Environmentally Friendly Fuels

– in the House of Commons at 10:45 pm on 4th July 2001.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

Photo of Ms Helen Clark Ms Helen Clark Labour, Peterborough 10:46 pm, 4th July 2001

This is a large topic and I obviously cannot cover all aspects of it tonight. I have therefore chosen to concentrate on the areas in which I have been personally involved.

I realise that some of the issues that I am going to raise may not be entirely the responsibility of the Under-Secretary of State for Transport, Local Government and the Regions, my hon. Friend Mr. Jamieson. Many of us are finding that the new departmental boundaries take a bit of getting used to; let us hope that the change will be positive. As the issues that I shall raise concern more than one Department, there is a mechanism for passing them for reply to the Minister with relevant responsibilities.

We should abjure parochialism in relation to national and European Community boundaries. I should like to give personal thanks and pay tribute to the delegation of French MPs whom I met today and with whom I discussed many of these topics.

During my lifetime and that of the majority of hon. Members, growth in road traffic has been so fast that it has been impossible to cope with its consequences for congestion, pollution, health and climate change. It is unsustainable, however many new roads we build. Undoubtedly, in the longer term, we shall adopt new patterns of road use and may travel shorter distances to work, own fewer private cars and rent more. I find that solution very convenient, as I am a non-driver.

Public transport certainly needs to be improved, and new forms will be developed, including road transport. At present, however, few people are willing to give up their cars or the freedom and flexibility that that mode of transport provides. Or, if they are willing in theory, they cannot see how their life style can be maintained without cars. People cannot, overnight or alone, decide to relocate their homes, work, children, shopping, school and leisure facilities, however concerned they are about pollution and its effect on health, climate and the future of the planet.

People in more remote areas have even less choice and have to travel, both to obtain the majority of their goods and services and to work. That is where the Government must intervene. We elect Governments partly to provide the solutions to problems that we cannot solve by acting alone; they should provide solutions in the short term and address and influence longer-term trends. Part of the short-term solution to the problems caused by increasing road traffic is the development and supply of alternative fuels. Hon. Members may know that, during my period of service in the previous Parliament on the Select Committee on Environmental Audit, I consistently championed the use of road fuel gases in vehicles. Such gases are consistently more environmentally friendly in terms of air quality strategy pollutants than petrol or diesel are. If we consider just one pollutant, particulates, the health gains from reducing particle levels are greater than for those of any other pollutant. About 20,000 people a year suffer medical problems owing to particulates. Most—75 per cent. of them—particulate emissions from road transport are from diesel engines.

In recent tests, liquefied petroleum gas engines have produced no measurable particulate matter at any speed. Recent tests also show that, at 30 miles per hour, although diesel engines fitted with traps are better than non-fitted engines, even they produce significant quantities of particulate matter. Clean diesel is an advance, but it is not the answer.

A major advantage of LPG is that the technology is available now and offers significant benefits to human health and the environment. Clearly, what is—and was—needed to encourage its development is the right fiscal policy, as other countries such as Holland and Italy already have large road fuel gas vehicle populations. During the previous Parliament, I welcomed successive Budgets that gave incentives to road fuel gases, but even now, only some 39,000 vehicles in the UK use LPG, compared with 1 million in Italy, a country of similar size, and 400,000 in the much smaller country of Holland.

In our country, road fuel gases are on the brink of full market viability, and significant numbers of drivers and fleet owners are realising the benefits to themselves and the environment of switching to cleaner fuel. One LPG pump is installed every day on a forecourt somewhere. There is now the prospect of a nationwide network of pumps so that drivers need not fear running out of fuel. There are still problems in rural areas. As I said in the debate on the Queen's Speech, there is a need for targeted help—again, as in other countries—to enable rural garages in places such as Scotland to install LPG infrastructure. That should be seen as part of a wider package to sustain the countryside.

On road fuel gases, we are nearly there; let us not throw it all away. Fleet owners need long-term confidence to invest, and many of them remember when a previous Government summarily removed incentives for LPG use and killed off a nascent market.

Powershift, the Government programme that encourages people to shift to cleaner fuels, did its own research this year and reported on its website:

"The research also considered the importance of a number of market factors in influencing the decision to switch to clean fuels . . . The strongest concern was a lack of confidence in the Government maintaining the fuel duty differential".

This Government have promised to retain the fiscal incentive until at least 2004, but I ask: what next?

