors such as lack of flexibility and frequent bunching leading to bad timekeeping, were cited as major reasons. Many of the reasons given were spurious and are certainly now capable of remedy through the application of new technology which could facilitate overtaking and better batteries that would enable trolleybuses to run off-wire for reasonable distances. In my view, technically there is no barrier to the reintroduction of the trolleybus.

As to running costs, even when oil prices were low—the noble Lord, Lord Palmer, pointed out that they are now sky high even without tax—the operating costs of trolleybuses were only marginally higher than those for diesel buses. With oil prices high and electricity prices lower in real terms, it is likely that costs per mile would now be in favour of trolleybuses.

It may be said that support for the trolleybus is backward looking. However, I must point out that although we, in this country, may have forgotten the trolleybus—some people under 30 have never seen one—in many countries they are an integral and an important part of the public transport system. In Europe and in many other parts of the world, the trolleybus is an essential and an integral part of their stage carriage services in towns and cities.

If many other countries operate them successfully, is it not time that we, in Britain, re-examined our attitude to them? Therefore, my plea to the Government is that they should finance research and development into electric vehicles and especially into a possible new role for the trolleybus in our public transport infrastructure. By that I mean assistance with re-installing the necessary overhead infrastructure and an accelerated change-over from diesel buses to trolleybuses or other environmentally-friendly vehicles. I believe this matter is urgent. We need to deal with the problems of motor vehicle exhaust urgently.

As the noble Lord, Lord Lucas, pointed out, there are other advantages. We would have to manufacture new trolleybuses which would create an opportunity for a new industry to be formed at a time when some industries in the automotive sector are closing.

I hope that my noble friend Lord Whitty will be able to give some encouragement to all noble Lords who have spoken and that the Government will listen to what has been said and will treat this problem as a matter of urgency.

9.6 p.m.

Lord Bradshaw

My Lords, I thank the noble Lord, Lord Dubs, for introducing this subject. I speak from some practical experience in public transport. Before the debate I inquired why compressed natural gas vehicles are not as welcome in the bus industry as they once were. In one British city there is a fleet of 11 such buses but they have turned out to be more expensive to run than was expected. Worse than that, from an engineering point of view they are complex. Their fuel tanks are so big and heavy that they cannot be fitted on double-decker buses and the view now is that their maintenance costs will be very high.

As noble Lords may know, I am a member of Oxfordshire County Council, and I was involved in the introduction of electric buses in Oxford. From an economic point of view they were almost catastrophic. Rarely were the five buses ever available. Breakdowns were frequent. A normal diesel bus would carry 25 seated and nine standing passengers, but that had to be reduced to 18 seated passengers because 4 tonnes of batteries had to be carried on the vehicle. They simply did not perform well. We must be realistic when taking decisions on which technologies it will be possible to extend economically to the bus industry.

The available evidence suggests that, at least in the short term, we should concentrate on the use of the best ultra-low sulphur diesel fuel, catalysts and particulate traps. Of course, new vehicles will be equipped with the best technology, but unfortunately there are weak business incentives to retrofit vehicles with systems such as particulate traps. The noble Lord, Lord Stoddart, referred to the fumes in Oxford Street. Buses should not be emitting black smoke, but certainly older buses need to be retrofitted with particulate traps.

Perhaps this is an area where the Government could help. I believe that out of the £280 million set aside in the Budget for transport, a sum of £6 million has been identified for the task of cleaning up pollution. Funding for the retrofitting of particulate traps to the newest of the older vehicles would be a good way of spending the money.

Modern engines, called Euro II engines, burn more fuel than the older engines, but they appear to offer the best way forward. As the Disability Discrimination Act comes into force and local authorities enter quality partnerships, this is likely to include a requirement to consider air quality. For that reason, I believe that we can look forward to the introduction of diesel buses with increasingly better engines that pollute far less.

