[Mr. David Amess in the Chair] — Biofuels

Part of the debate – in Westminster Hall at 2:30 pm on 5th June 2008.

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Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee, Chair, Environmental Audit Committee 2:30 pm, 5th June 2008

I am delighted that the Environmental Audit Committee's report on biofuels, written earlier this year, has been selected for debate this afternoon. I welcome the Minister to his place, and I look forward to debating the important and topical issues raised in the report. I am delighted to see two of my colleagues from the Committee here as well.

Almost three years ago, the Environmental Audit Committee decided to make climate change its main theme during this Parliament, in recognition of the growing urgency of the threat of climate change and the cross-departmental nature of most issues relating to it. It did so also in recognition of the overriding need, supported by the latest scientific evidence, to keep greenhouse gas concentrations in the atmosphere at levels low enough to avoid dangerous and irreversible climate change.

As part of that work, the Committee decided to explore the role of biofuels in reducing greenhouse gas emissions from transport. Almost a quarter of the UK's emissions come from transport, and that figure excludes emissions from international aviation and shipping. In passing, I stress the Committee's view that the continued exclusion of aviation and shipping threatens to undermine other efforts to tackle climate change. I hope that that will soon be corrected. The Climate Change Bill, whose Second Reading will take place in the House next week, could provide the first opportunity to recognise that international aviation and shipping should be brought within the calculations.

Transport is the only sector in which carbon dioxide emissions were significantly higher in 2005 than in 1990: they increased by 11 per cent. during that period. The Government have backed biofuels because they see them as one means of reducing transport emissions. The idea is that mixing biofuels made from crops with fossil fuels will reduce greenhouse gas emissions from road transport.

As biofuels policy touches on climate change, agriculture, transport, technology, trade and a host of other issues, the report, like many of our other reports, considered issues that cross departmental boundaries. We found that although biofuels such as bioethanol and biodiesel can reduce greenhouse gas emissions, the potential environmental impact of supporting biofuels was not adequately considered before the policy was introduced. We concluded that biofuels are not the best way to reduce emissions using the UK's bioenergy resources, and that there are other, better and more cost-effective ways to reduce emissions from transport.

As most biofuels are produced intensively from agricultural feedstocks, a large increase in demand for such feedstocks might have serious environmental consequences. Natural England recently reported that the natural environment is much less rich than it was 50 years ago. That is due in part to the damaging impacts of agricultural intensification. We found that biofuel support mechanisms are likely to increase the value and therefore the production of intensively farmed crops, adding to the damage that has already been done. We have seen what impact high commodity prices can have in terms of the loss of the set-aside land important for wildlife. It could also cause increased use of pesticides and fertilisers and lead to water shortages. At some point, commodity prices might become so high that farmers choose to opt out of agri-environmental schemes altogether, reversing the environmental improvements that such schemes have so far delivered.

Perhaps more seriously, the policy might also have global environmental impacts. Biofuel feedstocks are internationally traded commodities. Palm oil is one example. Although only a small fraction of palm oil is used to make biofuels at present, existing demand already creates a significant incentive to destroy highly biodiverse rain forests. The United Nations estimates that the combined effects of logging, fire and palm oil production could result in the total destruction of Indonesia's lowland rain forest as soon as 2012. It is therefore utterly wrong to intensify the pressure by creating another market for palm oil, and it is doubly wrong to do so in the absence of effective safeguards to prevent deforestation.

The impact of deforestation is extremely serious. It has been calculated that between 2008 and 2012, deforestation will cause the release of 40 gigatonnes of carbon dioxide. That is more than the total emissions from aviation from its invention until at least 2025. The Government have argued that their biofuel targets are cautious, but meeting the UK's 5 per cent. by 2010 biofuels target could require anywhere between 10 and 40 per cent. of this country's arable land. Using that much land to produce biofuels to meet even that relatively low target, when the impact on emissions would be marginal at best, is simply not justified.

The Government argue that sustainability standards will prevent such environmental impacts. Our report concluded that that is unlikely to work. Research commissioned by the Swiss found that in many cases, the damage caused by fossil fuels might be less than that caused by some biofuels in terms of acidification, fertiliser and pesticide use, biodiversity loss and air pollution. As a result, Switzerland supports only those bioenergy technologies that have a smaller environmental impact than fossil fuels, which excludes nearly all of them. The European Environment Agency came to a similar conclusion, recommending that conventional biofuels should be phased out and replaced with biomass crops that cause less environmental damage. In terms of biofuels' international impacts, there is no effective international system to prevent deforestation or ensure sustainability. Despite that, the Government and the EU press ahead with their policy, ignoring the damage that it will cause.

It could be argued that the negative environmental impacts might be justified if biofuels provide an effective means of reducing greenhouse gas emissions. After all, climate change could have even more disastrous impacts for the natural environment. However, in our inquiry, we discovered that biofuels could be one of the worst ways to use land and bioenergy resources to tackle climate change. In some cases, we found that biofuels might even increase emissions. It is important to follow policies that ensure that land is used effectively to mitigate climate change. To do so, they must ensure that the full range of possible land uses for mitigation is considered, such as maintaining carbon-storing habitats or even recreating habitats on agricultural land.