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

The hon. Lady's work on this matter is well known to the House. Will she join me in congratulating Powershift on its work so far and urge the Minister and the Government not only to retain but expand the scheme as much as possible, not only to include older vehicles, which would contribute greatly to tackling climate change, but to consider other fuel alternatives, such as fuel cells and biodiesel, as they come on the market?

Photo of Ms Helen Clark Ms Helen Clark Labour, Peterborough

I am most grateful to the hon. Gentleman. I agree with everything that he has said, and hope that he will join me in approaching the Minister at a later and more convenient date. I suggest that the measures be extended.

Just when the market is about to deliver, let us not offer the prospect of the advantage disappearing in three years' time. People are rational consumers; they will not invest in something that may become inviable in the foreseeable future. As the hon. Gentleman helpfully reminded us, recent consultation on Powershift has suggested that its help for conversion may be phased out at the end of next year. There are certainly other technologies that may require support in the longer term, but as I said, LPG is here, now. In government, we should deal in the here and now and in achievable solutions. LPG is already delivering. We cannot afford to throw away its environmental benefits in favour of a future of uncertain alternatives.

There is an article on the Powershift website by Professor Garel Rhys, the director of the Centre of Automotive Industry Research at Cardiff university business school, with which the hon. Gentleman may be familiar. He writes:

"It is important that the incentives are not withdrawn prematurely . . . whatever the state of public finances."

I agree. Powershift can and should be reviewed, but let us not throw the baby out with the bath water.

I turn to the challenge posed by the rubbish mountain. We have a problem of too much waste going to landfill. Only about 9 per cent. of household waste was recycled last year—a shocking figure. About 85 per cent. of domestic waste goes to landfill. The European landfill directive will force us to reduce biodegradable domestic waste sent to landfill by 2016 to no more than 35 per cent. of the 1995 level. That will not be easy.

We also have a problem of slow progress towards developing sufficient sources of renewable energy. The Government are committed to a target of 10 per cent. of electricity generation by 2010, but the present level achieved is only 2.8 per cent. There is a long way to go. Some people have suggested that large-scale incineration of waste with an energy by-product is the answer to both problems. I am not so sure that incineration deserves the support that it would gain from being included in the renewables order.

Incineration is unpopular with the public. It has a poor history of producing unacceptable emissions. Low environmental standards were applied to municipal incinerators as recently as the early 1990s. Incinerator technology does not need subsidy. However, we must be careful not to get caught by the shackles of vocabulary.

There is a danger that generating energy from waste by pyrolysis may be excluded from the renewables order. Pyrolysis is not the same as incineration. It has the advantage of recycling energy from waste effectively, without the emission problem. Modern pyrolysis technology is much more able than incineration to meet or improve upon the requirements of the new directive on emissions. It is an exciting technology, but is not yet at the stage of market viability.

A new generation of pyrolysis plants would need to produce much more electricity from the same amount of waste as handled by current pyrolysis plants. To do that, new cutting-edge designs must be introduced. It is unlikely that anyone would be prepared to take the risks of trying to establish pyrolysis plants on a commercial scale without the support of the renewables obligation. Can my hon. Friend assure me that pyrolysis, as distinct from incineration, will be given favourable consideration for inclusion in the renewables order?

I am concerned also about the deteriorating situation in relation to CHP—combined heat and power. The Government strategy for stimulating CHP is, I believe, out for consultation. CHP was set to double by 2010, saving more than 25 per cent. of the current shortfall in the UK target of a 20 per cent. reduction in carbon dioxide emissions by 2010. However, I understand from a major company in the Peterborough area, British Sugar, which has used CHP since the 1920s—yes, I had to look that up—that Government targets are under serious threat, owing to a combination of factors, including the electricity trading arrangements and the need to exempt CHP fully from the climate change levy.

There is an urgent need to stimulate CHP as part of the Government's sustainable energy policy. I urge the Minister responsible—in the Department for Environment, Food and Rural Affairs, perhaps—to ensure that a comprehensive strategy is published soon.

My final topic this evening is biofuels, which offer great reductions in emissions. The production of biofuels could be of great benefit in rural regeneration as another source of employment, particularly in my region, the eastern region. The matter was raised in another place last Thursday by my noble Friend Lord Palmer, and I was pleased to see the Minister's reply. He agreed that it was important to investigate the use of biofuels, and that fiscal and other measures might encourage their development. He specifically mentioned rapeseed-based biodiesel.

I am particularly interested in how far the use of such fuels in aviation has progressed. I asked a question about that in the House in January and I was informed that the Department of Trade and Industry was then reviewing what it termed a "modest proposal" to use a fuel derived from biomass instead of aviation kerosene.