In the longer term, if the Government are to put money into research, it would be much better to go one big step further into the area outlined by the noble Lord, Lord Lucas. The hydrogen fuel cell appears to offer a great many advantages. It is a plentiful fuel and one that does not produce greenhouse gases. Furthermore, it appears to be possible to build fuel cells of a reasonable size. However, a great deal of development work still needs to be done.

I take the point made earlier about picking winners, but I should be reluctant to see more money being spent on projects such as battery technology. When I joined the railway in 1959 that technology was hailed as an imminent and useful source of energy to propel trains. In reality it has advanced little over the past 40 years. I would much prefer to see the adoption of a technology that appears to have a realistic prospect of success, not only for fuelling vehicles but also for the provision of work in a new technology in which this country could take the lead.

One area of transport requires the Government's close attention. A great deal of pollution comes from old cars that are used as taxis. I suggest to the Government that a case can be made for imposing an age limit on taxis. That would be a local authority matter, but is something that could be required for local transport plans. Nowadays taxis should always be fitted with catalytic converters. Taxis spend a good deal of time with their engines idling in town centres to keep the drivers warm. That is by far the most polluting part of the cycle. Furthermore, taxis and private hire vehicles—I am referring to both types of vehicle—should have more regular emission tests than only once a year. Because they cover a much greater distance than the average private car, a strong case can be made for more frequent tests on such vehicles.

Mention has been made of electric traction. Certainly that is something for which we should aim. I, too, used to live in Reading and I very much regretted the departure of the trolley buses to which the noble Lord, Lord Stoddart, referred. I can remember the day of the last trolley bus in that town. It was most regrettable when they were taken out of service.

A matter that has greatly disappointed me—although I realise that I run the danger of having the Minister tell me, physician, heal yourself—is that neither in the network management statement of Railtrack nor in the calls for franchise renewal have I seen much evidence of extended electrification of the railways. That is an important point because it touches on what has been said by the noble Lord, Lord Palmer; namely, that we are already extremely dependent—and in the future will be even more dependent—on imported fossil fuels, not only for our road transport but also for our railways. This is in marked contrast to continental Europe, where a much larger percentage of the railway network has been electrified. To some extent this is a strategic issue. Not all of one's transport infrastructure should be tied to a common fuel base because then you can be held to ransom that much more easily.

Those are the points that I wished to contribute to this debate. I look forward with great interest to what the Minister has to say.

9.13 p.m.

Lord Brabazon of Tara

My Lords, I, too, am grateful to the noble Lord, Lord Dubs, for introducing this debate. I am not sure that I go as far as the noble Lord, Lord Palmer, in his description of its importance, but it has been interesting for all of us who have an interest in transport and cleaner technology.

I declare an interest as the user of a petrol-driven motorcar. Before we go any further with this debate, we should pay credit to the motor industry for the enormous advances in technology that have taken place over the past several years. They have eliminated completely the general use of leaded petrol; introduced the catalytic converter and vastly improved technology in the building of engines and cars themselves. I understand that cars now produce only 10 per cent of the pollution they did 10 or 20 years ago. In fact, some manufacturers claim that in polluted areas, that which comes out of the exhaust pipe is cleaner than that which goes in through the carburettor, though I feel that one would have to live in a fairly polluted area before that became true.

The noble Lord, Lord Stoddart, mentioned the case of Oxford Street—I, too, had it down in my notes for mention—which I gather is the single most polluted street in central London; and that has a ban on private cars. So the pollution is caused only by diesel-driven buses and taxis. Having said that, I shall be the first to regret the passing of the old Routemaster bus. I hope that whoever becomes mayor of London tomorrow will ensure that it survives. At the same time, I hope that the new mayor will ensure that those buses are re-engined with the latest technology.

Noble Lords referred to a number of different technologies available for environmentally friendly vehicles. Electricity, of course, is by far and away the cleanest fuel at the point of use. But one must remember that that electricity has to be made somewhere. So one may be shifting the pollution from one place to another. Also, those vehicles suffer from a lack of power, performance and range.