If forests are cleared to produce biofuels, it could take up to 50 or even 100 years for the biofuels produced to make up for the initial release of carbon. Reforesting land can also sequester two to nine times more carbon over a 30-year period than using biofuels can save. Natural habitats deliver cost-effective carbon mitigation and deliver wider ecosystem service benefits. Perhaps there should therefore be greater emphasis on a biological rather than technological solution.

If it is decided that bioenergy production can be justified in an area, the most effective bioenergy crop should be chosen. The Government have done work on the subject. In developing their biomass strategy, they found that biofuels are the least cost-effective way to use bioenergy to reduce greenhouse gases. Growing biomass crops such as miscanthus and burning them to produce heat and electricity can reduce emissions by more at a lower cost than using the same land to produce transport biofuels. For example, if a farmer uses wood chip grown on their land in a boiler, the cost to reduce carbon dioxide by 1 tonne is £36, but if the same farmer grows wheat to produce biofuel, it might cost as much as £152 to reduce carbon dioxide by the same amount.

In addition to the cost benefits, biomass crops also tend to have lower environmental impacts, and greater volumes can be produced sustainably. Although in some specific cases biofuels might reduce emissions more than biomass, current policy fails to ensure the most efficient use of our finite bioenergy resources—resources that could make a significant contribution to low-carbon energy production if used appropriately.

If we do not use biofuels, how should we tackle the problem of transport emissions? It would appear that policy measures such as behaviour change, better land-use planning, modal shift, eco-driving and simple fuel efficiency might be more effective and cheaper. The Commission for Integrated Transport calculated that such policies could reduce greenhouse gas emissions from road transport significantly without the environmental risks associated with biofuels. We do not say in our report that there is no future role for biofuels. So-called second generation biofuels not produced from conventional crops could have smaller environmental impacts and greater greenhouse gas savings. However, as the Royal Society recently pointed out, current policy will do little to stimulate their development. Instead policy will tend to stimulate and create an incentive for existing environmentally damaging technologies. An OECD report concluded that it is likely to be more cost-effective to support research and development into second-generation biofuels than to create markets for first-generation biofuels.

Such concerns led the Committee to call for a moratorium on biofuels. We felt that until the technology improves, robust mechanisms for preventing land use change are introduced and international sustainability standards agreed, there is not enough justification to carry on with the current policy. However, the impact of biofuels on food prices has further added to the need for a fundamental reassessment of the policy. In April, the International Monetary Fund reported that food prices have increased by 45 per cent. since the end of 2006. There have been riots in some countries as poor people find that they cannot afford basic foodstuffs. Although biofuels are not the sole reason for those price increases, the IMF concluded that biofuel production was seriously affecting food markets. Some 20 to 50 per cent. of certain feedstocks in major producing countries are being diverted to biofuels. The IMF also concluded that less ambitious biofuels policies would lower pressure on food prices.

To their credit, the Government have asked the Renewable Fuels Agency to consider food prices and other indirect impacts of biofuels. I look forward to the report, and trust that the Government will heed its recommendations. Having said that, although I welcome the fact that the Government are seeking to shed more light on the impacts of biofuels, I am concerned that the review will not necessarily investigate all the issues raised in the Committee's report. The scope of the review seems to take it as read that biofuels are an appropriate policy measure. It appears to focus on what measures would be required to lessen the negative impacts of biofuels, rather than on whether biofuels should be supported at all. I seek an assurance from the Minister that the review will examine the wider rationale for supporting biofuels.

We heard in the course of our inquiry that policy makers in the UK and European Union initially believed that biofuels would provide an ideal alternative to farming subsidies as well as delivering environmental and fuel-security benefits. Unfortunately, it turns out that the benefits might largely fall to arable farming, and not in a way that delivers a sustainable outcome. By failing to move away from supporting conventional intensive crops, the UK and EU have failed to ensure that overall land management becomes more sustainable and that we get the most out of our bioenergy resources.

Ultimately, I feel that the Government are in a difficult situation with regard to biofuels. Other EU countries might be reluctant to reform the policy because of the impact on their agricultural sectors. Only robust evidence will counter their arguments. We need to produce conclusive evidence that demonstrates how we can make the most of our sustainable bioenergy resources. That might indeed conclude that there is a role for biofuels, but it might also conclude that support should be given to other bioenergy technologies or to ecosystem management. More emphasis should also be placed on other ways of cutting emissions from road transport, including accelerating the switch to lower-emission vehicles.

Climate change is too big and urgent a problem to make ill-informed policy decisions. More information is needed to ensure that greenhouse gas emission reductions are maximised in the most cost-effective way and to ensure that the UK's fledgling bioenergy industry develops in a way that gives it a sustainable, long-term future. I urge the Minister and the Government to take on board the report's recommendations—even those that they have not initially welcomed publicly. I commend the report to the Chamber.