Future Vehicles Strategy

HC Deb 12 December 2002 vol 396 cc143-70WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Gillian Merron.]

2.30 pm

The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson)

It is customary at the start of an Adjournment debate to congratulate the Member who has been fortunate enough to secure it. I shall break with that custom because I secured the debate. Other Members who catch your eye, Mr. Deputy Speaker, may not feel as constrained as I.

I hope that the debate gives us an opportunity to review our progress on lowering vehicle emissions and to look at how we move the agenda forward in future. I hope that we find a high degree of cross-party understanding on these important issues.

Road transport is central to the United Kingdom's economic success and a great source of personal freedom. To sustain a vibrant and flourishing economy as well as to maintain Britain's position and competitiveness in the world, good transport is not just desirable, but essential. However, transport and, in particular, road transport is the source of 25 per cent. of the UK's greenhouse gas emissions and a major source of other air pollutants.

The Government have done much to clean up transport. There have been significant reductions in local pollutants over the past decade because of improvements in vehicle technology and fuels. Those improvements have been driven forward by cooperation with our European partners. The European emission standards mean that a new car sold in the UK today emits 50 times fewer regulated pollutants than its equivalent on sale 30 years ago. Using a more recent time scale, today's cars emit 40 per cent. less particulates and oxides of nitrogen than new cars in 1996. By 2005, those emissions will be 70 per cent. lower than in 1996. That is a massive improvement over 30 years, including the improvements of the past 10.

However, yet further improvements are necessary if we are to meet our air quality targets and give everyone the benefit of cleaner air. Cleaner air means better health, better places to live and a better environment for us all. If we are to meet the challenges that road transport presents to the environment, we must capitalise on the opportunities that new generations of vehicle and fuel technology offer.

In July this year, the Government launched their powering future vehicles strategy. As the Prime Minister says in the foreword to that important initiative, our objective is clear: we want the UK to lead the way in the global shift to clean, efficient, low-carbon transport. Such a move will not only help the environment and improve our quality of life, but reduce the cost of motoring for those who choose low-carbon cars and build a competitive advantage for the UK's automotive industries.

The strategy provides the framework to promote the development and take-up of new technologies that will deliver significant reductions in emissions of greenhouse gases. It supports the delivery of our Kyoto targets and our domestic carbon dioxide goal of a 20 per cent. reduction from 1990 levels of carbon dioxide by 2010. The new vehicles will be clean as well as low carbon, delivering air quality improvement, especially in our congested urban areas. They will have significant effects for human health and the environment. It will mean an improved quality of life for those who suffer most from air pollution. For example, children with asthma or elderly people with heart or lung conditions are particularly vulnerable.

Cleaner vehicles are generally quieter than today's vehicles. That will bring real benefits to those who suffer from traffic noise. During a recent visit to Perkins Diesel in Peterborough, I was told that a vehicle that is powered by compressed natural gas gives off about a third of the engine noise of one that is conventionally powered by diesel.

Mr. David Chaytor (Bury, North)

Has the Minister heard of the company in Marseilles that claims to have manufactured the world's first zero emission vehicle? If not, will he ask his officials to obtain information on that important development in French technology so that all hon. Members can be informed about it?

Mr. Jamieson

I shall certainly look into that. Perhaps my hon. Friend has some details and would like to point me towards them. I shall talk briefly about zero emission vehicles later. I suspect that other hon. Members may do the same, having experienced such a vehicle this week.

Road transport is responsible for a significant proportion of emissions of some of the air pollutants that are of most concern, especially oxides of nitrogen. Reducing emissions of those pollutants from road transport will play a key role in helping the United Kingdom to meet its air quality strategy objectives as well as to comply with legally binding European Union limit values for such pollutants.

The strategy presents other opportunities beyond those of improving the environment, including building competitive advantage for UK industry. Low-carbon road transport will need to come to the UK if we are to meet our Kyoto targets and air quality objectives, but we want it to come from the UK as well. We cannot afford simply to import solutions. Manufacturing, research and development—which we are very good at in this country—are a vital part of that future, and the automotive sector is key to that development.

So we must look to the future—to tomorrow's global market demand for clean low-carbon transport. We must ensure that the United Kingdom is the location of choice for the design and manufacture of tomorrow's vehicles. That means that we must research and develop new solutions, creating new knowledge-based supply chains, making world-class value-added products for environmentally aware customers across the globe and ensuring that the UK is a good home market in which to sell clean low-carbon vehicles.

The Government are taking immediate action to drive the UK forward to low-carbon transport. The strategy commits us to an important target: that within the next decade, one in 10 new cars sold in the UK will be low-carbon vehicles, emitting 100 g of carbon dioxide or less per kilometre. One in 10 means up to 0.25 million cars a year. Low-carbon means fuel-efficient-100 g of CO₂ per kilometre is the equivalent of about 70 miles per gallon, compared with today's new car average of 178 g of CO₂ per kilometre and an average of about 40 mpg. We are also setting a target for buses: that by 2012, 20 per cent. of new buses coming into operation every year will be low carbon.

We have been bold in setting targets for the introduction of low-carbon vehicles. Those targets will serve to drive the strategy forward and send out a signal that we are serious about developing low-carbon transport and seizing the competitive advantages from it. However, targets on their own are not enough. We need the engagement of industry and of stakeholders if we are to make this work. That is why the Government fully support the establishment of the low-carbon vehicles partnership. The partnership will operate as an independent forum to maximise the potential for UK business to gain the competitive advantage from the powering future vehicles strategy. It will work with industries to engage proactively in the move to low-carbon vehicles and provide a forum in which stakeholders can work together in overcoming market barrier issues affecting the shift to new vehicles and fuels.

The partnership will be publicly launched on 16 January next year. A high-level board has already been recruited, including the chairman and director-level executives in the auto industry, the chairman of the RAC foundation and senior people from nongovernmental organisations and local government. The board will meet for the first time in January to set the strategic direction for the partnership and establish a first-year work plan. An awareness of the partnership is rising. The website is now live and potential members are invited to make expressions of interest.

Delivering the strategy requires action from Government as well as other stakeholders. That involves more than just one part of Government, which is why the strategy is being issued jointly by the four key Departments: the Department of Transport, the Department for Environment, Food and Rural Affairs, the Department of Trade and Industry and the Treasury. That is why the Prime Minister has made four Ministers jointly responsible for overseeing its implementation. Such a joined-up approach means that we can use all the tools at our disposal to drive the shift to low-carbon transport, including taxation measures.

Mr. Christopher Chope (Christchurch)

The strategy talks about the establishment of a joint ministerial low-carbon group. Will the Minister tell us how many times that group has met and what it has resolved?

Mr. Jamieson

The hon. Gentleman must have been too busy writing his notes to hear what I said. I shall repeat it: the group will meet next month. It has not actually resolved anything yet because it has only just been formed. It will meet after the launch on 16 January.

Mr. Chope

The Minister has misunderstood me. He was talking about the low-carbon vehicles partnership, and the Government are involved in that, but I thought that there was a separate, joint ministerial low-carbon group comprising of four Ministers. That group was supposed to meet and produce an annual report, which was an aspiration more than a year ago. I wondered what had happened since.

Mr. Jamieson

Perhaps I have not made myself entirely clear, but I will have another go. The two groups will be launched next month. The ministerial group has not met formally. The four Departments have had several meetings in the lead up to the powering future vehicles strategy, but the formation of the group will be next month and we will take the agenda forward in 2003.

We are the first major country to base its mainstream vehicle taxation system—company car tax and vehicle excise duty—on carbon emissions. Those tax changes are already having an impact on automotive manufacturers and motorists, which we can see by looking at the way advertisements for vehicles now concentrate on the carbon dioxide ratings. We have also introduced duty incentives for cleaner fuels, including biofuels and road fuel gases—liquid petroleum gas and compressed natural gas.

Taking biofuels as an example, we know that they can provide significant life cycle reductions in carbon dioxide emissions. Bioethanol and biodiesel from virgin crops can reduce CO₂ by about a half compared with conventional fuels. In the case of biodiesel from waste vegetable oil, the life cycle benefits can be even higher. They can go into conventional diesel and petrol as a blend that is safe, clean and of high quality and which meets the manufacturers' warranties.

Mr. Chaytor

On bioethanol and biodiesel, whilst recognising the important progress that is being made, does the Minister accept that there is a remaining contradiction in taxation policy because biofuels have a higher level of taxation than LPG, which is of course a fossil fuel?