The noble Lord, Lord Stoddart of Swindon, referred to trolley buses. I can assure him that I am old enough to remember trolley buses in London. As far as I can remember, the problem was that the trolley would come unstuck from the electricity supply above. The driver would have to come round and rehook it up at the top; meantime an enormous jam would have formed behind. But if one could find the kind of trolley bus which could survive on its own for at least a limited distance, that may be a step forward. To give one anecdote, the noble Lord, Lord Stoddart, said that they were in use in various different countries. I visited Ulaanbaatar in Mongolia some years ago when I was a Minister in the Foreign Office. They used electricity-powered trolley buses which were extremely clean. The only problem was that that city was naturally prone to smog and the power station was only two miles up the road. Whenever there were smoggy conditions, the whole city was covered in the smoke from the old-fashioned coal power station, so any benefit to the population was immediately lost. I am not saying that that means that we should not look into that avenue for the future.

In relation to gas, I declare a past honorary interest as president of the Natural Gas Vehicle Association. I was disappointed to hear what the noble Lord, Lord Bradshaw, said, although I have not really kept up with progress. I read somewhere with great excitement that there was going to be a doubling of the number of outlets for compressed natural gas, which sounded good until one read that it meant a rise from 30 to 60 over the whole country. It is one of those times when the use of percentages tends to mislead.

There are problems with the lack of infrastructure, but liquefied petroleum gas can be useful for depot-based fleets. Those vehicles have another advantage which I do not believe has been mentioned this evening, in that they can be much quieter than conventional diesel-driven vehicles, particularly for something like a refuse cart which has a compressor as well as an engine. That could provide significant advantages for local residents. Of course, the problem is that, due to the lack of infrastructure, private motor cars would have to be dual-fuelled, which means that they would have to have a petrol tank as well as a gas cylinder. So the owner would lose most of the boot space.

I should like to ask the Minister a serious question on the matter. It is one to which I know that the noble Lord, Lord Dubs, referred. It relates to the granting of planning permission for LPG facilities at refuelling stations. I understand that BP Amoco had hoped to install LPG facilities at 70 filling stations this year. But, so far, I believe that it has received planning consent for only three. Similarly, Shell had a target of 100 for the year, but it has reduced that number to 60 merely because of the difficulty in getting planning permission. Can the Minister tell us what the Government are going to do to assist by way of giving guidance to local authorities in order to make it easier for planning permission to be granted for LPG refuelling facilities at petrol stations? I understand that this might be included in the final version of PPG13, but can the noble Lord tell us what progress has been made in that respect?

I turn now to diesel. Like other noble Lords, I, too, was briefed by Peugeot on the matter. I take a good deal of interest in what the company has to say. Diesel emits 20 per cent less greenhouse gases and 50 per cent less hydro-carbon pollutants than petrol. When we shortly have particulate filters that will completely eliminate any particulates coming out of the exhaust, that will be a very significant improvement.

However, we in this country seem to be going in completely the opposite direction to any other country in Europe. Over Europe as a whole, the number of diesel vehicles as a percentage of the total has risen from just under 25 per cent in 1998 to 28.5 per cent in 1999 and, in the first months of this year, the number rose to over 30 per cent. In Germany, France, Spain and Italy the number has risen during each of those periods but, because of the tax regime on diesel, the increase in vehicle excise duty on diesel-driven cars and the increase in duty on diesel itself, we seem to be the only country where the number is decreasing. Why are we taking this step, which seems to be completely different from steps being taken anywhere else? I am not suggesting that we should always follow the example of other European countries, but they seem to have proved a good point in this case.

Certainly, as far as the industry is concerned, Peugeot is not the only company which believes that diesel in efficient modern new vehicles—not the old buses to which I referred earlier—is a very important way forward. My noble friend Lord Lucas told us about fuel cells. I am not familiar with the technology involved, but I have heard that great developments are taking place at quite a rapid rate at present. As my noble friend said, it is a pity that such developments are taking place elsewhere and not in this country. Many people seem to regard the fuel cell as the "thing" of the future; indeed, it may well be. People seem to regard it as something worth waiting for, and that is perhaps why we have not made particular progress in other methods of reducing emissions.