The growth in aviation is even more dramatic than that in road transport. The number of planes using UK airports has doubled since 1985. Air travel worldwide is expected to reach double 1995 levels by 2015. In 1992, air transport accounted for 3.5 per cent. of greenhouse gas emissions, but by 2050 it could be as high as 15 per cent. Those are worrying figures. A White Paper is expected which will attempt to address the many issues involved. I ask the Minister to ensure that, at the very least, as for road transport, the use of cleaner, more environmentally friendly fuels is a priority.

I did not notice anything on the subject in the Green Paper published last December, but there is considerable interest in it, including in the aviation industry. I happened to be at an event hosted by British Airways this week, and I shall certainly be following up some contacts that I made there.

In all the areas upon which I have touched there is a balance to be struck between incentivising technology with real promise and technology which has enthusiastic backers but little prospect of viability. Making the wrong choice results not only in wasteful expenditure, but deprives us of attainable environmental gain. As I said in the debate last week, transport being now part of another Department, I am concerned that transport policy making could be less informed by environmental considerations, and I am far from alone in that. There is a danger that economic drivers will be given precedence without check by environmental and social considerations, the two of which are far from independent, or, indeed, always in conflict.

During the past few years, we have learned a lot about the processes and benefits of sustainable development, about how we can achieve economic benefits without social or environmental costs, and, indeed, in the best so-called win-win-win scenarios, about achieving gains on all fronts. We must not discard all that experience now. We must be very careful where we build new roads. We must properly assess and understand the projected impacts, both short and long term, and investigate creative alternatives.

We must be equally and similarly vigilant concerning measures to address the increase in aviation and the environmental and other problems that it will cause. We must continue to encourage investment in other forms of transport, both public and private, and not forget the aims of the integrated transport strategy developed by the Deputy Prime Minister in the previous Parliament. We must encourage existing and new forms of cleaner transport and other fuels.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport, Local Government and the Regions 11:03 pm, 4th July 2001

I congratulate my hon. Friend Mrs. Brinton on securing the debate. She has taken much interest in environmental matters and has always brought her considerable experience to debates such as this, as she has done tonight.

In answer to one of my hon. Friend's latter questions, I can assure her that, while I am in this job and my hon. Friends are in their jobs, transport policy will be informed by environmental concerns.

My hon. Friend raised a number of matters that fall within the responsibility of the Department of Environment, Food and Rural Affairs, and I shall draw those to the attention of my colleagues.

My hon. Friend made important comments on transport and traffic, underlining the issues addressed in the 10-year plan. I am pleased to be responsible for cleaner fuels and vehicles in the Department of Transport, Local Government and the Regions, and, like my hon. Friend, I have a personal conviction about the potential to raise transport quality as well as improve the environment. We can do that by reducing air pollution and the resulting health problems, making vehicles quieter, enhancing local liveability, helping to bring about an urban renaissance, cutting greenhouse gases and opening the way for haulage to operate more flexibly.

My hon. Friend raised the issue of liquid petroleum gas, which is better known as LPG, but that is only part of the Government's agenda. I welcome the opportunity briefly to outline that agenda and its underpinning strategy. The components are to secure the maximum take-up of today's environmentally friendly fuels, bring forward the next generation of green fuels and lay the foundations for the United Kingdom to benefit from the longer-term prospects for fuel-cell propulsion and the low-carbon economy.

That means using the right mix of measures, including, as my hon. Friend mentioned, appropriate taxation of the different fuels and types of vehicle, in line with the Government's statement of intent on environmental taxation. The strategy includes grants to provide incentives and support for motorists and businesses in buying green vehicles, action to promote information and awareness of new fuels, and partnership with other players such as the vehicle and fuel industries, local government and others to break the logjams and make things happen.

I have briefly described the structure and sinews of the strategy, but I want now to fill out the picture. As my hon. Friend said, LPG is here now and is already delivering. That success follows the action taken by the Government, who have put in place the low duty for LPG and compressed natural gas, or CNG. The rate is 6p per litre, compared with 45p for petrol and diesel, which means a pump price of about 40p. We have established the Powershift grant and promotion programme, and increased the scheme's funding substantially in the 2000 comprehensive spending review, giving it a firm three-year forward budget of £30 million.

