Biofuels (Hansard, 8 October 2002)

§ Lord Palmer
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as an unpaid president of the British Association for Biofuels and Oils and as a farmer.

§ Baroness Farrington of Ribbleton
My Lords, the Government recognise that biofuels have potential for UK agriculture and can deliver environmental benefits. The green fuel challenge was an initiative designed to stimulate industry to come forward with practical proposals for alternative fuels. Following the challenge a new, reduced rate of duty for biodiesel was announced.

§ Lord Palmer
My Lords, I am grateful to the noble Baroness for that reply, but would she perhaps agree with the premise that the polluter should pay? If one could have a slight increase on the likes of LPG, that could balance a reduction on the rate at which biofuels are taxed.

§ Baroness Farrington of Ribbleton
My Lords, I have to say that the noble Lord may not have uniform support throughout the country for increasing tax on other forms of fuel, if recent public expressions of concern on that subject are taken into account. As we explained in the "Powering Future Vehicles" strategy, we will continue to keep transport taxation under review and look at the taxation policy avenues that are available to incentivise the further use and development of both low-carbon vehicles and fuels.
134 The Chancellor sets rates of duty Budget by Budget and has to take into account a wide range of economic, social and environmental factors. We are committed to looking at avenues to promote the use and development of low-carbon vehicles and fuels.

§ Lord Greaves
My Lords, following that slightly disappointing and perhaps slightly feeble Answer from the noble Baroness the Minister—

Noble Lords
Oh!

§ Lord Greaves
My Lords, that is quite uncharacteristic of the noble Baroness.
Is it not a scandal that £184 million a year is being wasted by paying farmers to leave their land fallow in the form of set-aside when that land could be used for growing crops that could be used for biodiesel or bioethanol, which would help to meet our reduction of carbon requirements and probably slightly reduce the cost of fuel?

§ Baroness Farrington of Ribbleton
My Lords, I am, as always, deeply sorry if I have been feeble in the eyes of the noble Lord, Lord Greaves. As he knows, feebleness is not something that I normally seek to achieve. We have very strong policies in terms of encouraging the development of biomass and biodiesel crops. As part of an overall strategy, we take into account the benefits of the fuel's production and its effect on greenhouse gases. However, government must balance that against other interests in terms of other forms of renewable energy development.

§ Lord Jenkin of Roding
My Lords, does the noble Baroness recollect that the Government rejected the recommendation of the Select Committee on Science and Technology to establish within government a champion for non-food crops in order to take forward this whole area and that instead they proposed a forum? Does she also recollect that at that time the Government fully accepted that there was great potential for industrial and other products from non-food crops, including from set-aside land? One has to ask why it has not happened. Why have the hopes expressed by the Government two years ago in their reply to the Select Committee not yet produced anything?

§ Baroness Farrington of Ribbleton
My Lords, the noble Lord, Lord Jenkin of Roding, knows that the Government have developed a wide range of different strategies within this area and that they take advice from a wide range of sources. His argument that the Government are doing little can be resisted because of the wide range of issues that the Government have taken into account.
At present, we are in the middle of producing an energy White Paper, which will be published early next year, in order to consider further strategies. However, perhaps I may simply refer to the current ongoing 135 programmes. Energy efficiency best-practice schemes are in progress, as is energy labelling of domestic appliances. A bio-energy infrastructure scheme is being set up with £3 million of funding from the £100 million allocation announced by the Prime Minister last year. I am sorry if the noble Lord feels that that is inadequate, as he visibly does. However, I believe that the range of strategies, including the development of combined heat and power projects, is in line with some of the recommendations of the Select Committee to which he referred.

§ Lord Carter
My Lords, is the problem that the Government are still concerned with the reports produced some years ago and that they favour biomass in the form of coppice, which takes at least six or seven years to mature? Taking into account the present state of agriculture, it is very hard for a farmer to consider an investment which will not pay off for six or seven years, compared with the possible advantage of biodiesel or bioethanol, which come from annual crops.

§ Baroness Farrington of Ribbleton
My Lords, my noble friend is right that there is scope within these fields. However, I can say in response to the three noble Lords who spoke before my noble friend that the new and renewable energy research and development programme, worth £55.5 million, is an enhanced R&D programme and stimulates development over a wide range of areas. My noble friend is wrong to believe that we are concentrating on one particular area of development. On off-shore wind development, £74 million has been spent; on energy crops and biomass, £81.5 million; on photovoltaics, £20 million; on wave and tidal energy, £5 million; and on biomass heat, £3 million. In addition, a range of projects, including a highly developed package, comes from sources such as the Performance and Innovation Unit, the New Opportunities Fund, DEFRA and the DTI working together.

§ Lord Elton
My Lords, is the noble Baroness aware that in Germany 500 million gallons of such fuel were burned last year and that the Germans expect to burn 750 million gallons this year? In view of the fact that such fuel reduces by between 80 and 90 per cent the carcinogenic content of exhaust emissions, should it not be given some fiscal advantage so that it is used more generally?

§ Baroness Farrington of Ribbleton
My Lords, we obviously recognise the need for fiscal advantage. That is precisely why the differential rate of fuel duty was levied by this Government.

§ Lord Ezra
My Lords—

§ The Lord Privy Seal (Lord Williams of Mostyn)
My Lords, I think we must move on now.