I believe that the noble Lord, Lord Dubs, referred to a report on the costs and environmental benefits of modern technology that is expected shortly from the Government. Can the Minister tell the House when that report is due? I understood that it would be produced this month. It would be interesting to read its findings. I wonder whether we shall receive it as early as expected.

I conclude by saying that we on this side of the House would very much welcome progress in this respect. We would certainly make further reductions in fuel duty on cleaner fuels. I am pleased that the Government have continued with what we started on the duty on natural gas and on LPG. We would also introduce tax discounts for alternative environmentally friendly fuelled cars and we would grade vehicle excise duty according to the environmental standards of cars. If I may say so, the present proposals from the Government are not sophisticated enough in that direction. They seem to rely entirely on engine size rather than necessarily on fuel efficiency.

I thank the noble Lord, Lord Dubs, once more for introducing the debate and I look forward to hearing the Minister's reply.

9.25 p.m.

Lord Whitty

My Lords, I too congratulate my noble friend Lord Dubs on, and thank him for, initiating this debate, which has proved instructive. Noble Lords who are present in the Chamber have a significant interest in, and knowledge of, the areas we are discussing. Some of that knowledge is new to me and I shall consider their points on international experience and on technology.

From the Government's point of view this is a timely debate as it follows recent announcements of government initiatives to encourage cleaner vehicles and fuels. For example, changes to the company car tax system and to VED rates—the noble Lord, Lord Brabazon, mentioned this—for new cars relate to the emissions index rather than to engine size as for old cars. From next year the charges will relate to CO2 emissions. Increased funding for the Powershift programme was announced as part of the Budget package. These are all clear signals of the Government's determination to promote cleaner, more fuel efficient vehicles.

We are adopting these measures to help us tackle two of the greatest environmental challenges facing us: climate change and air quality. Road transport is the third largest source of carbon dioxide emissions—the main greenhouse gas—in the UK. Measures to reduce CO2 emissions from transport will play a central role in meeting our Kyoto targets. Conventional petrol and diesel vehicles will become more fuel efficient in coming years and will help us to meet those targets for 2010; cleaner fuelled vehicles will also play a significant part. New technologies will need to be adopted to meet the targets for 2010 and more significant greenhouse gas reductions will be needed in the future.

My noble friend Lord Stoddart referred to air quality. The problem of the quality of the air that we breathe as pedestrians or as motorists is an acute one. In support of our commitment to improve air quality, we have set tough air quality objectives to be met throughout the UK over the next few years. Our new Air Quality Strategy, published in January, identifies the major sources of air pollution in the UK and sets out a programme of action for delivering cleaner air.

As road transport is one of the major sources of air pollution, especially in urban areas, any attempt to improve air quality must consider measures to reduce pollution from transport in terms both of engine design and of fuel technology. As the noble Lord, Lord Brabazon, indicated, much is already being done to reduce pollution from conventional car and lorry petrol and diesel engines. They are becoming cleaner thanks largely to tougher European emissions standards and consequent efforts by motor manufacturers and also fuel processors. As a result, total emissions from transport are declining in terms of local air pollutants despite increases in road traffic.

However, even with these improvements, our air quality objectives for particles and nitrogen dioxide may not be met in some urban pollution hotspots. We need further measures to reduce emissions from road transport in those areas. Under the system of local air quality management, local authorities are required to identify any air pollution hotspots and to draw up action plans to deal with them. Cleaner fuels and technologies are measures that could further reduce vehicle emissions and deliver air quality improvements.