The oil companies have responded with impressive forecourt investment. As my hon. Friend said, there are now more than 750 LPG outlets and the number is growing daily. We have a strong and high-quality conversion industry. The car companies are now starting to offer LPG models as standard, off-the-assembly line options, so that buyers do not have to arrange separate conversion. That further establishes LPG as a mainstream vehicle option. However, technology does not stand still. Conventional fuels and vehicles have become much cleaner in the past few years, which challenges the gas technologies to raise their environmental performance in the same way.

My hon. Friend noted that the Government are currently consulting on the future direction of the Powershift programme. We are maintaining the funding for LPG grants—there is no question about that—but we have suggested that grants should now focus on the conversion of light-duty goods vehicles, as the biggest air quality benefit now comes from displacement of diesel. Hence the proposals to switch resources progressively towards such vehicles. Some responses argue that refocusing of the grants should be taken more slowly. That view and all comments will be carefully considered.

The Government also want to push hard on CNG, which is the other main gas fuel that is now available. It has huge potential to make heavy goods vehicles significantly cleaner and, importantly, quieter. We have put the economic parameters in place—guaranteed low duty for CNG, plus the grants available through the Powershift and CleanUp programmes—to assist HGV operators in investing in new CNG-fuelled vehicles and in converting existing vehicles. There is still a chicken-and-egg problem with the fuel network: there are not many CNG vehicles, so there are not many outlets, and vice versa. We have begun two pilot initiatives—one with the London Mayor and Transport for London and another with Manchester city council—to demonstrate how a local agency can break into the circle by bringing together prospective CNG users and suppliers.

The second strand of the strategy is introducing the next generation of fuels. As my hon. Friend said, we are considering hydrogen and biofuels, which can start to decouple mobility from climate change. That is crucial. My hon. Friend mentioned biofuels, which are practical and can replace and be blended with fossil petrol or diesel in existing engines. When compared with fossil fuel, the carbon saving is highest when the biofuel is made with waste or recycled material. It is less when the feed stock is specially grown using fertilisers and energy.

We intend this country to be a leader in biofuel technologies. The Chancellor launched the greener fuels challenge in last year's pre-Budget report to identify the most promising fuels for tax treatment. That led to the 20p per litre reduction in duty for biodiesel in the Budget. That will encourage biodiesel, which is produced in the UK with used vegetable oil.

In the Finance Act 2001, we took powers to set low duties for pilot projects aimed at bringing forward other new fuels. Companies will shortly be invited to introduce their proposals, and we aim to announce the successful pilots later this year.

Bio-ethanol made from agricultural waste material or from municipal refuse is especially interesting. It delivers double benefits: a new source of farm income, and a better option for waste disposal. It is a productive alternative to incineration or landfill. The potential is obvious.

I am aware of the arguments that there should be an even larger duty cut for biodiesel to open the way for biodiesel made from virgin rapeseed, and that biodiesel duty should be on a par with LPG or CNG.

As my noble Friend the Under-Secretary of State said in the other place, the Government will continue to keep all biofuels under review, including biodiesel production from rapeseed. Doubtless, continuing developments will occur in technology and rapeseed cultivation. The case for even lower duty on biodiesel, on a par with LPG and CNG, was addressed in the debate on the Finance Bill. My hon. Friend the Financial Secretary explained that the prime purpose of the low duty on LPG and CNG was to help combat air quality problems. Experts generally agree that biodiesel is no better than fossil diesel on the most important emissions. Rapeseed biodiesel offers some carbon savings compared with fossil diesel, but the benefits are fairly limited because of the amount of fertilisers and energy used in growing rapeseed.

If we look even further ahead, there is the firm prospect of electric drive vehicles running on fuel-cell technology. That opens the way for a clutch of benefits. They include higher vehicle efficiency, better in-car amenities, zero tailpipe emissions and lower carbon emissions. Carbon emissions will be almost zero when the hydrogen is renewably generated.

We want this country to be out in front. In the autumn, my Department and the Department of Trade and Industry will produce a discussion document, entitled "Powering Future Vehicles." It will set out our strategy for promoting the development, introduction and take-up of fuel cell and other new technologies, and for ensuring that the United Kingdom automotive industry is fully engaged in that process. That will open an extremely important discussion, with great significance for the whole automotive industry and the environmental footprint of transport.

In the time available, I have ranged widely on the subject, and I hope that that has been useful. I am grateful to my hon. Friend for initiating this evening's debate and for her presentation of the case. If she believes that any issues have not been covered in adequate detail, I will ensure that my officials provide a response shortly. I am glad that the matter has been aired and I look forward to discussing it in future.

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Eleven o'clock.