Renewable transport fuel obligations

Amendment proposed [this day]: No. 1, in schedule 6, page 75, line 38, leave out subsection (2) and insert—

‘(2) It is the duty of the Administrator to ensure that only renewable transport fuel that—

(a) causes or contributes to the reduction of carbon emissions over its total lifecycle from planting or production to use, and

(b) contributes to sustainable development and the protection or enhancement of the national or global environment generally,

qualifies as a permitted fuel under this Act.’.—[Martin Horwood.]

Question again proposed, That the amendment be made.

I am reminded that amendment No. 1 is narrowly drawn. It is not about the generalities of biofuels, but about the role of the administrator. I am sure that Members would agree that the role of the administrator is of considerable importance in the light of the growing understanding of concerns about the origins and derivations of biofuels. I declare an interest: for many years our company has been working with the largest manufacturer of biofuels from used fat. Indeed, we helped to develop the modern techniques that make that a very successful procedure. As should be the case when one declares an interest, I know a bit about the subject, and I support the Liberal Democrat proposals. If the presumption is not tested clearly that biofuels are better than mineral oils and that they do more for the environment than the equivalent fossil fuel, we bring the whole process into disrepute. That ought to be our main concern. It is very important to make that distinction, and I have indeed sought do so for a very long time.

I do not blame the Government, because it was difficult to get biofuels taken seriously, and that has not been helped by the way in which they have been seen, first, as the be all and end all, and the answer to every possible prayer—maidenly or otherwise—and, secondly, by the same people, as precisely the opposite. It is said that there is no good biofuel to be found. Sometimes, those in the campaigning movements should pause awhile and recognise that it is not satisfactory to march people up to the top of the hill, and then march them down again. A little more careful consideration in the first place and a little less precipitate action in the second place, might make it easier for those of us with  responsibilities to get a bit nearer the truth. It might also help us to avoid the “I told you sos” from the climate change sceptics, such as the Daily Mail, and all other trouble makers in this area. I hope, therefore, that those from the green organisations who read the report of this debate will recognise that they have not helped the debate about biofuels one little bit.

I agree with the right hon. Gentleman. If I wanted to use taxpayers’ money, I would cross-reference the addresses of people who wrote to me in favour of biofuels with the addresses of those who wrote to me recently against biofuels. But I shall not waste the taxpayers’ money.

That temptation arises on many occasions. I am glad that the Minister has rightly fought against temptation, but I know exactly what he means—the same is true of other things in life.

We must therefore try to make the Bill the most sensible answer possible. It goes against a lifetime’s experience to say this, but I think that the Liberal Democrats were right to table amendment No. 1—they know that that is my general view. It is right to make the changes that they have proposed, first because this is a matter of life cycles. It is quite a difficult thing to do, but at the same time it is essential. One cannot say that particular biofuels from particular sources are always as beneficial in one circumstance as another.

Let me give an example: biofuels produced close to the point of use are likely to have a lower carbon footprint than those produced a very long way away that have to be carried a long distance, although not necessarily. A biofuel source may be much more carbon intensive if the fuel is produced using a particular process rather than another way. A lot of research has shown that to be true.

I commend to the Minister the work of Low Carbon Vehicle Partnership, which he supports. That partnership has produced some good work on which we can base our judgments. I was sad that the Government found themselves unable to use its work from the beginning on the renewable transport fuel obligation. I hope that they can use it now and the amendment will enable it to be used.

Subsection (2)(b) of the amendment would widen the tone of the phrase by using the words “enhancement”, “protection”, “national or global environment” and “generally”. They are all useful additions that would help to achieve what the Government really want. I hope that the Government feel that they can take that on board.

Finally, the amendment is valuable because it would add to the administration of the system—a point that you, Mr. Atkinson, drew our attention to earlier on. That is important because we must move to a world in which we take these matters into account automatically and without a second thought, so that this is not some great new operation stuck out there, but simply the way that we think and the means by which we move forward. It is what my mother used to refer to as “good habits”. There is a lot to be said for doing things the right way all the time. I shall put it bluntly: people who find themselves in extremis revert to type, so it is valuable for them to have good habits. When something crops up that they did not expect, I want the default mode of a society and a Government to be, “This is how we behave and this is  the mechanism that we always use”. Therefore, I congratulate the Liberal Democrats for tabling the amendment, because it not only makes the point that needs to be made, but sets an example about how we ought to behave in all circumstances.