In terms of carbon emissions we are still faced with a situation where the growth of traffic is outpacing technological improvements. I take the point that the noble Lord, Lord Brabazon, made that we take into account not only immediate emissions and environmental effects, but also the whole life effects of that technology from manufacture through to scrapping. He also made the point that it is not only a question of emissions but noise which can bring environmental benefits if it can be reduced. Some cleaner fuels and technologies also produce significantly less noise than conventional motors. For example, gas-powered vehicles are much quieter. As the noble Lord, Lord Lucas, indicated, electric vehicles are also very quiet in operation although there are certain side costs involved which need to be addressed. The benefit from gas-powered lorries, for example, delivering in residential areas is not only as regards a reduction in pollution, but also the noise is far less disruptive to the quality of life in residential districts.

That is the background. Perhaps I may explain how the Government are encouraging the wider use of cleaner fuels and vehicles. The Powershift programme is sponsored by my department and administered by the Energy Saving Trust. It provides grants towards the additional cost of buying gas and electric vehicles. Clearly, the ability to increase the growth of the market depends on reducing the cost differential with conventional vehicles. Only vehicles offering significant emission benefits qualify for such grants. Powershift has already directly assisted the purchase of over 3,000 gas and electric vehicles.

In recognition of the continuing success of Powershift, my noble friend Lord Macdonald recently announced a substantial increase in its budget of up to £10 million in this financial year. That is three times the previous budget. It will enable Powershifi to keep pace with the increasing demand for cleaner fuel vehicles.

In addition to Powershift, the Government have introduced a range of tax incentives to provide and support cleaner vehicles. Road gas fuels such as liquefied petroleum gas and compressed natural gas benefit from a much lower rate of duty than conventional petrol and diesel. Electric vehicles benefit from no fuel duty on electricity and lower VED at £40 a year. Gas, trucks and buses can benefit from savings of up to £1,000 a year on the annual road tax. As I have said, new, cleaner fuel cars will benefit from lower rates of VED from next year and from the reformed company tax regime from the year 2002.

So it is not just alternative fuels that benefit. We are also encouraging cleaner petrol and cleaner diesel. For example, leaded petrol was banned at the beginning of this year. Ultra-low sulphur diesel now effectively accounts for all diesel sold in the United Kingdom thanks to the fuel duty incentive. In the recent Budget the Chancellor announced a 1p. per litre incentive for ultra-low sulphur petrol to take effect from 1st October 2001. As noble Lords have said, the Government set up the cleaner vehicles task force to bring together the motor and oil industries, environmentalists and others to promote the production, purchase and use of cleaner and more efficient vehicles.

In answer to the noble Lord, Lord Brabazon, the task force's report on cleaner fuels will be published on 31st May. That will compare the performance of a range of fuel technologies and will include a series of recommendations including recommendations aimed at government, industry and users on how cleaner fuels and technologies can be used.

The work of the task force has already led to a number of new initiatives. For example, there is a £6 million programme for a new cleaner vehicles programme. That initiative is a direct response to the recommendations to reduce pollution from existing vehicles and in particular from buses and taxis. As my noble friend Lord Stoddart and the noble Lord, Lord Bradshaw, said, they are still substantial polluters. There is a slower rate of turnover of a fleet than in the car sector. Urban vehicles such as buses and taxis will benefit from that programme by fitting catalysts and particulate traps.

In addition the new Motorvate scheme arose from a task force initiative. The scheme, which will be formally launched in June, sets simple, achievable targets to ensure that we have lower CO2 emissions.

The cleaner vehicles programme will include retrofitment of particulate traps to buses, and it will be for local authorities—or, in London, the Public Carriage Office—to take up those proposals. There are a number of technical options available.

The Government, of course, have a responsibility in relation to public sector vehicles. I am keen that government departments and agencies take up the benefit of cleaner vehicles. There are some limited success stories to mention. The Government Car Service is currently operating 33 LPG cars and is planning long-term trials of LPG vans. The DSS has taken a proactive role and is currently operating 73 LPG vehicles and intends to order a further 30 cars. Local authorities are to the fore in this area in the use of both LPG cars and CNG vans. The development of the use of electric vehicles is taking place in a few local authorities, notably Coventry and a consortium of London authorities.