Mr. Jamieson

Yes, we recognise that. My hon. Friend will know that a great deal has been said about that and much lobbying has taken place. He will also know that the duty levied on biodiesel was reduced by 20p a litre. Next year, the levy on bioethanol will be reduced. That has been due to the lobbying that has taken place, and a reflection on the contribution that those fuels can make to a cleaner environment. However, biodiesel and bioethanol still emit a considerable amount of air pollutant at the tailpipe. We have to take that into consideration.

Another issue about liquid petroleum gas that we were very mindful of was the need to give an incentive to set up the refuelling network, which was very costly. I am pleased that the oil industry has responded extremely well. I believe that we are all surprised that we now have a comprehensive network of about 1,200 LPG filling stations. Some 10 per cent. of filling stations now supply liquid petroleum gas, so the fuel is available throughout the country. However, the incentive had to be given in the first instance.

My hon. Friend knows that compressed natural gas offers considerable advantages. Unfortunately, the network of filling infrastructure has not grown in the same way that it has for LPG. The thrust of my hon. Friend's question was whether we are constantly reviewing and rethinking the fiscal incentives. The answer is yes. Evidence of that has come in the Chancellor's statement. We have been able to respond very quickly to points that have been made to us and we have put in place fiscal incentives on fuels that emit lower CO₂ and result in better air quality.

It always gives me a considerable amount of pleasure when I travel beyond the borders of this country for discussions about the issue to learn that many other countries have a great interest in what we are doing and want to replicate some of our fiscal measures. We probably lead the world, including some Scandinavian countries which generally have a very good record on such issues.

A biodiesel duty cut of 20p per litre below that of ultra low sulphur diesel has been in place since July. Although it is early days for the biodiesel industry, the latest provisional figures paint a very encouraging picture. The amount of dutied biodiesel has risen sixfold to more than 400,000 litres a month since the introduction of the duty cut. Several companies have plans to expand the number of retail sites dispensing the fuel and we expect the numbers to keep rising. From information provided by the industry, we expect more than 80 filling stations to be dispensing biodiesel blends by the end of the year.

The green fuels challenge built on the change in the pre-Budget report with a similar 20p per litre cut for bioethanol. The Government have announced that they will consult with stakeholders to establish the optimum timing for the introduction of the duty cut. Government support and industry initiative will create a sustainable biofuels industry with a long-term future.

The Government are supporting cleaner vehicles as well as cleaner fuels. The PowerShift programme, which is sponsored by my Department and administered by the energy saving trust, is aimed at developing a sustainable market for alternative-fuel vehicles in the UK. PowerShift grants are available to assist with the additional costs of buying hybrid, gas and electric vehicles while the market for such vehicles is small. PowerShift's sister programme, the new vehicle technology fund, supports the demonstration of innovative low-carbon technologies, such as hybrid and fuel cell vehicles.

Mr. Chope

Does the Minister accept that many customers are concerned that there is no long-term guarantee of the duty differential on LPG and that at the end of 2004 the differential will disappear unless the Government make an announcement? An investment in a vehicle needs a return over a period longer than two years.

Mr. Jamieson

The differential will not disappear, but we will have to review carefully all the fiscal incentives over a period of time to reflect the changing market and the changing competitive edge of one fuel over another. The fuel duty rebate for LPG came in about five years ago, when the gap between emissions from LPG and from petrol and diesel was actually very large. What has happened recently probably was not anticipated at the time. Emissions, particularly from petrol, have been considerably reduced and the gap between LPG and petrol has closed, but the gap between petrol and/or diesel and compressed natural gas is still very large. As I was saying to my hon. Friend the Member for Bury, North (Mr. Chaytor), those fiscal incentives will not disappear, but we will have to review them and look at them very sensibly. We need to look at them in a way in which a disincentive is not provided for taking them forward. We have to weigh up a number of very important issues. If the hon. Gentleman has some ideas and his party wants to make a contribution to the process, we will be pleased to hear from him.

Mr. Chaytor

On the PowerShift programme, I want to endorse the point raised by the hon. Member for Christchurch (Mr Chope) about the need for certainty before an increased number of people are likely to take advantage of the regime. Has my hon. Friend the Minister recently studied the PowerShift register on its website, which I do from time to time? I have mentioned this to him before. Of all the vehicles listed on the register, my recollection is that the vast majority are not yet eligible for grants simply because their emissions are deemed to be not yet proven. That is a disincentive to those people who are interested in converting their vehicles from petrol to LPG. Will the Minister review the register to see what can be done to make grant available for a wider range of vehicles? Some manufacturers have no vehicles that are eligible for grant because their emissions have not yet been proven.

Mr. Jamieson

My hon. Friend would agree that we must make the grant available only where there is a tangible improvement in emissions. We have been having many discussions with the manufacturers to get them to put their vehicles on the register and to make the proper assessment to allow them to do so. I am pleased to say that the register has grown substantially over the past 18 months—that does not just coincide with the time in which I have been doing this job.

On Monday, I was pleased to visit MG Rover. By February next year, all its vehicles, which it produces at Longbridge, Birmingham, will have the option of having the LPG kit fitted to them. That includes the large 2.5 litre engine, for which some manufacturers have baulked at providing the equipment because of the small market that exists for those vehicles. Some of the larger and more polluting vehicles will, therefore, have the potential to be converted. However, we are mindful of my hon. Friend's point. Some manufacturers, which are not taking up the opportunity of getting themselves on that register, might be missing a trick in terms of marketing their vehicles. The public, who increasingly make choices on environmental, as well as plain economic, grounds, are ever more sensitive, and people may look to certain manufacturers rather than others. That is, however, a matter for the manufacturers. We certainly hope that cars manufactured in Britain, which provide for our economy, benefit from the register.

Powering future vehicles is a United Kingdom strategy, which looks outwards and recognises the need to work with our international partners. It includes the highly successful European vehicle emissions and fuel standards, which are commonly known as the Euro standards. The progressive tightening of the Euro standards has helped to reduce emissions from particulates, oxides and nitrogen from road transport by about 50 per cent. over the past decade. Even tighter regulatory standards have been put in place for vehicles entering the market from 2006, which is one of the many benefits accruing from our membership of the European Union. We often say that no country can achieve cleaner fuel or air on its own.

The European Union contains one quarter of the world's economy, which gives us an enormous amount of leverage with both vehicle manufacturers and oil companies. Given that Japan and Korea also want to work to our environmental standards, there is agreement among about 40 per cent. of the world's economy. As such, manufacturers and fuel refiners have to listen to what we want if they want to sell their vehicles in Europe. The European Union voluntary agreement of vehicle manufacturers is a good example of this point in action. It has been a key driver in the reduction of carbon dioxide emissions. The target is to reduce the average fuel consumption and carbon dioxide emissions of new cars to 140 g per km by 2008. We know that this is a demanding target that will take levels down by about 25 per cent. compared with the 1995 average of 187 g.

So what will low-carbon future vehicles look like? In the foreword to the strategy, the Prime Minister stated: Beyond 2010, we will accelerate the shift towards technologies such as hydrogen fuel cells, with zero tailpipe emissions. The Government intend to develop a 2020 target for sales of ultra low-carbon vehicles and we expect that a significant proportion of those cars will offer zero tailpipe emissions. That would include hydrogen fuel cell vehicles.

The Government are providing support for road trials of hydrogen buses. In 2003, Transport for London will take delivery of three fuel cell buses for trial on the roads. My Department is supporting that initiative through the PowerShift programme and the new vehicle technology fund. The fund is also being used to support the piloting of hydrogen buses in Cambridge in 2004. Buses typically run in urban areas in which air quality is of the greatest concern. Fuel cell buses, which can operate with zero tailpipe emissions, offer real environmental benefits in such areas.

Most experts think that the cost of fuel cell cars is not likely to reach a viable mass-market level much before 2010 to 2015. The application of the technology to road vehicles is very new and there are considerable further technical and economic hurdles, in terms of raising the performance of fuel cell stacks, maintaining sustained performance and bringing down the current very large manufacturing costs.

In the meantime, hybrid vehicle technologies will help us to move towards a low-carbon economy and towards a more sustainable transport system, in terms of carbon dioxide, air quality and noise. Hybrid technology involves a combination of the internal combustion engine and the electric motor, which drives the vehicle and collects electricity from the braking. Hybrid technology will probably have a life that stretches through the current internal combustion engine way into the time when cars may or may not be powered by fuel cells and hydrogen.

The hybrid technology that is available today offers about twice the fuel efficiency of a conventional vehicle, with only half of the carbon dioxide emissions. The benefits are obvious and the Government actively support the development and application of hybrid technology. That includes support for development of a hybrid bus.