We should ensure that the two elements are measured—first, the life cycle, so that we know what the carbon footprint really is; and secondly, how it contributes to sustainable development, not only to the protection of, but to the enhancement of both the national and the global environment. All that should be seen not just in specifics, but in generalities. Therefore, I hope that the Government will find this a suitable amendment to accept. I know that it is always difficult to accept amendments but, after all, this one is in line with their own thinking.

May I say how relieved I am that my right hon. Friend has moved away from exhorting the Minister to be vulgar and is extolling the virtues of his mother’s good habits. The Committee will be on safer ground if we stick with the latter—not to mention the habits of any dustbin men. I rise generally to support, if not the amendment, the thrust of what has been said by my right hon. Friend and the hon. Member for Cheltenham. The Minister may say that the amendment is not necessary, because proposed new section 125A(2) of the Energy Act 2004, on page 75, already does what the amendment would do and that the Government intend to ensure that the administrator promotes only good biofuels.

A few years ago, I was one of those who thought that biofuels could do no wrong, but I was wrong to think that. I was perhaps looking at the issue from a Cumbrian or a United Kingdom perspective. I looked at the acres and acres of set-aside and at the weeds and thistles and thought, “Goodness me, why are we promoting that? I know that there’s a wildlife element involved, but can’t we grow biofuels there instead?” I was looking at the issue from the perspective of what we could do in our localities to grow indigenous British crops closer to home and convert them into biofuel, because I thought that was a better alternative to leaving land fallow or set aside. In those circumstances, there was a place for biofuels, and I called for more of them to be produced in Cumbria, so that we did not need to have a plague of ghastly wind farms, like a noose around the neck of the Lake district.

In the past few years, however, I have seen certain countries cut down their original, primal rain forests to grow sugar cane to convert into biofuels, and I therefore joined the school of thought that believes that biofuels can do no right. That, too, is wrong, and I suspect that the truth lies somewhere in between, as my right hon. Friend the Member for Suffolk, Coastal said. It is utterly wrong to cut down original rain forests to grow short-term crops—sugar cane or date palms for palm oil—that are then converted into biofuels and transported hundreds of thousands of miles around the world.

Colleagues on both sides of the Committee will be relieved to know that I am not going down the old biodiversity and rain forest speech route again, but it is a million times better to keep rain forests intact and preserve our biodiversity than to cut them down for biofuels. It is better for our carbon footprint to let them grow ad infinitum and then to let them rot and grow  afresh than it is to cut them down—that immediately releases carbon—than to grow short-term crops for biofuels that do nothing to reduce our carbon footprint.

All that I want from the Minister is an absolute assurance that, even if the Government will not accept the amendment, the administrator will take into account the thrust of what the hon. Member for Cheltenham and my right hon. Friend the Member for Suffolk, Coastal have said and will promote the supply of transport fuel using biofuels only if those biofuels have not been produced by destroying a better crop, such as primal rain forest or our upland bogs and peatlands, which have locked carbon in.

I have no objection to using biofuels if they are from short-term coppice or myriad other crops that I have never heard of and do not understand, if they come from close to home and if they do not involve a huge number of whatever the equivalent of food miles is—I suppose that the term would be fuel miles. Similarly, I have no objection to biofuels if we do not cause more destruction or release more carbon into the atmosphere to create the modern environment to grow short-term biofuel crops. That is not the way to go, and I look forward to the Minister’s assurance.

It is nice to see you back in the Chair, Mr. Atkinson. Let me say at the start how grateful I am to my right hon. Friend the Secretary of State for Transport for making the statement on the Gallagher review to the House before we got to the amendment. I would like to say that that was a consequence of my Machiavellian and detailed planning, but I have always believed in the cock-up theory, not in the conspiracy theory. Seriously, however, it is good for the Committee that we are debating the amendment after the statement on the Gallagher review, because I suspect that right hon. and hon. Members would have smelled a rat and seen a conspiracy where there simply was not one.

The schedule and therefore the amendment are not about the rights and wrongs of the renewable transport fuel obligation. As you rightly said, Mr. Atkinson, they are about an amendment to the way in which the administrator works. However, the amendment tabled by the hon. Member for Cheltenham is helpful in that it addresses the instruction to the administrator on how we may improve the confidence of the consumer and show that, under the scheme, biofuels are sustainable. That is the intention of schedule 6, in which we have made amendments that build on the policy and improve its functioning in exactly the area on which the hon. Gentleman tabled his amendment. It is about increasing sustainability and, with it, consumer confidence, let alone the environmental sustainability that we are all in favour of.