Again in relation to conventional fuels, the noble Lord, Lord Brabazon, raised the question of the differential between petrol and diesel and the difference between ourselves and certain other countries. Certainly it is true that the motor industry is making tremendous strides in reducing harmful emissions from diesel, but emissions of particulates and oxides of nitrogen are still expected to be significantly higher compared to emissions from new petrol cars. That is why the differential is there. Nevertheless, recent developments in diesel after-treatment technologies have the potential to offer significant emission reductions, to the extent that some diesel cars could eventually have comparable emissions with clean petrol cars.

Questions were raised in relation to the infrastructure for gas vehicles. The noble Lord, Lord Brabazon, and my noble friend Lord Dubs referred to the issue of planning. I can confirm that the revised transport planning guidance (PPG13) will encourage local authorities to view planning applications for refuelling facilities much more favourably. There are now some 360 LPG refuelling points within the United Kingdom and around 30 or so CNG points, as the noble Lord, Lord Brabazon, said.

As to electric vehicles, the Government are keen to encourage their wider use. They have a lower VED rate; we offer grants under the Powershift programme; we are encouraging local authorities to use them in their fleets where the vehicles' relatively low range can be incorporated; and we are encouraging other potential users.

As to trolley buses—an issue raised by my noble friend Lord Stoddart—I, too, have nostalgic views of trolley buses despite never having lived in Reading or ever visited Ulan Bator. There is some prospect of progress in this regard, but the overall cost of trolley buses given the huge infrastructure outlay—we may have made a mistake in taking out the infrastructure in the first place, but putting it back will cost money—is likely to be higher than traditional buses with cleaner fuels and retrofitting for existing buses.

The noble Lord, Lord Lucas, raised the question of the regulation of electric vehicles. Although many of the features that apply to conventionally fuelled vehicles will apply to electric vehicles, new regulations will be required, and we are taking a proactive part in the drawing up of those regulations in Europe. As the noble Lord will know, vehicle regulations are now determined at EU level.

The noble Lord, Lord Palmer, referred to biodiesel. We certainly recognise that biodiesel is a renewable source of energy that has some major advantages over conventional mineral diesel. However, the production and distribution of biodiesel can be quite energy intensive. Unless this energy is produced from renewable sources, biodiesel cannot be considered as truly renewable. Nevertheless, we consider that it has potential advantages. Technology has been developed in Germany and elsewhere. Biodiesel is often considered to be carbon-neutral as the carbon absorbed by the oilseed rape when it is grown offsets the carbon emissions when biodiesel is burnt. We propose to keep under review the whole scope for rapeseed or indeed other organic crop-based fuels. For example, there are advantages with short-rotation willow coppice which are greater than those for rapeseed. There are significant areas that need further examination. The Government will undertake that.

Noble Lords have referred to fuel cells as the technology of the future. We agree that fuel cells may well be the best bet. However, we need to cover the whole range of technologies that will come into play over different timescales. An expanded Powershift programme is already supporting fuel cells and the programme contributed to the costs of the vehicle referred to in relation to Sevco and Westminster Council. We are very aware of the potential of fuel cell vehicle technology. We would hope that both research that the DTI, under its advanced fuel cell programme, is already supporting and, it is to be hoped, eventual production could accrue to this country.

I come now to the points raised by the noble Lord, Lord Beaumont of Whitley, in relation to the development of what I refer to as ultra-light rail options. A number of innovative systems are being promoted in this field. To develop this commercially and operationally, it would have to fit into the priorities for the local transport plan. Funds have been made available as part of the innovative public transport project with the aim of producing a prototype of an innovative public transport system. A number of bids are currently being considered. We are undertaking various small-scale research programmes in this area.

I have run out of time. This has been a fascinating debate. There are a number of potential options here. I shall study all noble Lords' comments as we look into developing further our strategy in all of these alternative fuel areas.

House adjourned at eighteen minutes before ten o'clock.