The Government are not backing one particular technology or fuel. Instead, we are backing a low-carbon future. That means a future with an improved environment, a better quality of life in our towns and cities and a flourishing United Kingdom automotive industry.

2.58 pm

Mr. Christopher Chope (Christchurch)

I, too, welcome the debate and I am grateful to the Minister for having made it one by allowing us to intervene and discuss issues.

I share the aspirations of the Government, and probably all people, in relation to this issue. I look forward to a time when we can have zero-emission vehicles. However, that is on the horizon—it is a long-term prospect. Most of my remarks will be geared to more immediate issues. The Government could do more in the short to medium term to improve the environmental quality of vehicles.

The Minister began by saying that targets were not good enough on their own. On 3 December 2001, when the Government first announced that they would produce a draft of the powering future vehicles strategy, a press release stated that the final strategy would be published in the spring. Of course it was not; it was published late in July. When it was published, we were told that there would be a joint ministerial low-carbon group, but the Minister, in his usual candid way, has explained that that group has yet to meet officially, although its terms of reference were clearly set out on page 17 of section 3 of the Government strategy published in July.

Why has that group not met? It is to produce and publish an annual report. If it is going to start work only in the new year, I suppose that we shall not get its first annual report until this time next year. Such delays seem to be totally unnecessary and suggest that the Government are perhaps paying lip service to the issue, but not putting their shoulder to the wheel to get things moving as fast as they could. A year ago the Government thought that they could produce the strategy document in the spring, but it was not produced until July. Why did it take twice as long as they expected? I suspect that that was because the document had a lower priority than most participants in the debate would have wished.

However, we must start from where we are now: with a policy that has been announced and that we are debating. My party welcomes its contents, but thinks that, on LPG in particular, there is much more scope for extending the use of LPG, which would benefit the environment through reduced CO₂ and noxious emissions, especially in urban areas. The hon. Member for Bury, North (Mr. Chaytor) said in his intervention that he accepts that there is a problem with the Government having set the LPG subsidy to continue only until the end of 2004. That subsidy is what drives people to convert to LPG.

The strategy document recognises the importance of fiscal incentives. We do not yet live in a world where everybody will switch to an LPG vehicle purely for altruistic and environmental reasons. If we accept the need for fiscal incentives and recognise that we do not have anything like as many LPG vehicles in our vehicle park as we could have, why do the Government not declare now that the LPG fiscal incentive will continue beyond 2004? Perhaps it could continue until 2006, the date on which our parliamentary passes expire. If we can have a parliamentary pass that continues until 2006, why cannot the motoring public and the people considering investing in a dual use or LPG vehicle be assured that the present fiscal incentive will continue until then?

What the Minister has said today in response to interventions and what the Economic Secretary to the Treasury said during debates on this subject in the Finance Bill Committee earlier this year—in which I was privileged to be able to participate—causes much concern. When I raised the road fuel gas differential continuing beyond 2004 in that Committee, the Economic Secretary responded: First, he accused me and other Ministers of refusing to say anything about that matter, but that is not the case. He asked why we should not commit ourselves to continuing the differential beyond 2004. The answer is simple: the environmental case for maintaining that fuel duty differential beyond 2004 for road fuel gases, such as LPG, has not yet been proved, so the Chancellor and the Government will consider it on a Budget-by-Budget basis."—[Official Report, Standing Committee F, 11 June 2002; c. 262.]

Does the Minister think that the environmental case for extending the LPG differential beyond 2004 has been made? Most people who follow this debate think that it has. Some of the Government's other actions suggest that they accept that case. On 15 November this year, the Energy Minister announced in a press release that the Department of Trade and Industry would give £1 million to rural motorists to increase the uptake of liquefied petroleum gas in remote areas because LPG has good environmental benefits. That was a joined-up Government press release and it is worth looking at the notes to editors annexed to it, which remind us that: Compared to diesel, LPG emits around 90 % less NOX, 1/50th the amount of particulates and only 1/500th the amount of ultra fine particles. The main air quality pollutants of concern in the UK are particulates and NOX. In Central London road traffic causes 93% of all particulate emissions and 58% of all NOX emissions. Department of Health statistics show that particulates are responsible for several thousand advanced deaths each year and many thousands of instances of illness and reduced activity. Owing to its environmental benefits, the duty on LPG was reduced by 29% in the 1999 Budget and 40% in the 2001 Budget…This has resulted in a retail price on the forecourt of around half that for petrol and diesel. More than 5 million drivers worldwide use LPG and in the UK numbers are increasing as more motorists learn of the benefits. In the UK, from a small start of 3,500 at the end of 1998 some 65,000 vehicles were on our roads by the end of 2001 and, with the Government fiscal incentives continuing, it is forecast that numbers will increase to around 250,000 by the end of 2005. That is what one of the Ministers who is a member of the joint ministerial low-carbon group, which has yet to meet, said in his press release, yet that is not consistent with what the Minister said today or what the Economic Secretary said during the Finance Bill. The Government must make an immediate announcement that they intend to extend for a significantly longer period the fiscal incentive for LPG because it is a good thing, as the Energy Minister acknowledged. Unless there is that continuation and an assurance of a continuing fiscal incentive, we may find that the take-up of LPG is nothing like as great as it otherwise would be and nothing like as comparable to what is happening elsewhere in the world.

I hope that when the Minister attends the joint ministerial group, he will take up the cudgels on behalf of the motor industry and LPG industry and on behalf of the people who suffer the ill effects of polluting vehicles to ensure that we get more LPG-powered vehicles on British roads.

The next issue to which I want to refer and which is not far away on the time horizon is whether we are doing enough with a fiscal incentive on biodiesel. The Minister is aware that the National Farmers Union issued a press release recently saying that it wanted a 30p per litre differential on liquid biofuels because that was required to ensure the necessary investment in that new form of fuel for motor vehicles. That incentive of 30p per litre sounds big, but the fuel must be diluted by 20 parts before it can be used, so the incentive is not so great. At the moment, it is probably more expensive to fill a tank with biodiesel than with ordinary diesel because the 2p per litre difference is insignificant and there is an additional cost because it is not so fuel efficient.

There is a potential market for biodiesel, but the Government are not doing enough on that front. A Department for Transport press release on 14 November was headed: Government gives a 100 per cent. boost to biodiesel in buses". It went on to say that: Local bus operators will be eligible for a 100 per cent. fuel duty rebate on biodiesel". If the operators are to be given that incentive, why can the incentive not be extended to a wider group of motorists?

Mr. Jamieson

Before we move on from that point, will the hon. Gentleman better inform our discussion? Has he a figure in mind of the duty rebate that he would offer on biodiesel or bioethanol?

Mr. Chope

At the moment—and this is something that I regret every night and day—we are not in government and so do not control what is happening. The Minister is asking me to make a commitment on what a Conservative Government will do when they are returned in, say, 2005. Obviously, I cannot make such a commitment, as it will depend on the situation. If the Minister is not prepared to commit the Government beyond 2004 in relation to the duty differential for liquid petroleum gas, it is unreasonable of him to expect me to commit a future Conservative Government. He may hope that such a Government will not appear until well beyond 2004, but I hope that they will appear very shortly after 2004.

I hope that this is the sort of issue that will be discussed in the ministerial group. If the Minister wants to invite me along as an honorary member, I shall be happy to attend. If I did, I would point out that, in Germany, they have been much more robust and radical than we have been, which is producing dividends for them.

You were a chairman, Mr. Benton, during the Finance Bill proceedings, although I am not sure whether you were chairing on the particular day when we had an excellent debate on these issues. My right hon. Friend the Member for Fylde (Mr. Jack) is something of an expert on biodiesel and he quoted an environmental information note that he had obtained from the university of Aberdeen, which was published as long ago as 13 September 1999: '"Sales of bio-diesel, a renewable fuel from oilseed rape, increased to 100,000 tonnes in 1998. 800 German petrol stations now sell that green fuel. Sales have doubled since 1996 when motorists purchased 50,000 tonnes, available from 500 outlets.' My right hon. Friend added: Biodiesel comprises 1 per cent. of German diesel sales."—[Official Report, Standing Committee F, 14 May 2002; c. 54-55.] Having heard the Minister's aspirations, I do not think that we will get anywhere near where the Germans are now—and remember that the figures that I have just given were from September 1999. The Germans have been able to make such progress in promoting biodiesel because biodiesel is not subject to duty. That environmentally friendly form of diesel, therefore, has an outright price advantage. The Government would do well to consider what is happening elsewhere and the benefits that may flow from taking a more radical approach.