I agree with the hon. Gentleman and I can give an assurance to the right hon. Member for Penrith and The Border that the Government agree with the policy behind the amendment. I have a problem with the amendment, which I will explain, if I may, Mr. Atkinson, but with your permission I shall briefly outline the purpose of the schedule before addressing the amendment specifically, otherwise I may lose the thread of the argument.

The changes to the renewable transport fuel obligation that we are advancing in the schedule are designed to enhance the operation of the order to give increased flexibility, but they are not essential to the operation of the RTFO. We are not debating whether that goes ahead, but talking about how it works. Under the schedule, a number of changes are made to the provisions of the Energy Act 2004, in order to improve it.

Proposed new section 125 would replicate the existing provision for setting up a non-departmental public body and appointing it as the administrator, so it preserves the effect of the order appointing the Renewable Fuels Agency. Proposed new section 125A would place a new duty on the administrator of the scheme to promote the supply of renewable fuel, which delivers carbon savings and contributes to sustainable development or general environmental protection. There is consensus on that point throughout the Committee. We want to use schedule 6 to improve the instruction to the administrator to ensure that there is sustainability. The amendment tabled by the hon. Member for Cheltenham goes a little bit further and, as I said earlier, we agree with that policy.

Of course, we acknowledge the point that the right hon. Member for Suffolk, Coastal made about the worries about some biofuels and the production methods relating to some biofuels, but we do not wish to throw the baby out with the bath water. We recognise that to encourage research and development in future generations of biofuels, it is necessary to help create a market for existing biofuels so long as they are sustainable, as far as is humanly possible.

Proposed new section 125B would enable the Secretary of State to give written directions to the administrator about the use of any power that the administrator has, under an RTF order, to require information from fuel suppliers or to specify the form of the information or the period within which it is required. That power enables us to instruct the administrator to provide and report on the information that all of us want to see.

That is an abridged version of the rationale for the new schedule. Let me turn to amendment No. 1, tabled by the hon. Member for Cheltenham. I have already said that the Government agree with the policy behind the amendment. Let me take Committee members through the reasons, which I hope will satisfy them, why we do not want the specific wording. I strongly believe that I can convince the Committee that we are getting to where the hon. Gentleman wants to be, but by a route which, because of the European Union interest that he mentioned, gets us to the right place.

The criteria and methodology for demonstrating the carbon saving and sustainability of the products is complex. I do not want to hide behind that. We are committed to certification and sustainability criteria. The amendment would introduce a requirement under law that affected entitlement to certificates for the selling of biofuels and, consequently, the biofuels market. It would not define what is required. Without an amendment to the Renewable Transport Fuel Obligations Order 2007, of which the hon. Member for Bexhill and Battle reminded us, to provide the necessary definitions, the law would be uncertain. It would therefore be left to the courts to decide on the criteria and the methodology.

My fear is that such uncertainty about the validity of certificates issued in the meantime could be used by those opposed to what we want to achieve to undermine  the scheme. I think there is a consensus that the criteria and method for measuring carbon savings and sustainability should be set on a European Union-wide basis because we wish to create an EU market for good biofuels, rather than going it alone. It is an area where there is a self-evident benefit from an EU-wide policy.

My problem is that, at present, the European Union criteria and methods are being developed. I am advised that the EU law falls under the technical standards directive, which we strongly support. It is not something that Europe is imposing on us against our will. That will never happen. I want to make it clear that we support that because it is in our interests to have a biofuels market that it is EU-based. The technical standards directive does not currently allow member states to implement legislation that covers the same ground.

Under the directive, UK law setting carbon and sustainability requirements, including the amendment and other associated amendments to the 2007 order, would be subject to a stand-still period to prevent its implementation for at least 12 months to enable the EU criteria to be agreed and adopted. Furthermore, if we were unilaterally to introduce the criteria and method in the United Kingdom, it might be difficult to ensure compliance with EU trade rules. That is a subsidiary argument, but one that I put before the hon. Member for Cheltenham.

If the amendment were accepted, it would be legally ineffective until such time as the EU carbon-saving and sustainability requirements are adopted, at which point it would be superseded. My argument to the right hon. Member for Penrith and The Border is not the usual ministerial contention that the amendment is not necessary because it is covered anyway, but that it is not necessary for different reasons. First, it would be ineffective for a year and, secondly, when we have the EU policy, it would be superseded.

