The Department has had a number of discussions, both at ministerial and official level, with a wide range of stakeholders, including the National Farmers Union, the Country Land and Business Association and biofuel trade associations, which include farming industry representatives, individual farmers and agricultural businesses.
Why do the Government not encourage farming diversification and renewable energy production by offering comparable non-fossil fuel support to farmers producing biomass and biofuel crops, instead of supporting more environmentally contentious diversification such as onshore wind farms?
There are not many farmers involved in onshore wind farm businesses, although some receive a rental income from them. There is a range of diversification available to farmers, in which biofuels play an important part. Farmers are allowed to grow biofuel crops on set-aside land, for example, and a 20p reduction in fuel duty is available to encourage the use of biofuels. We are also considering other measures to encourage their use, including a potential biofuel obligation on oil companies. About £50 million is also available to encourage the development of biofuels.
In his discussions on this matter, has my right hon. Friend talked to the Department for Transport and the Treasury? I hope that he will accept that, without further policy instruments, a further reduction in excise duty and the speedy introduction of the road transport renewable fuel obligations, the industry will not take off in this country. Is he worried about the import of Brazilian biofuels?
My hon. Friend makes a good point. We are in close talks with the Department for Transport, the Treasury and other Departments. He will be aware that we are currently engaged in the climate change review, which is considering a range of options, including biofuels and the ways in which we can promote them. We have seen some successful experiments involving coal-fired power stations burning coppice willow, for example, which I very much welcome. His point about structuring the support to encourage the production of biofuels in this country, rather than encouraging imports, is also a good one.
We are aware that biofuels are a sustainable mechanism for avoiding climate change. We are also aware that the Government are committed to avoiding climate change and therefore do not wish to see a massive increase in the use of fossil fuels. However, they are also committed to a substantial increase in air travel. What proportion of the increase in fuel consumption by air traffic will come from biofuels?
Let us draw a distinction in relation to the expansion of air travel. It is not being encouraged by the Government; it is a fact of life that we have to react to and take into account. The hon. Gentleman might be aware that we are pressing for the inclusion of aviation in the European carbon trading scheme, which will represent an important way of controlling emissions. Biofuels have a wide range of applications, and aviation is one of them, although we should not exaggerate their use in that way, because of the amount of land needed for biofuel production. However, it has enormous potential. The Government have set up a taskforce chaired by Sir Ben Gill to examine the role of biofuels and agriculture, which will give us important advice on how we take this issue forward.
Is not the distribution network one of the problems in respect of biodiesel? My hon. Friend will know that the network is heavily skewed towards the eastern part of the country, and that it is virtually impossible for those living in Greater Manchester and the north-west region to gain access to a biodiesel station. Will his Department talk to the manufacturers and distributors to ensure a more evenly balanced distribution network across the United Kingdom?
I know that my hon. Friend has taken a long and close interest in biofuels. There is a garage in my village that sells biodiesel—which I use, incidentally—but I am aware that that is not typical of the whole country. However, I am pleased to say that, as part of the approach to encouraging biofuels, a factory has been established in Scotland to produce biofuel, and a further factory is under construction in Teesside that will have a considerable capacity for producing biofuel. However, we need the distribution network as well. We need the manufacture and the distribution in place to encourage its use—a well-to-wheel approach, so to speak.
The Minister has talked about instruments to encourage the production of biofuel. The other side of the equation, however, is the use of biofuel. Given that previous grants for the conversion of lorries, in particular, to greener fuels have had to be withdrawn, what measures will he take to encourage the use of greener fuels and biofuel, particularly by the road haulage industry?
New EU regulation is to be introduced in relation to heavy good vehicles involving their manufacturing and emissions, which will improve the situation considerably. The big advantage of biodiesel is that engines do not need to be adapted to use it: conventional diesel engines can run on it, which is one of its great strengths.