The Conservative party acknowledges that the Government's heart is probably in the right place. We are delighted that the Government's vendetta against the motorist seems to be waning. We admire the British motor industry and recognise its importance. The Minister referred to it in passing, but it is our largest manufacturing industry. It produces output of about 1 billion every week and it is probably responsible for about 800,000 jobs in this country. I am sure that the industry will wish to invest in new technology and will do its best to ensure that we remain world leaders in this field.

The Government acknowledge the importance of fiscal incentives. I hope that they will not be timid in using them to the full to ensure that we fulfil our potential and can produce a car park with vehicles that emit much less noxious gas.

I congratulate the Government and the motor manufacturing and sales industry on achieving a record number of new car sales in each of the past two years. That was not one of the Government's obvious manifesto commitments when they came to power in 1997, but I congratulate them on that, in case they wish to take a share of the credit. As the Minister now recognises, it is important that we face up to the reality that there will be more vehicles on our roads. We have to ensure that all vehicles are less polluting than they used to be, thereby ensuring an overall improvement in the quality of our environment.

I hope that the powering future vehicles strategy will extend to the issue of where those vehicles should be parked. Government policy seems very short-sighted. The Government suggest that underground car parks and off-street car parking will somehow damage the environment. If there are to be a lot more vehicles in our country, it is important that we find places—preferably secure places—where they can be parked out of harm's way. Certainly, they should not congest the highways as they do at the moment. There is so much on-street car parking, even though new developments could incorporate a lot more off-street car parking. That is one of my particular hobby-horses.

It is disappointing that more people are not present for the debate, but that may well be because there is, as the Minister said, quite a lot of consensus on the subject. There has been a series of illuminating and well informed meetings in the House recently, one of which was on the role of hydrogen fuel cells, and another organised by the Country Land and Business Association—that was on promoting the role of biodiesel. At the moment, a debate is taking place in the Chamber that I am sure will partly cover those points.

I am grateful to the Minister for having ensured that we had the debate and I wish him well in vigorously fighting his corner on the joint ministerial low-carbon group to ensure that the fiscal incentives—and all the benefits that flow from them—are brought forward.

3.17 pm

Mr. Fabian Hamilton (Leeds, North-East)

Before I start, I should declare an interest. On 10 and 11 September I was a guest of General Motors in Monaco, where I test-drove a hydrogen fuel celled vehicle.

As the Minister was not able to congratulate himself, I congratulate him on securing the debate. As the hon. Member for Christchurch (Mr. Chope) and the Minister said, the debate is timely, but it is also timely for another reason: almost exactly three years ago—on 14 December 1999–I introduced a debate on alternative fuels in Westminster Hall. I shall consider some of the points that I raised then and say what has happened on those issues. I hope that that will be helpful to the Minister.

My first point was that 1999 was an opportune time for the debate. I said that transport and alternative fuel policy was a question of joined-up thinking, which required cross-departmental working, as the Minister pointed out. It still requires just that. I also quoted from the Government's transport White Paper, "A New Deal for Transport: Better for Everyone", which was published in July 1999. It says: We will continue to encourage the use of more environmentally friendly fuels. I hope that I can answer some of the issues that the hon. Gentleman raised in some of the points that I shall make.

Much has been said about liquefied petroleum gas. That is significant to me because I have just returned my contract hire vehicle—a Vauxhall Vectra dual fuel that I had for three years—to Vauxhall Master Hire. I have seen the development of LPG as a consumer and I have seen the rapid expansion of fuel stations that sell LPG throughout the country. I think that there are about 1,200 now. In 1999, only about 8,000 vehicles were powered by LPG. That figure has multiplied tenfold, according to Calor Gas, to some 80,000 vehicles. Calor Gas, like many of us, aims for up to 500,000 vehicles to be powered by LPG within the next couple of years. The point about extending the differential in duty beyond 2004 is valid.

I congratulate the Government on every initiative that they have taken and, especially, on kick-starting the LPG industry and ensuring that we have the number of filling stations and the infrastructure that we need. I said in 1999 that we had a bit of a Catch-22 situation. Joseph Heller, the author of "Catch-22", died a few days before that debate. His novel points out the sort of problem that we were facing. No one would buy an LPG vehicle because it could not be refuelled. Of course, the companies that funded the infrastructure, such as Calor Gas, Shell and British Petroleum, would not put the infrastructure in place until a critical mass of vehicles was on the road. We have gone beyond that point and are seeing at last the take-up and number of vehicles on the road that we want.

Our problem is whether the duty differential will continue beyond 2004. The public are cynical. I received a lot of publicity as the first Member of Parliament to purchase a dual fuel vehicle in 1999, and my constituents said, "Yes, that's all very well, but as soon as it becomes popular, even your Chancellor will put masses of tax on it." Thankfully, that has not happened yet.

However, the Minister's point about the environmental case for extending the LPG duty differential and the points made by the hon. Member for Christchurch about the debate on the Finance Bill require careful examination. There is no doubt that even since my debate three years ago, the environmental impact of petrol-driven and diesel vehicles has been dramatically reduced. In 1999 I quoted Ian McAllister, the then chairman and chief executive of Ford UK. He was fond of saying that if 30 passengers were taken off a London bus and put into brand new Ford cars, there would be far fewer exhaust gas pollutants than those produced by the bus—that was three years ago. I welcome the initiatives that the Minister mentioned to reduce bus tailpipe emissions.

I am a keen cyclist as well as a keen motorist. Most mornings, when the weather is less appalling than this, I have the dubious pleasure of cycling from north-west London down the Edgware road. Anyone who has done that without a mask will know how filthy some of our London buses are. That is not only true of London buses. The bus emissions in my city of Leeds are quite repulsive, although there are far fewer cyclists to soak them up. It is important to encourage the conversion of our buses and our cars—especially our buses—to compressed natural gas, which is a very good fuel for buses, as well as LPG and other types of fuel for propulsion.

I shall talk about hydrogen at some length in a few minutes, but I want to say something about diesel because many people have said to me, "Well, you've returned your LPG vehicle, which you really enjoyed driving." I was not too sure about the contract hire arrangements because I was allowed only a limited mileage. Everyone exceeds the limit, and that means that a large penalty must be paid. However, I am now temporarily driving a diesel vehicle and cycling as much as possible. Diesel vehicles have improved dramatically. Mine was manufactured at about the time of my debate in 1999 and it does about 40 to 50 miles per gallon. It is a Peugeot and that is fantastic because it makes very good use of the limited fuel available in the world.

We have also mentioned biodiesel. Robin Woolcock, the chief executive officer of Volkswagen UK mentioned to me at a Society of Motor Manufacturers and Traders event that he would also like a tax reduction on biodiesel. After all, it is far better in terms of carbon emissions and is a renewable fuel. Diesel has undergone a lot of development recently. In my debate in 1999, we discussed some of the particulates—the PM10s and PM2.5s. PM10s advance 8,100 deaths a year, so it is welcome to see the developments taking place in green diesel engines.

Back in March, a seminar was held in 1 Parliament street with Delphi Auto, a French company that now owns the Lucas-TVS group, which has been involved in the development of green diesel. Monsieur Jean Botti, the research director, told us that he could now reduce tailpipe emissions, including particulates, to zero. My hon. Friend the Member for Bury, North (Mr. Chaytor) also mentioned this: Monsieur Botti has a Peugeot 106 in his workshop in Paris. He would like me to lie underneath it when I visit him to see the vehicle. I should breathe in the tailpipe emissions, because the air that I will be breathing will be cleaner than the air in central Paris. I am not sure that I want to do that but the point is well made.

We may soon be able to produce diesel engines that consume approximately 70-80 miles per gallon, thus stretching out the fossil fuels that are left, and that emit a minimum amount of carbon dioxide to meet emissions targets such as 100 g of carbon dioxide per kilometre—a good target to aim for. It would be well worth trying to achieve that before fuel cell technology and the infrastructure needed to support it is readily available. The infrastructure is extremely important to its development, just as it has been with LPG. I hope to visit Paris shortly to see for myself whether the claims made by Delphi Auto are true.

On the holy grail of hydrogen fuel cells, before I went to Monaco two days ago, I was slightly sceptical about that technology, which is supposed to solve all the problems of carbon emissions. The Sun's motoring correspondent, Ken Gibson, was in Monaco last week. He writes: I have just driven the car of the future…and it's out of this world…It is easy to be sceptical about Hy-Wire"— the experimental General Motors hydrogen fuel cell car with a drive-by-wire system— until you drive it and see how well it works. Especially when you realise hydrogen is also the most plentiful natural fuel supply in the world. He concludes the article, "Beam me up Scotty". Perhaps we will not need to be beamed up if we all have hydrogen fuel cell vehicles.