The Minister makes a technically accurate and important point that was made also in another place. I referred earlier to the possibility of the EU’s legislative timetable not going according to schedule and the directive not being adopted before the next European elections in June 2009. That raises a different scenario, which the hon. Gentleman should address.

I congratulate the hon. Gentleman on his argument and research. I admonish myself for not reading out the advice at the beginning of my speech, which covers the point. I was handed the paper before lunch—or dinner, as we say in Lancashire.

The hon. Gentleman has a point. The United Kingdom cannot set mandatory standards unilaterally. They need to be agreed at EU level. We have already set a reporting mechanism within the law. What we are trying to do is to set out the requirements to the providers to report on the criteria, as our building block towards the European Union policy. That is as far as we can go before the EU adopts the policy.

The hon. Gentleman may be right, but I would ask him to consider the point that, in the circumstances to which he referred, we would be in the right position by following my argument, because we have established the reporting mechanism. We can slow down the RTFO  levels through United Kingdom secondary legislation. My right hon. Friend the Secretary of State for Transport announced a consultation on that point. We are following the route suggested by the hon. Member for Cheltenham.

Let me use another argument, that of the third party, which is from the noble Lord Teverson, the Liberal Democrat in the House of Lords. A similar amendment was tabled, fairly, by the Lib Dems in the other place. In response to my noble Friend, Lord Rooker, Lord Teverson said:

“My Lords, I thank the Minister for his extensive reply”— mine has clearly not been as extensive—

“which I have to admit was very persuasive.”

He went on:

“I am fully persuaded. The irony, as the Minister well knows, is that the whole biofuel debate moves at a faster rate than political dialogue.”—[Official Report, House of Lords;18 March 2008; Vol. 700, c. 239.]

The noble Lord Teverson was persuaded by the argument that I have put. I hope that the hon. Member for Cheltenham is, as well.

I am entirely persuaded by the Minister’s argument, but does he not have to put forward a further argument? In the discussions in the European Union, we are faced by those who want to advantage some internal production of biofuels, for reasons nothing to do with sustainable development, climate change or anything else. It is important for him to be able to show clearly that he has been entirely within the law in his position. He will need to argue with those who want to produce biofuels from rape oil in France and from soya beans in Germany for entirely agricultural and electoral reasons—nothing to do with the real issues of climate change. He must show that he has treated the issue with great seriousness, because he might have some pretty tough discussions to get the final results that he and we want.

I am grateful to the right hon. Gentleman for providing another bullet in the chamber, if I may put it that way. He is right. He raises a practical point. Let me try to amplify it for the hon. Member for Cheltenham, in an attempt to convince him of the force of my argument.

By signing up to European Union law, the UK is not able to implement unilaterally our own mandatory carbon and sustainability standards while the draft directive that I mentioned is being negotiated. That is because of the overlapping subject matter. The requirement proposed in amendment No. 1, tabled by the hon. Member for Cheltenham, and changes to the RTFO order to implement that, would have to be notified to the Commission under the technical standards directive and would be subject to a stand-still period.

The stand-still period is expected to be 12 months, as set down in the technical directive. It would, incidentally, be extended to 18 months, if during the 12 months the Council adopted a common position on the draft directive. Therefore, if unilateral UK action was proposed, by the time the applicable standstill period finished, the renewable energy directive would very likely—I would say almost certainly—have been adopted and its provisions would supersede the proposed UK legislation. That is a new point for the hon. Member for Cheltenham to consider.

I am pleading with the hon. Gentleman. Although the Government agree with his policy, we think that schedule 6 is the best way to get to it. Schedule 6 beefs up the instruction to the administrator. The danger—if that is not too strong a word—with the hon. Gentleman’s amendment and the amendment in the other place is that they could pull the rug from under us, although we agree with their policy. I rest my case, as it were.

I am pleased by the degree of consensus in the Committee today and I am particularly pleased by the congratulations from the right hon. Member for Suffolk, Coastal, whose expertise on these issues and record on environmental issues generally are to be respected. I therefore forgive him for his earlier party political pot shots, in this new spirit of cross-party co-operation.

