§ Lord PalmerMy Lords, in begging leave to ask the Question standing in my name on the Order Paper, I must declare an interest as a farmer and a non-paid president of the British Association for Biofuels and Oils.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to encourage farmland not required for food production to be cultivated to produce environmentally friendly road transport fuels; and when they will equalise road fuel duty between bio-diesel, bio-ethanol and liquid petroleum gas.
§ The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)My Lords, the Government recognise the potential of biofuels to deliver environmental benefits. The green fuel challenge was an initiative designed to stimulate industry to come forward with practical proposals for alternative fuels, including those that can he produced from crops, which offer environmental benefits over current conventional fuels. Following the challenge, a new reduced rate for bio-diesel was announced in recognition of the environmental benefits that it delivers.
§ Lord PalmerMy Lords, I thank the Minister for that reply. In that the Government are committed to a low-carbon economy, will he give the House some evaluation of how the 40p per litre rebate on fossil LPG compares with that of 20p per litre for bio-diesel and nothing at all for bio-ethanol?
§ Lord WhittyMy Lords, the issue is what those rebates can stimulate and deliver. As the noble Lord knows, a further assessment is being carried out of whether fiscal incentives or any other government support are appropriate for bio-ethanol. Some of that looks promising. We have a panel looking at the potential for non-food crops, which is focusing on bio-ethanol and bio-diesel. The exact fiscal details are being considered by the Chancellor as the Budget approaches.
§ Lord Hardy of WathMy Lords, does my noble friend accept that these developments could be to our national technological advantage? As well as adding to the contribution made by renewable sources of energy, bio-fuels could help the agricultural and rural economies.
§ Lord WhittyYes, my Lords. It is important for environmental and agricultural policy to look at the uses of biofuels of all sorts. The policy commission on agriculture and the panel on alternative fuels, to which I have referred, are both considering that.
§ Lord EzraMy Lords, have the Government decided on the extent to which crops should be devoted to energy purposes and, if so, whether the resultant processes should be used for road fuel or for electricity generation?
§ Lord WhittyMy Lords, the green fuel challenge has already promoted the further development of the non-food uses of crops for energy and for road fuels. No doubt the policy commission report on farming and food will also refer to that. The Government have already provided substantial sums of money to develop a market for biomass energy. It is not an either/or situation. There are different crops for different uses and there will be different fiscal regimes surrounding them.
§ The Lord Bishop of ChelmsfordMy Lords, I understand that bio-diesel performs identically to ordinary diesel, but contributes only half as much to CO2 build-up in the atmosphere. As it could also help to revitalise the farming industry if used as a rotational crop, does the Minister agree that it would be prudent to encourage our farmers to use God-given sunshine and rain to produce at least some of our road fuel and so help clean up the atmosphere?
§ Lord WhittyIn principle, yes, my Lords. The issues of how economically we can meet our environmental objectives are being addressed. However, a substantial amount of oilseed rape, for example, needs to be planted for use as bio-diesel before a significant impact can be made on the total diesel market. The use of agricultural hectarage and the economic cost have to be taken into account.
§ Lord TomlinsonMy Lords, will my noble friend be cautious about extending yet another direct subsidy to agriculture particularly in the post-Doha period when we have to reform agriculture and agricultural subsidies if we are to enlarge the European Union? Is he aware that the use of red diesel in agriculture involves a subsidy of 42.69p per litre? The 6,879 million litres used in the past year resulted in the Treasury forgoing approximately £3 billion of revenue. Most of that was a hidden subsidy to agriculture.
§ Lord WhittyMy Lords, there is a problem with the continued use of red diesel, but fuel is a substantial cost in the hard-hit agricultural sector. For the immediate period, I do not think that it is appropriate to increase the duty paid by farmers, although I agree that that is a long-term problem. The use of biofuels is of a different order. If red diesel is an environmental problem, the potential for biofuels is an environmental advantage. It will be helpful as an alternative crop for farmers and will contribute to meeting our Kyoto targets.
§ Baroness Thomas of WalliswoodMy Lords, have the Government considered providing assistance to people trying to get fuels such as liquid petroleum gas to fuel consumers, or to garages when they initially equip themselves to connect the supply with the users of such new fuels?
§ Lord WhittyMy Lords, there is already a significant advantage to the use of liquid petroleum gas, and grants are available to convert vehicles. The activities of the Energy Saving Trust and others have also helped to develop what is a growing infrastructure for liquid petroleum gas and compressed natural gas in garages. I agree that the infrastructure needs further development, but much of the government support for those fuels is already in place.
§ Lord SwinfenMy Lords, can crops used for biofuel be grown with less fertiliser than crops used for food, so that fewer nitrates and nitrites are put into the water supply?
§ Lord WhittyMy Lords, the advantage of biofuel is more the reduced use of pesticides than of fertilisers. However, such crops certainly require less application of fertilisers overall, and therefore have that advantage as well.
§ Lord Stoddart of SwindonMy Lords, will the Minister consider reorientating priorities for alternative fuel? Is he aware that it would be far more pleasant to use crops to produce fuel rather than waste acres—square miles of land—to produce energy from wind power, which is wasteful, inefficient, very noisy and destructive of the countryside?
§ Lord WhittyMy Lords, I accept that in certain circumstances and certain locations there are problems with wind power. Nevertheless, wind power—both offshore and, in the appropriate place, onshore—is a renewable source of energy that can contribute towards our environmental targets. The advantage of biofuels, if we can develop the market and the technology, is clearer because the technology uses existing agricultural space—its use for food having perhaps reduced—for purposes that could offset the use of fossil fuels. That is the advantage. As your Lordships may be aware, 100 years ago a very high proportion of cereal growth went to transport, mainly in the form of oats for horses.