What is the wonderful holy grail of hydrogen fuel cells? As anyone with O-level chemistry will know, if hydrogen is burned, water is the tailpipe emission. The BMW group has been working on that process and earlier in the year in Berlin—unfortunately, I was unable to attend—it tested a series 7 BMW using hydrogen as an internal combustion engine fuel. That may not be the most efficient way of burning hydrogen, but it considerably reduces emissions of all sorts.

Fuel cells, however, are slightly different. Luckily for me and my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller), who was with me in Monaco, some of the top scientists in the General Motors group came to explain to us exactly how they work. I have a basic knowledge up to O-level of chemistry, physics and so forth so it stretched my knowledge to understand what they tried to show me. Even I managed to understand it.

The principal basis for fuel cells is as follows: as every schoolboy knows, if one puts two electrodes in water and passes an electric current through them, the water will electrolyse into its constituent components of hydrogen and oxygen. I did not realise that if one then tries to recombine those elements, one generates electricity. That is basic physics and chemistry. One passes the hydrogen through a catalytic process, which is being developed to try to speed up the chemical reaction. One passes the air through and combines the two, and one volt of electricity is generated.

Conveniently, that can be generated in as much as a 2 sq mm space. Therefore, with regard to the fuel stacks that the Minister mentioned, if one combines 200 or so of those tiny 2 sq mm squares, one generates not one volt but 200 volts. That is enough to drive quite a hefty electric motor, which runs on alternative current. Using the computer control system, one can alternate the current and thus produce a very powerful electric motor.

To demonstrate the power of that motor, GM installed such a fuel stack and electric motor into the current vehicle—a Vauxhall Zafira, which is called an Opel on the European continent. The Zafira is an Astra-based multi-purpose vehicle or MPV. The first thing that one notices when one gets into that car is that there is no gearbox; there is only a switch that goes forwards and backwards. The second thing one notices is that when one puts the key in the ignition and starts the engine, it clicks and nothing happens. There is a little screen and lots of graphs and figures flash in front of one's eyes. That meant nothing to me, but my co-driver said that it meant that the fuel cell was beginning to warm up—the hydrogen was coming through and generating electricity. Then one puts one's feet on the footbrake and the accelerator, one presses the forward button and the vehicle accelerates away.

It is amazing. It drives like a very quiet, gearless, automatic vehicle. There is no engine noise, but there is plenty of power. We drove the vehicle straight up a hill and round the Monte Carlo circuit, which was fun, although I did not manage to achieve a speed of 100 miles per hour. When it was competing with the other traffic on the roads, it was like driving an ordinary vehicle—there was plenty of power.

The scientists tell me that the amount of fuel cannot be measured in miles per gallon or litres per hundred kilometres or whatever: the amount of energy that is used for the distance covered has to be measured in kilojoules or megajoules. In lay person's language, one will get twice the amount of miles per gallon from hydrogen that one gets from the equivalent amount of petrol.

Mr. Chope

It is interesting to hear what is happening in Monaco. Did the hon. Gentleman have the chance to talk to the experts there about the incident that was reported in The Times on 17 October? Ford's £1.7 million Focus fuel cell vehicle came to a sudden halt while it was being driven in the Cornish rain and the world's top fuel cell engineers were unable to fix it.

Mr. Hamilton

One would not expect GM's engineers to comment on Ford's failures. All I can tell the hon. Gentleman is that GM's vehicles had no problem with driving in the warmer rain of Monaco or in our London rain. It had five vehicles on the roads; it has been driving them for two weeks in various weather conditions and there have not been any faults or hitches. We will rely on Ford's engineers to put their technologies right. However, the point is well made that this technology is still in an experimental and developmental stage. I have witnessed it at first hand: it is excellent and it works.

GM estimates that within two years it will have sufficient numbers of vehicles available for fleets—that is return-to-base fleets, so that the hydrogen refuelling can take place at those bases—and that it will be possible to buy them from a showroom within the next seven or eight years, by around 2010. That is sooner than we thought. However, that remains to be seen. The fact is that, in a conventional vehicle, the new technology seems to work well. Clearly, the tests were an attempt to ensure that opinion formers, Members of Parliament and others, especially journalists such as Mr. Gibson from The Sun, were publicising and pushing forward what GM is doing.

It is not only General Motors that has taken such action. Ford has developed its experimental car, the Focus Daimler-Chrysler, and is pushing ahead with fuel cells. About 70 per cent. of the world's manufacturing capacity—four major vehicle manufacturers—are moving ahead on fuel cell technology. What will happen remains to be seen, but we should encourage the development of hydrogen as a viable fuel. It is the most plentiful element in the universe.

I hope that the Minister did not mind my explaining how such matters work, but I felt that it was relevant to do so. Several major influential bodies in the United Kingdom have also been pushing ahead on low-carbon vehicle use. We have heard that 22 per cent. of carbon emissions are the result of automotive private vehicle emissions.

The hon. Gentleman mentioned the German experience whereby diesel has zero duty. When I was listening to his well-made point, I was thinking that that is perhaps down to Volkswagon's preference for developing diesel and biodiesel fuels rather than for taking the hydrogen fuel cell route. That could have influenced the German policy on taxation.

As has been said, it is vital that the United Kingdom leads the world in developments, certainly the policy on low-carbon vehicles. The Society of Motor Manufacturers and Traders said that the Government's short-term policies must provide adequate synergy with longer-term, more strategic approaches, such as fuel cell development; that policy initiatives must provide targeted support to assist in the development of new technologies throughout the full life cycle of a product, bearing it in mind that development production and market acceptance of a product can take up to 20 years; that European Union emission standards should form the basis of co-ordinated incentive programmes in the United Kingdom marketplace; and that the Government should only incentivise fuels for which there are fuel standards. Those incentives must consider a fuel from well to wheel—a term that will be heard a lot more in the future.

Planning policy guidance should be reviewed to support the development of an adequate refuelling structure for alternative fuel vehicles. That brings me back to hydrogen. It is a great fuel, but how do we manufacture it? We all know roughly how we get hold of petrol and diesel. Such fuel comes from oil wells, is pumped into tankers, goes on to refineries and eventually is shipped to our petrol stations in big tankers and stored underground ready for us to use to refuel our vehicles.

What about hydrogen? There are two main methods of producing it, one is, as I already stated in my elementary chemistry lesson, to electrolise water. That requires electricity, which is generated mainly from nonrenewable sources in this country, from gas-turbine power stations, coal-fired power stations, oil-fired power stations and nuclear power stations. Very little is generated from hydroelectric or wind power, although there are plenty of wind turbines in west Yorkshire.

Recently, I read in The Times that the Government are encouraging the development of wind-turbine generating electricity some 25 miles into the coastal waters offshore from the United Kingdom. A study has shown that it would be possible to generate 100 per cent. of our energy needs from offshore wind power within the next 25 to 30 years with sufficient investment. Let us consider that fact and relate it to the production of hydrogen. If we could generate our hydrogen from electricity that is derived entirely from renewable resources, we would achieve the aim of completely reducing CO₂ emissions and other dangerous gases. That is well worth aiming for, because the alternatives are to take hydrocarbons and use reformers. A reformer is a system that is designed to extract the hydrogen from fossil fuels and use it in a fuel cell or in internal combustion. That does not solve the problem.

I am not a supporter of nuclear electricity, but I am a strong supporter of wind power, wave power and hydroelectric power. If it is true that 100 per cent. of our electricity needs can be provided from such renewable sources, combined with photovoltaic cells in new houses and anything that we can do individually in our own homes to generate electricity and put the excess back into the grid, we will have a sustainable form of energy production for domestic use, public buildings and our automotive requirements. I hope that the Minister is listening and that the Government will be encouraged to move in that direction. They have already made great strides, but if we could achieve that, we would lead the world in low, or zero, carbon emissions within the time scale that we have talked about in relation to the rest of the world.

With those few comments 1 encourage the Government to do more of the same and I congratulate them on the steps that they have taken so far. With these developments and with the kind of investment that is being made, I am optimistic about the future. I hope that all of us will play our part and reduce our own emissions and thereby encourage the development of the technologies that will save our planet.

3.41 pm

Mr. Andrew Stunell (Hazel Grove)

It is a pleasure to follow, and to listen to, such an enthusiast for the subject as the hon. Member for Leeds, North-East (Mr. Hamilton).