As the right hon. Member for Penrith and The Border rightly said, we have all been on a bit of a journey on the subject of biofuels. I think that it was the Secretary of State for Transport yesterday who slightly unkindly quoted the right hon. Member for Witney (Mr. Cameron), who only a couple of years ago made the definitive statement:

“Five per cent. of all fuels sold in the UK to come from biofuels is a start, but it is a minimum step: we will need to go further in the future.”

Like the right hon. Member for Witney, we have modified our position.

What my right hon. Friend the Member for Witney (Mr. Cameron) said is entirely possible. If one talks to scientists about the developments in biofuels, such that science and technology are employed to use the whole plant, it is entirely possible, and certainly conceivable, that we could be that ambitious, but not if biofuels are grown unsustainably. My right hon. Friend would always insist that they are grown sustainably, so I am afraid that it is a canard.

I am not sure that I remember the right hon. Member for Witney saying that to the Renewable Energy Association. However, we are on common ground in the belief that much more robust sustainability criteria are needed. Nevertheless, it is important not to throw out the biofuels baby with the bathwater.

The right hon. Member for Suffolk, Coastal and others were a little unkind to members of the green movement and some of the non-governmental organisations that have been lobbying us, implying that they have simply switched position. Those of us who regard ourselves as members of the green movement have been accused on various occasions of holding an almost religious fervour about some causes, such as nuclear power and genetically modified foods, and of never being prepared to change our position. Well, this is a very obvious standing rebuttal of that accusation, because on this issue the consensus in the green movement has shifted. Therefore, the right hon. Gentleman’s accusation was a rather simplistic one.

Sitting suspended for a Division in the House.

On resuming—

Order. Before I call the hon. Member for Cheltenham, may I say to the Committee that the business on the Floor of the House is likely to run without a vote until just before 6.50 pm? After that, when the Bill starts on its Committee of the whole House stage, there will be a series of Divisions. Members of the Committee may think it more convenient to make some progress before that time, because otherwise the latter stage of this Committee will be disrupted.

I was just extolling the virtues of cross-party co-operation and of the green movement generally. I shall move on to the specifics of the amendment.

As the Minister said, there is some common ground, and he was good enough to welcome the essence of the policy in our amendment. He was right to say that the status of the RTFO itself is not at issue. Interestingly, he said that what we seek to do is to give instructions to the administrator to ensure the sustainability of the fuels involved. The amendment proposes to use the word “ensure” instead of the current word “promote”, making the instruction in law to the administrator much stronger and more powerful.

In that sense, I am completely with the Minister. He suggests that amendment No. 1 introduces that requirement without sufficiently clearly defining it. He said that that might introduce uncertainty over the validity of certificates and that the criteria should be EU-wide. That is true and we agree with that, and we agree with sufficiently robust criteria being adopted at European level, as we have said. There is no shortage of definitions of sustainability around biofuels.

The Swiss Government already have a working scheme in which they have clearly defined measures of sustainability. The Environmental Audit Committee studied that scheme when we examined the issue. The Gallagher report also goes some way towards defining it. Professor Gallagher made the statement that it should be possible

“to establish a genuinely sustainable industry provided that robust, comprehensive and mandatory sustainability standards are developed and implemented.”

Professor Gallagher thinks that that is eminently possible, and goes on to make specific recommendations including

“the replacement of volume or energy based targets with comparable greenhouse gas saving targets as soon as practicable”.

There is a degree of consensus already available.

We then came on to the rather more technical and legal point. It is right to raise the point that the noble Lord Rooker raised in another place: that, in effect, there would have to be a 12-month standstill period for this regulation, and that it might in the end contradict EU trade rules. If all those scenarios came to pass and the renewable energy directive was adopted on time, the amendment might be ineffective because it would have to wait for the EU rules to be adopted and then it would be superseded.

That is the argument that my noble Friend Lord Teverson thought was so impressive in the other place. We have reflected together on the matter and realised that it is dependent on the renewable energy directive being adopted. That was the technical point that I put  back to him, to which he said that I “might be right”—I think that I am quoting him correctly. I think that I am right. He said that policy cannot be set unilaterally because of the overlap of subject matter, but that is not true because the renewable transport fuel obligation itself is a unilateral piece of policy that is already adopted ahead of the renewable energy directive coming into force. I fear that I am not persuaded to withdraw my amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 2, Noes 11.

Question accordingly negatived.

Schedule 6 agreed to.

Clauses 75 to 77 ordered to stand part of the Bill.