[Mr. David Amess in the Chair] — Biofuels

Part of the debate – in Westminster Hall at 2:53 pm on 5th June 2008.

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Photo of Nick Hurd Nick Hurd Opposition Whip (Commons) 2:53 pm, 5th June 2008

It is a pleasure to see you in the Chair, Mr. Amess, and to register my support for the report by the Committee, on which I serve. I apologise in advance, because I shall have to leave the Chamber before the end of the debate.

What strikes me about the context of the debate is the degree to which the ground has shifted, and continues to shift very fast indeed. The context, as the Committee Chairman, my hon. Friend Mr. Yeo, clearly set out, is the imperative of climate change. In that context, what has changed since Governments started to formulate policy in the area is, as the scientists tell us, that the problem has got bigger and the urgency greater. What has also changed is that the gloss has started to come off the UK's performance, as it has become clearer that emissions have risen, not fallen, over the past 10 years, and that the transport sector, which we are discussing today, remains absolutely stubborn in terms of our ability to reduce emissions from it.

A further, recent, change is the mood music around biofuels, which some years ago were seen as a win-win opportunity to create benefits for the agricultural sector as well as for the environment. That has unwound dramatically over the past year. Another change is the economic context of the debate: the economic prospects for the UK and the world, and public finances.

The central theme that I shall address is the cost-effectiveness of policy, which underpins my belief that the Government must think much more carefully about biofuels, because they are vulnerable, nowhere more so than in the renewable transport obligation and the renewables obligation. I shall compare the two instruments, because they are structured in similar ways. I am encouraged to make that comparison by the Minister's remarks in evidence to the Committee when he was pressed on whether he felt that the biofuels policy would be cost-effective. He said he hoped that it would be at least as cost-effective as the policy on wind farms. That filled me with horror, because the facts tell a different story about the cost-effectiveness of the Government's policy on renewable energy and wind farms. That is relevant because the renewable transport obligation is structured in a similar way and has been lacerated by independent organisations such as the National Audit Office and Ofgem in respect of its cost-effectiveness.

I am afraid that the facts now speak for themselves: we have one of the lowest deployment rates for renewable energy in the European Union. It costs British taxpayers—our constituents—£1.4 billion a year. The cost per tonne of CO2 abated is estimated to run at well over £100, compared with a price in the European carbon markets of about €26. Rather than stimulating next-generation technologies, the policy is shunting public money towards mature and controversial technologies such as onshore wind. It is controversial because of the public's limited acceptance of the technology and, in terms of overall contribution to greenhouse gas emissions, because of its intermittency and the need to have back-up conventional energy to support it.

The policy was undermined by the Government's failure to put in place necessary complementary planning process and grid access policies. The problem is worse when one looks at what the European Union encourages us to do, quite rightly, considering the scientific context of the debate. The EU says that we need to go further and faster with renewable energy. Its targets set an enormous challenge for the country, which, as we now know through leaked documents, the Government acknowledge will be very demanding and, presumably, expensive. The Government are reluctant to reform existing policy instruments for fear of unsettling existing investors.