The Liberal Democrats welcome the publication of the strategy. We think that it is well merited and that its content leads substantially in the right direction, so as to take the country forward appropriately. I welcome the debate, which is of a high quality although the Chamber is not exactly crowded. I also welcome the Minister's intention to seek approval across the whole House and to take the matter forward in a non-partisan way. I am sure that some of the decisions that need to be taken will have to stick not just for five or 10 years, but for 15, 20, or 25 years. If such decisions are to be sustainable, cross-party consensus is required.

There is an urgent and important need to reduce carbon and greenhouse gas emissions. We also need, particularly as far as the transport fleet is concerned, to ensure that we cut further the emission of particulates and pollutants. Hon. Members have already spoken about the position in central London. It is the same in many urban areas, in which the most significant air polluters are road transport vehicles. The other main necessity, apart from reducing gases and pollutants, is to reduce the number of vehicle and traffic movements, because of the congestion that they cause and the economic cost. If this country is to succeed in doing that, we must employ a combination of measures.

The report is primarily about the introduction of new technologies, which we certainly need. However, we also need a new culture—fiscal and regulatory measures will have a part to play in creating that—and a modal shift in the way in which people transport themselves and their goods around the country. From that point of view, it is timely that today's debate should be held in the same week as the transport statement.

Travelling by train from London to my constituency in Stockport, I generate some 8 kg of carbon emissions. If I travelled in a reasonably efficient motor vehicle, it would generate 28 kg of carbon emissions. The emissions generated by road travel are three or four times worse than travel by train. Widening the M6 while denying investment to the west coast main line cuts across some of the Minister's objectives.

Mr. Chope

Surely emissions depend on how many people travel by train, which is why the transport Green Paper states very clearly that a bus, for example, with very few passengers on board is more polluting than a car.

Mr. Stunell

The hon. Gentleman makes a sensible point. I took my figures from a parliamentary answer, which related to journeys from London to Newcastle, given to my hon. Friend the Member for Lewes (Norman Baker) on 20 November. The figures relate to average occupancy rates, which are, of course, important.

Mr. Jamieson

I cannot allow the moment to pass: I thought that I heard the hon. Gentleman say that the Government are "denying investment to the west coast main line". The work, which costs many billions of pounds, on the west coast main line is probably the greatest investment in our railway system for 100 years. To say that we are denying investment to the west coast main line is frankly nonsense.

Mr. Stunell

We have livened up the debate, which is good. I am well aware of the current investment in the west coast main line, which will produce a line on which trains travel at 120 mph while the operator has bought trains that can travel at 140 mph. If the Minister were to underwrite the necessary improvements to raise track speeds to 140 mph, I would be delighted.

Mr. Jamieson

I am interested in pursuing the issue. The hon. Gentleman suggests that we should spend more money on the west coast main line, but he was probably not present in other Westminster Hall debates in which Liberal Democrat transport spokesmen were asked how much more they would contribute to the transport budget. They said that they would contribute no extra money because the 1 p that they would put on tax would be for education. I have heard what the hon. Gentleman has said and I do not disagree with him, but he needs to check whether the Liberal Democrat Treasury spokesman has cleared his calls for extra funding.

Mr. Stunell

The question is not whether we take money from education, but whether we take it from the M6 and spend it on the west coast main line. That could be the subject of another debate in which I should be happy to take part.

Mr. Chope

Is the hon. Gentleman saying that his party's policy is to take money away from the M6 and put it into the west coast main line?

Mr. Stunell

I am making a point in the context of reducing carbon emissions in our transport system. If the Government were joining up their policies in the areas covered by today's debate and this week's transport statement, they would have announced a decision to upgrade the west coast main line, which would reduce carbon emissions by a greater extent than their investment in the M6. It is a matter of joining up the policies pursued by different Government Departments, which is an issue to which I shall return.

Issues relating to technology form the core of the strategy paper. The Liberal Democrats see the issue in terms of three distinct steps. First, there is a clear necessity to produce more improvements in the efficiency of our existing petrol and diesel-fuelled vehicles. There is no doubt that it is possible to build a petrol-fuelled vehicle that runs at about 90 to 95 miles per gallon. We need to ensure that the European voluntary code is demanding of, and imposes increasingly tight requirements on, manufacturers and that we move towards a far more progressive and efficient conventional vehicle fleet. It will probably require changes to the fiscal regime relating to excise duty and other matters, and to the regulatory regime, too.

Secondly, we need a transfer to alternative fuels; the Minister and the Conservative spokesman have extensively referred to biofuels. We need to consider how fuel duty rebate works in the public transport industry in particular, because it gives an artificial incentive to people to use diesel as their fuel, which surely counters the impact that the Government want to achieve.

Thirdly, we must move to the next generation of fuels and vehicles, and talk about the introduction of renewable fuels. We heard a most learned exposition of hydrogen fuels from the hon. Member for Leeds, North-East, on which I shall not attempt to improve. He touched on a matter that is of great importance when we talk about novel fuels for the future: we must consider the whole picture—not just the cleanliness and availability of fuel, but where it comes from and how it is generated. Again, I hope that the Government will be able to join up not just their own thinking but the thinking of the wider industry.

The pressures to develop renewable energy generation for electricity and to find clean fuel for a transport fleet can be brought together in an efficient and effective way when one uses the peaks of generation of renewable electricity to produce the hydrogen used in our vehicle fleet. In that way, hydrogen provides the storage reservoir or battery that can act as the cushion between the intermittency of some of our renewable generation sources and the requirements for electricity on the electrical grid and of power in the transport network. There is work to be done in bringing together innovative and separated thinking in those two areas, from which both public policy and private profit can gain.

I shall now look at the draft strategy in a little detail and pick out one or two points on which I would be interested to hear comments from the Minister. I entirely agree with his underlying point that it is not the Government's job to pick a winning technology. The history of investment in science and industry in this country during the past 50 years is littered with white elephants and lame ducks in which Governments who thought they knew better, but did not, invested. It is appropriate for the Government to invest widely, and plant in many different fields to see which plants flourish and grow. They will then be providing the environment in which the new technologies can be substituted for existing ones.

I regard the draft strategy paper as a welcome addition to the jigsaw of policy required to take us to an ultimately sustainable transport system. It has to be capable of delivering both prosperity and quality of life, which leads to an interesting mixture of private investment, public policy and a matching of environmental and economic measures. However, there are one or two gaps on which I want to test the Minister. I hope that he will feel able to answer my points—if not now, later. The paper includes a reference to allowing those who run buses and commercial vehicles to join the UK carbon trading scheme. That seems to be a desirable objective, but in the past week we have seen an entirely different European Union carbon trading scheme emerge.

Some serious difficulties are expected in integrating the UK and EU schemes. Does the Minister think that integrating bus and commercial vehicle emissions into a carbon trading scheme is best done through the UK scheme—which has a comparatively short time frame, going through to about 2008—or through joining the EU trading scheme, which starts at about the same time but on a much more comprehensive Europe-wide basis? The strategy refers to co-operating with Europe, working with it on the design of vehicle fleets and creating a common market for the sale of new technologies on a level playing field. Therefore, the Government may well feel that it is better to aim for the EU scheme.

My next point is on the phrase: Making fullest use of new vehicles and fuels in the Government's own vehicle fleets", which I link to the point made in the strategy's summary: Encouraging consumer take-up of new vehicles and fuels". I note that, in fact, the average engine size in the Government's ministerial vehicle fleet increased between 2001 and 2002 by 2.2 per cent. The number of ministerial cars has increased by 10.7 per cent. from 187 to 207. The budget for ministerial cars rose from £10 million in 1998 to £14 million in 2001—a 40 per cent. increase. I should be interested to hear from the Minister how many of those cars take account of this strategy. Why are there bigger engines and more cars? Are they all low-emission vehicles? Let us have some background on that.

I use that point to draw the Minister's attention to the fact that, in many public sector leasing schemes and private finance initiative schemes, the purchasing of vehicles is on a least-cost basis and does not take sufficient account of vehicles' efficiency or public policy on emissions. An example has been drawn to my attention this week, although it does not relate to transport, of a school built under the PFI where, under questioning from the school governors, the designers admitted that they had kept the building to the very minimum requirement of building regulations relating to energy efficiency because they were required to achieve the lowest possible cost. I would like assurance that this document contains not merely aims and aspirations, but something that will produce a real difference—not just in other people's behaviour, but in the Government's.

