§ Lord Carterasked Her Majesty's Government:
What level of duty rebate is required for biofuel to achieve 2 per cent of the market share of the United Kingdom road transport fuels. [HL2902]
§ Lord McIntosh of Haringey:Duty rebates are only one of many factors that stimulate demand for market share of any product. Other factors, such as the development of an infrastructure to supply a product, will also be important in deciding what share of a particular market a product is able to achieve.
The Government have already announced a duty incentive to encourage production of biodiesel and bioethanol of 20 pence per litre relative to the main road fuel duty rates. The Government, however, have made it clear that they would not support biodiesel production at any cost, and that the duty incentive of 20 pence offers best value for money to the taxpayer.
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§ Lord Carterasked Her Majesty's Government:
What steps they are taking to ensure that the United Kingdom will be able to meet the European Union indicative targets for biofuel use in 2005 and 2010. [HL2901]
§ The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Lord Macdonald of Tradeston):The United Kingdom and other European Union member states are required, under the terms of the recently agreed Directive on the Promotion of Biofuels and other Renewable Fuels for Road Transport, to set their own indicative targets for the use of biofuels and other renewable fuels in their areas. Member states are required to set indicative targets to be met in the years 2005 and 2010, and to notify the European Commission of these targets by July 2005 and July 2006 respectively. The Government will consult key stakeholders in due course on possible indicative targets for biofuels sales and sales of other renewable fuels in the UK, as well as on the most appropriate ways of meeting these targets.
The Government have already put in place a number of measures to incentivise the production and use of biofuels in the UK. These include a 20 pence per litre fuel duty incentive for biodiesel, which came into effect in July 2002. Sales of biodiesel have increased significantly as a result of this, with some 700,000 litres sold in the month of April 2003. Budget 2003 announced that a similar duty incentive in favour of bioethanol would come into effect in January 2005. It also indicated that the Government are considering how best to give further support to bioethanol produced from lignocellulosic feedstocks, which potentially offers even greater environmental benefits.
§ Lord Palmerasked Her Majesty's Government:
What would be the annual saving in tonnes in the output of greenhouse gases if (a) 2 per cent; and (b) 5.75 per cent of United Kingdom road transport was fuelled by biodiesel-bioethanol; and what would be the cost per tonne of these savings. [HL2959]
§ Lord Macdonald of Tradeston:Studies show that the level of carbon savings from biofuels depends on factors such as the type of biomass feedstock, agricultural management and the processing method. A range of 40–60 per cent life cycle carbon savings is assumed to be realistic for the UK. Using this range gives an estimate of 0.3–0.45 megatonnes of carbon (MtC) and 0.9–1.3 MtC savings for the 2 and 5.75 per cent targets respectively. The cost figures, based on the European Commission's estimates of cost, put the cost of carbon saving at £280—£700 per tonne.
The final text of the recently agreed Biofuels Directive includes 2 per cent and 5.75 per cent as reference targets for the proportion of sales which should be biofuels by 2005 and 2010 respectively. The expected carbon savings and cost per tonne saved from the introduction of biofuels at these rates have been set 108WA out in the preliminary regulatory impact assessment (RIA). A copy of the RIA, together with the Explanatory Memorandum, is available from the House Library.