Renewable Transport Fuel Obligation (Hansard, 25 January 2005)

§ Lord Davies of Oldham
My Lords, the Government announced in December 2004 that they would undertake a feasibility study on the possibility of introducing a renewable transport fuel obligation. It will seek to establish the cost-effectiveness and administrative feasibility of an obligation, as well as its compatibility with other government objectives. The study is under way, and an interdepartmental group is making good progress. We will be talking to stakeholders shortly and seeking their input to the study.

Lord Carter
My Lords, I thank my noble friend for that Answer, but is he aware that oilseed crops in the ground now for harvest this summer could produce the feedstock for biodiesel, if the Government and the oil companies had the will to implement the renewable transport fuel obligation that is on the statute book? That is exactly the kind of initiative that could show that the Government are serious about their wish to put climate change at the top of the environmental agenda. Is my noble friend also aware—he will not need reminding—that CO₂ emissions from road transport are increasing at the moment?

§ Lord Davies of Oldham
My Lords, a plant in Scotland has just been constructed to produce biofuel. Another one in Middlesbrough, which is five times larger than the Scottish one, will come on stream shortly. My noble friend, who played a conspicuous part in including this issue in the Energy Act, will recognise that there are major issues relating to the transport obligation that require us to cover the angle of international trade and our obligations in the European Community and to look at the sustainability of the programme, given the difficulties that some biofuels can produce in some economies. There are many angles to look at. I assure my noble friend that the study is going ahead, and we intend to make rapid progress this year.

§ Lord Palmer
My Lords, is the noble Lord able to say roughly how rapid that progress will be? As the noble Lord, Lord Carter, mentioned, crops already growing in the ground now could be used by this coming September or October.

§ Lord Davies of Oldham
My Lords, the best indication of our commitment to make rapid progress is that we expect to set a target for 2010 this year. That is two years before we are obliged to do so under the 1139 European requirement; we do not need to do it until 2007. We expect to be in a position to set that target this year. That is proof of the emphasis that we are putting on the development.

§ Lord Ezra
My Lords, is it not surprising that the Government are launching yet another consultative inquiry into the issue of a renewable transport fuel obligation when they launched one in April last year and a majority of respondents replied in favour? The Energy Act 2004, drafted by the Government themselves, sets out in great detail how such an obligation should operate. Why is there this further delay?

§ Lord Davies of Oldham
My Lords, the noble Lord is, of course, right; the amendments tabled by the noble Lord, my noble friend and the noble Lord, Lord Palmer, formed the basis of the government amendment to the Energy Act that gives us the basis for progress on this work. However, the noble Lord will recognise that it is not an easy market to develop. We have a model from the electricity supply industry, but this is a much more complex market. We have a great deal of work to do in developing the scheme. As I indicated, we expect to make progress this year.

§ Earl Ferrers
My Lords, will the noble Lord be kind enough to have another shot at answering the question of the noble Lord, Lord Palmer? He asked when the plant was likely to come into operation. I think that the noble Lord forgot to answer that.

§ Lord Davies of Oldham
My Lords, if I did, I apologise. One plant is in operation now—the one in Scotland that I mentioned. The Middlesbrough plant is being constructed. However, the broader question of a renewable transport fuel obligation constitutes a much bigger issue. That was the focus of the original Question and is the issue with which we are wrestling, due to its great complexity.

Lord Berkeley
My Lords, will my noble friend confirm that the renewable transport study will include the aviation sector? He mentioned international trade. Any duty on aviation fuel would have to be at least Europe-wide. Will he confirm that that important sector will be included, as it does not pay any duty at all at the moment?

§ Lord Davies of Oldham
My Lords, the project that we are discussing relates to land transport and not to aviation. The aviation industry is governed by international rules that are more complex to change than those relating to the issue that we are discussing, to which we can effect changes through our own legislation. My noble friend will have noted that my right honourable friend the Prime Minister has indicated that he intends during his chairmanship of the G8 this year to place the issue of aviation fuel firmly within international consideration of airline emissions.

§ Baroness Byford
My Lords, does the Minister accept that, so far as I am concerned, his response will 1140 be greeted with dismay by the farming community and those who are trying to push renewable energy forward? Does he also accept that the two plants of which he has spoken, one in Scotland and one in Middlesbrough, will involve transporting items for miles, which will add to CO₂ emissions? Will the Government try to hasten progress on the matter? As the noble Lord, Lord Ezra, rightly said, consultation has taken place. Cannot more plant be built before 2010, which, to be frank, is too long a delay?

§ Lord Davies of Oldham
My Lords, I was not indicating that the project involved 2010 as a date for the new plant; I was indicating that that would be the date on which we would have a percentage target to which we would be committed for the use of renewable fuels.
The noble Baroness will recognise that we must approach the issue with some care. It is not the case that an easy introduction of the scheme would be of immediate and instant benefit necessarily to British farmers. We operate in a worldwide competitive situation, and it is clear that some crops appropriate for such development can be grown a good deal more cheaply elsewhere. We must have regard to the obligation in order to ensure that we get benefits from it for our farmers in addition to the rest of the community.