My next point is about ensuring effective links between Government Departments. The hon. Member for Christchurch (Mr. Chope) made some points on that. I do not want to criticise the Minister for not having convened a meeting yet—everything must start sometime. There must be a first meeting on one date or another, and it just happens to be in January. That is fine, but when one looks at the document and sees who sits on the panel, and some of the issues that are still to be sorted out. it is clear that there must be much better links between the Department of Trade and Industry with its "Foresight" programme and the Department for Transport with its "PowerShift" programme.

An underlying problem in attempting to fulfil our environmental commitments is still that there is such a division of responsibility between Government Departments, and such a fragmentation of functions, that it is more and more difficult to see how coordination can be achieved. Sometimes it seems difficult enough to get co-ordination within one Department; to get it among four or five is a challenging task, and I should like the Minister to tell us how he will ensure that this topic gets the comprehensive push that it needs on all fronts.

The document contains some excellent aims and poses some challenging questions. I shall attempt to answer a couple of those. First, should there be long-term targets for the number of low-carbon vehicles in future years? As the Minister said, there is a target of 10 per cent. by 2010 for low-emission cars and a 20 per cent. target for buses and public service vehicles. That is obviously good and desirable. My answer to the question is that there should be progressive long-term targets, not only because targets are nice to have, but because that is the best foundation for investment by the private sector, which will know for certain that there will be a market and a demand for its products, and the best signal that one can give to consumers that they are making the right choice in going to the market for a low-emission vehicle. To that extent, I join the hon. Member for Christchurch in his comments about the need to provide longer-term certainty about fuel duty rates, excise duty and other taxation measures, so that those who are making a purchase—which is, after all, an investment—can have some understanding of whether their investment will pay off.

Secondly, the document asks what is an adequate definition of low-carbon emissions. Liberal Democrat Members believe that it must be what the hon. Member for Leeds, North-East described as a "well to wheels" calculation. In other words, one must consider the total amount of carbon emissions generated in getting the car on the road and the total amount of emissions that it will produce when it is on the road. Not only the use, but the construction of the vehicle must be calculated and understood. In reality, a vehicle often requires more energy and produces more carbon emissions while it is being built than it will ever burn as fuel. Efficient construction using renewable energy and recyclable materials is as important as the fuel that is subsequently burned and the efficiency with which it is burned.

My colleagues and I welcome the strategy document, and look forward to contributing ideas and evidence as the strategy develops. I personally wish the Minister well in achieving objectives that I think that everybody shares.

4.2 pm

Mr. Jamieson

I should like to respond to some of the points that have been made in this short, but high-quality debate. I am glad that the Government's strategy is generally welcomed. Rightly, questions have been raised about certain aspects. We welcome constructive criticism and thoughts on what we are doing—we certainly do not think that we have a monopoly on good ideas. One of our reasons for establishing the partnership group was so that we could draw in ideas from much wider sources.

I think that the hon. Member for Christchurch (Mr. Chope) was welcoming the strategy. Even if he was not, I shall assume that he was. He said that the Government are not doing quite enough on this issue. I do not want to bring party politics into this, but I gently suggest to him that we may be doing rather more than any other Government have ever done before. That includes Governments of all parties, including some of our own in the past. He mentioned an annual report on the powering future vehicles initiative. We launched the idea in December 2001. That was followed by a three-month consultation period, then a period of deliberation on its results, which had brought in many views from a wide range of people, and we published the document in July this year. Since then, we have been setting up the partnership group and drawing in industry, local government representatives and other people. It has taken time to contact the people who are interested and to get the right people involved.

The partnership group will be launched and will meet on, I believe, 16 January. It will inform some of the discussions of the ministerial group, which will consider its deliberations. We will produce an annual report once a full year has passed. We have not yet issued an annual report because we have not met and because a year has not passed since publication of the document.

I thought that the hon. Member for Christchurch was a bit churlish about the Government's approach to liquid petroleum gas. He questioned whether our heart was in this. If it were not, why would we have given fiscal incentives in the first place? The Government provided fiscal incentives for LPG because the environmental case has been made about CO₂ and the other emissions that he mentioned, such as fine particulates from diesel engines, which are particularly damaging to children. It is because the case has been made that the Government gave fiscal incentives.

The hon. Gentleman asked whether we were doing enough. There has been a considerable increase in the take-up of LPG and the number of stations that have opened, so it appears that our strategy is right. He rightly asked about future incentives for LPG. We realise that a decision must be made fairly soon about the 2004 date. As I said in reply to my hon. Friend the Member for Bury, North (Mr. Chaytor), there has been a change during the past few years in the difference between the benefits to be derived from LPG and those to be derived from petrol. We are giving the matter careful thought. Indeed, I was at a meeting this morning to discuss the issue. We want to continue to use fiscal incentives to ensure that we create demand for cleaner fuels and vehicles, but any fiscal incentive must reflect the true emission benefits of those fuels and vehicles.

Mr. Chope

The Minister says that a decision will be made fairly soon. Will it be made before the next Budget?

Mr. Jamieson

Such decisions are in the gift of the Chancellor, of course, but we can see reasons for making a decision fairly soon. We want to ensure that we continue to provide an incentive.

However, the decision must be properly informed. Such matters must be carefully thought through and weighed. We want to take into account what the motor and the oil industries and consumers have to say. In recent years, the Treasury has taken a sensitive approach to such matters. We have worked very well with the Treasury. It has listened carefully to what we have said—and we have had to listen to what it has said. It has responded sensitively to some of the matters that the hon. Gentleman raised, not least company car tax, which we have not talked about much today. Company cars make up about half of all cars purchased. The company car tax now provides benefits that have led fleet buyers to consider vehicles that are more carbon dioxide-friendly.

I agree with the hon. Gentleman's comments about biodiesel. It has given enormous potential for improvement. Since we introduced the biodiesel incentive in July, there has been a six fold increase in sales, which is welcome. Some 400,000 litres were sold during November. We are moving forward, but more needs to be done. We need to see how the biodiesel industry will respond to that incentive. The hon. Member for Christchurch was right to point out that biodiesel tends to be part of a mix, and is a proportion of the total fuel.

At the moment, most vehicles can satisfactorily run on ordinary diesel containing about 5 per cent. biodiesel. That 5 per cent. is CO₂ neutral, which also has the benefit of making the old diesel burn a little cleaner. There are benefits, and we need to look at how the 20p levy is performing to see whether it needs to be adjusted.

The Conservative party may be deliberating about its transport policy, and may form a view as to what the incentive level should be. I appreciate that it will be in opposition for a long time and may not have to face that problem, but if the hon. Member for Christchurch has a view on the matter, we would be interested to hear it.

Mr. Chope

It would be sensible for us to give a longterm policy commitment on the issue as we approach the general election. People will be making investment decisions and will want to know what the position will be when there is a change of Government. We shall seek to meet that challenge.

Mr. Jamieson

I look forward with great eagerness to seeing those documents; I look forward with equal eagerness to the outcome of the general election.

The hon. Gentleman said that one of the benefits of a new Labour Government is that more new cars are being sold. That is because the country is more prosperous than it was five years ago. There are now 1.5 million more people in work, some of whom travel to work by car. They have more money to spend, more leisure time and more work to do, but unfortunately that has created some problems: economic prosperity brings congestion and pollution problems. That is very much in our thoughts.

My hon. Friend the Member for Bury, North unfortunately could not stay with us, but he asked about a zero emission vehicle. I think that he may have been referring to a vehicle powered by compressed air, which would mean zero emissions from the tailpipe. I saw a little article about that very interesting idea. The only thing I would say—we probably covered this in the discussion about hydrogen—is that compressed air needs to be compressed by something, which would usually be electricity. If the electricity is generated by fuels that create carbon dioxide, the car would not seem to have many carbon dioxide benefits. Of course, it may have benefits in lowering emissions in town and city centres.

My hon. Friend the Member for Leeds, North-East (Mr. Hamilton) made a very good contribution to the debate. He is clearly knowledgeable, and made many considered remarks. He referred to the debate that we had a few years ago, and looked at the test that he set to see how we were getting on. I am glad to say that I was mentally ticking off many of the points as he went through them. It seems that much of what he was asking for has been done, or is now under way. We shall be interested in taking forward some of the ideas that have not been adopted. I hope that he enjoyed the journey in the hydrogen car that he took the other day.

My hon. Friend also made an important point about buses and pollution. Unfortunately, we are—for obvious reasons—encouraging people to use buses, and we have to ensure that the emissions from those buses do not cause yet another problem: pollution. In some cities, buses are now the major polluters. We want to ensure that that is not the case, because we are trying to encourage people to use buses more than they have done.

