Clause 10 - Bioethanol
Finance Bill
2:30 pm
Mr Michael Jack (Fylde, Conservative)
I happen to have that document with me, but I would be less than correct if I did not admit that I have not completely refreshed myself with every submission. My recollection is that we did not get the breakdown that we wanted. I found another source. The Economic Secretary made a speech on 4 February 2003, which I am sure, with his assiduousness and memory, he will recall with entire clarity. In that speech he let the cat out of the bag about how the figure of 20p was reached, saying that it was down to the quantification of the environmental benefits. I also checked with British Sugar, representatives of which the Economic Secretary has met. It confronted him with the matter and the impression gained was that when the Treasury calculated the environmental benefits, it got a figure slightly below 20p for bioethanol, but decided that it could not give bioethanol a different deal from biodiesel, so it came up with the figure of 20p.
A Department for Transport consultation document verifies that impression to an extent, and again I apologise if I have misunderstood the information that it contained. On page 15, a table gives an indication of the relationship between fuel usage and the value of the carbon that would be saved by using biofuels. If we take the forecast total fuel sales and divide it into the total annual value of carbon saved, we get a figure of 16.4p per litre. On the other hand, if I have misunderstood that and I divide it by the smaller sum that is supposed to be the direct biofuel, I get a much larger number.
It would be helpful if someone were to explain how the figure of 20p came about. Is 16.4p the right number? Have I calculated it the right way? If I have not, I apologise, but please explain how the figure came about.
In the Economic Secretary's speech of 4 February 2003, in which he listed the agricultural benefits, the potential increase in security of supply, the new industry and all the economic benefits, why did he not go beyond 20p? He stated a large number of benefits.
I have given more than five plus points so far, and I will give the Economic Secretary a sixth. He, being an assiduous man who reads Select Committee proceedings with care, will no doubt be aware from the evidence presented by the Royal Society for the Protection of Birds to the Select Committee during its inquiry into sugar regime reforms that one key environmental gain from sugar beet crops is the pink-footed goose; and he will know that the tops of sugar beet are the main food source for that remarkable bird, which comes from Iceland to the United Kingdom in the cold season to feed. There is considerable value in producing a sugar beet crop as the feedstock for biofuels alongside the other environmental gains that I have listed.
There are other pieces of evidence to suggest that the Economic Secretary could, even at this late stage and perhaps on Report, be bolder than the Treasury wants to be. In the multi-faceted world of biofuels, where we have the Department for Environment, Food and Rural Affairs, the Treasury, the Department of Trade and Industry and the Department for Transport all in there mixing it, it would be helpful if he were to tell us who is in charge of biofuels policy in the United Kingdom.
In clause 128 of the Energy Bill, as before the House on Monday, there is a clause entitled, ''Renewable transport fuel obligation''. Its contents follow the line of argument that I put forward during last year's Finance Bill when we discussed this very area. I pointed out to the Economic Secretary that he could, if he was really bold and imaginative, have his cake and eat it. He could have a UK biofuels policy at zero cost to the taxpayer. I am sure that he has read clause 128 of that Bill, which effectively requires targets to be set about how industry will blend biofuel and existing hydrocarbon fuel to achieve the EU objectives of which I spoke this morning. He will understand that following the Department of Trade and Industry's line and giving statutory weight to clause 128 in that Bill would mean that there would be an obligation on industry to show how it was going to meet the EU requirements by blending biofuels and hydrocarbon fuels targets. The price of that fuel would be the price of the fuel. The same logic would operate for biofuel as for the renewables obligation on electricity.
If the Department of Trade and Industry has, for the time being, accepted clause 128 of the Energy Bill, why are we discussing clause 10 in this Bill as cast? Clause 128 delivers, at no cost to the taxpayer, the policy objective that the Treasury is following, at cost to the
taxpayer, in clause 10. If the Treasury decided to blend the duties itself, there would be a modest change in the price of fuel. Blending bioethanol and petrol to meet the 2 per cent. target would require a 0.6p per litre increase in the price of fuel, thereby passing on some of the costs to users and enabling people to pay for the environmental gain. However, we do not have that before us. The Economic Secretary is falling back on clause 10 in a way that does not give sufficient inducement to the industry to make the necessary investments in plant and against a background of the Economic Secretary not justifying the situation properly.