Mr. Fabian Hamilton

I am delighted that my hon. Friend is looking at buses. London is obviously the key place, and he referred to experimental fuel cell buses. The congestion charging that is being introduced by the Mayor of London includes an exception for LPG vehicles and, presumably, hydrogen-powered vehicles, if there are any.

Mr. Jamieson

I am pleased that congestion charging is about not just congestion but air quality. I believe that one of the Mayor's concessions is that cleaner vehicles, including electric vehicles, will be exempt from the charge. Manufacturers who are on their toes could use that as a marketing device for some of their vehicles: if congestion charging occurs in other cities, that device could be a further incentive for people to buy their vehicles.

My hon. Friend gave an interesting integrated science lesson today with a little chemistry and a little physics. He gave an account of electrolysis—my O-levels from the 1960s just about encompassed the science involved. He said, rightly, that one way of producing hydrogen is through electrolysis using electricity. That has enormous benefits because the power lines of which we have an abundance in this country are channels through which the hydrogen is sent by proxy to the communities where it is needed. That obviates the need for transporter lorries carrying fuel from one place to another with an effect not just on pollution and environmental damage, but on safety. It is a safer way of conducting energy through a pipeline or wire. The emissions from the tailpipe are not zero, but a bit of water will not hurt us—we seem to have had plenty of water in the streets in the past few days—and it is the only by-product.

The hon. Members for Christchurch and for Hazel Grove (Mr. Stunell) both said that unless the electricity is produced by sustainable means, there is no carbon dioxide benefit. We get the emissions benefit on the streets, but we do not get the carbon dioxide benefit. Another issue is that producing hydrogen for transport and incentivising it is probably one of the more expensive ways of reducing energy use. It is cheaper to incentivise energy reduction in homes and factories than in transport. There will be some earlier hits in energy and CO₂ reduction by other means. Transport will play its part later, which is why it is so important to lay the foundation stones now and to get ourselves ready to face the future.

I thank the hon. Member for Hazel Grove for his welcome for the powering future vehicles strategy, which he dealt with in a non-partisan way. I hope he did not feel that I introduced too much of a partisan element, but I have discovered in this job that we must often consider priorities and weigh up their value. I note what he said about the M6. It is possible to move money from one budget account to another, but I wonder whether he has asked his constituents in the Hazel Grove and Stockport areas whether the M6 should have improvements made to them. If he carried out a survey among his constituents, he might find that they have a view about the M6, just as they would have a view about the west coast main line. It is our job to find a balance. The issue is not either/or; it is a matter of finding a balance.

Mr. Stunell

The Minister is right to say that the issue concerns priorities. If I were ploughing a solely constituency interest today, I would say that the metro tram to Stockport is also important. We all have schemes that we would like to see implemented, but I was trying to make a specific point about the relative value of investment in reducing carbon emissions in the transport system, as exemplified by this week's statement. I appreciate that there are choices to be made, but the environmental imperative does not seem to have been at the heart of the decision.

Mr. Jamieson

I think it was. The slow-moving traffic on the M6 and the M1 is a major contributor to pollution. Under a certain level, the slower that vehicles go, the more pollution they cause. Stop-starting is the most polluting part of a vehicle's cycle, so there are environmental benefits to getting traffic moving.

Obviously, the Government are considering environmental benefits, such as cleaner air. We want to get as much freight and as many passengers as possible away from the roads and on to the railways. Nevertheless, there must be a balance. There will still be a need for road transport. The hon. Gentleman's constituents will still want to travel on motorways and have their goods brought to the shops in that way, if no other means are possible. I am sure that he appreciates that we have to facilitate that.

The hon. Gentleman mentioned hydrogen being produced from off-peak electricity. That is certainly one of the benefits of using hydrogen as a fuel. A hydrogen battery is a far better way of storing energy than pumping water up and down a hill, which is the way in which it was stored at Dinorwic. That method was useful in its time, but may have limited value compared with the way in which hydrogen can be stored.

The hon. Gentleman talked about the United Kingdom and European Union carbon trading schemes. It is true that there is an EU scheme as well as a UK scheme. However, the details of the EU scheme are still being finalised. We shall work to resolve or minimise potential conflicts between the two schemes.

The hon. Gentleman rightly said that it is not for the Government to pick winners. In the document, we said that the winner is the low-carbon future, rather than a particular technology. We did not plump for one technology because we felt that there were dangers in doing so—the hon. Gentleman articulated those dangers very well. The Government do not have complete wisdom in relation to such matters. Sometimes, the market drives things forward and greater brains from outside come up with brilliant solutions. As a democratic Government, we want cleaner air, better engines, quieter vehicles and continuity of energy supply. However, it is up to scientists and technologists to come up with the solutions, because generally they know best.

The hon. Gentleman asked some questions about Government vehicles. The Government dispatch service uses compressed natural gas vehicles. A large number of ministerial cars run on liquefied petroleum gas. The one that I use occasionally is LPG powered. There is pressure to look to hybrid vehicles. We are torn between choosing cleaner vehicles and choosing vehicles that have the Union flag on the back. Other pressures are placed on us, and we have to resolve such things. Generally, there is a move towards getting cleaner vehicles in the fleet. If the hon. Gentleman wants me, or the Minister responsible for that area, to set things out in more detail, that can be arranged.

The hon. Gentleman also made a point about the Government group. A group of Ministers has been meeting through the Cabinet committee that has been discussing this matter. There has been a great deal of accord and we shall continue to meet. We jointly attended the launch and interdepartmental work will be done on other launches. We will work together. It is difficult if people in government all work in their silos, but on this issue we are working together to resolve what are very important matters.

The hon. Gentleman made some good points about getting long-term certainty in fiscal incentives. He is absolutely right. However, as I said, there must be balance and occasional review to ensure that the fiscal incentives are giving us what we want and delivering a cleaner environment.

Mr. Stunell

I thank the Minister for his response. Obviously, we must check and audit to ensure that we are getting the right result. Does the Minister think that formal revisiting of the targets will form part of the strategy? Will there be a five-year or 10-year look? That would help us to understand the Minister's thinking.

Mr. Jamieson

We are committed to reviewing the targets, because it is sensible to do so. We have reviewed several targets that we set ourselves. We want to ensure that the targets are realistic. For example, had we set targets a few years ago for the number of LPG stations that we wanted, we would have well surpassed them by now—we would not have set as high a target as the 1,200 stations that are open. Had we set a target for the number of LPG vehicles that we want on the road, it would have been somewhat higher than the number that is on the road now. We want more such vehicles.

The hon. Member for Christchurch made a point about LPG. It is important that good-quality conversions that give true benefits are made to vehicles. About 80 per cent. of conversions are being done in under-the-arches garages. Although they are not necessarily bad conversions—some will be very good—about 80 per cent. of vehicles are not benefiting from the PowerShift grant. A proportion of the conversions are done with customers being misled that they can claim the grant retrospectively—of course, they cannot. Also, some conversions are poor or even dangerous, because the proper equipment is not fitted to protect against a blow-back or a leak of fuel that is not attended to. We do not want that, because some poorly fitted conversions might not give an emissions benefit. Such conversions give a fiscal benefit to car owners through fuel purchases, but we want to ensure that fiscal benefits improve air quality. The poor conversions that might be dangerous, in rare cases, do not successfully promote LPG. The same thing would happen with petrol vehicles if petrol tanks were fitted dangerously. Petrol tanks are very dangerous pieces of equipment.

Mr. Chope

The Minister makes a good point. Will he consider whether the MOT test should cover such conversions? I understand that there is no requirement for conversions to be tested. There is a further issue of additional insurance costs and the invalidation of a vehicle's warranty if an unauthorised conversion is carried out.

Mr. Jamieson

I thank the hon. Gentleman for that good point. We did not anticipate the large number of people who would set up businesses to do conversions on an ad hoc basis, which shows how difficult these things are. We thought that the vast majority of people would try to get the PowerShift grant, which may represent up to 60 per cent. of the substantial conversion cost. We have concerns about that and are examining the best ways of tackling it. The avenue that the hon. Gentleman mentioned might be one way of doing that, or we could use a certification system that would be required for a vehicle to receive other benefits, such as those for vehicle excise duty and company car tax.

We have had a short debate but it has been of a high quality. We have covered a wide range of issues and found much cross-party accord, which is rare in both Westminster Hall and the Chamber. I thank hon. Members who participated in the debate and I hope that we shall have further opportunities to debate the issues as our policy unfolds. In the end, we have a great interest in having a transport system that serves our economy and delivers goods and people, but that must be done in a way that reflects environmental concerns, both globally and in our cities.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Four o'clock.