Renewable Transport Fuel Obligations (Amendment) Order 2009

I have a great deal of sympathy with some of the wide-ranging points put by the noble Lord, Lord Palmer, and a certain overlap with my noble friend. However, I would like to come at this subject from a different point of view; that is, with a rather sharp critique of the way the order was presented to the Merits Committee, of which I am a member, and where I think its approach was wholly inadequate to this very important subject. Because of the faulty definition and the reactions of the fuel suppliers to it, we are now faced with a new start, and indeed not anywhere in the evidence presented to us have we had a critique of the way the renewable transport fuel certificate system is working. All we know is that the UK made a pretty slow start on biofuels and is still markedly behind the game. In such an important area as climate change, to miss the opportunity of reviewing the wider Government policy towards biofuels and the progress made against it is, I think, not what we would expect from the Department for Transport. It has been pointed out that there is a difficulty; we keep being told that we have a joined-up Government, but in this instance the joined-up aspect has not been achieved. What did the Explanatory Memorandum tell us? We are due to have a revised one in answer to the point made by the Merits Committee that no reference was made to the impact on the UK biofuels industry, whether the agricultural, processing or distribution parts of it. The memorandum states that we have to conform with the renewable energy directive and that the slowdown mentioned in the opening policy statement is, ""in response to concerns about the sustainability and food impacts of indirect land use change"." The Minister referred to sustainability, but the EM connects it absolutely to the Gallagher conclusion about the possible impacts of indirect land use change. How does that conclusion affect the United Kingdom? We import 14 per cent of our present biofuels from Brazil in the form of bioethanol, and it all comes from sugar cane. Brazil has been producing bioethanol from sugar cane for the past 30 years, and even 20 years ago a 20 per cent blend was being used in Brazilian motor cars that had nothing to do with climate change, but with substituting for imports. Brazil has no indigenous supplies of oil, so for many years the Brazilians have been interested in producing bioethanol and blending it with petrol. They are also the world’s largest producer of sugar from sugar cane, with Australia coming in second. I was for a while the chairman of the trustees of Kew Gardens. I heard about deforestation in Brazil for the purposes of cattle and soya, but I am not aware of it having been an issue that has affected the Brazilian sugar cane industry. There is no evidence in the Explanatory Memorandum or the regulatory impact assessment to connect the Gallagher conclusion with Brazil. Secondly, there is a strong conclusion about South-East Asia, Indonesia and Malaysia related to palm oil, which forms 7 per cent of the UK’s consumption of biofuels, in this case biodiesel. It is perfectly true that there are issues about biodiversity and deforestation that relate to the planting of oil palms. However, we have to remember that the oil palm is the most productive vegetable oil plant in the world, and much more productive than soya and oilseed rape. It is much more highly productive than soya oil or oilseed rape. It is dangerous to draw conclusions from the fact that 7 per cent of the UK’s imports relate to oil palm. What about the indirect effects on land use of the rest of the UK’s consumption—75 per cent of it, approximately? That is mainly imported from the United States and produced in Europe, including the UK and, to a degree, in Argentina, which has a temperate climate. There is an analysis in the RFA’s reports about how much of this is from existing cropland. The answer with UK production is that 100 per cent is from cropland. I do not believe that there are any indirect land use effects in the UK. In the Explanatory Memorandum and the RIA, there is absolutely no evidence that there is. I suspect that the issue in the case of the USA is about how much support the US Government should give to their farmers, particularly in relation to soya beans, but that is a different issue—it has nothing to do with the Gallagher conclusion. We move from the Explanatory Memorandum to the regulatory impact assessment. For the first time, that raises the question of greenhouse gas emissions and gas savings. That is not in the Explanatory Memorandum, although that is the heart of the Government’s policy on biofuels. In the latest RFA report, the savings are calculated at over 40 per cent; so far, so good. It says that if we were able to calculate indirect effects, it might be somewhat lower. I do not think that it would be much lower for the UK. If future calculations show that it is, I hope that we will be presented with it. Deep in the RIA, after a passage about government intervention, which in essence is a negative intervention—that is to say, "You will pay if you cannot produce certificates"; as the noble Lord, Lord Palmer, said, that is something that people have to live with because of climate change although it is not something that they enjoy—we are told that the 20p duty rollback will disappear at the end of the coming financial year. The government intervention will become all stick and no carrot in April 2010. It is very distressing that throughout this presentation, there is no mention of UK agriculture or UK processors, yet sugar beet provides 16 per cent of our bioethanol usage; it is a UK supply and does not have indirect land-use issues. The hectarage of sugar beet has been going down because although the performance of the beet has been pretty good in terms of yield, the price has been very poor. I do not think that the sugar beet issue has any effect on food supplies in the UK or in the world, where there is—there always has been in my time in tropical agriculture—plenty of sugar. I turn to the oilseed rape market. The document is silent on the production of diesel from oilseed rape, yet we import 15 per cent of the biodiesel that we use from Germany; we produce only 6 per cent from UK supply. One asks what is going on to make that the situation. I thought that the Common Market was a level playing field and I find it difficult to believe that Germany can produce oilseed rape at a lower cost than the UK. The UK processors—I will finish very shortly—are basically living on used cooking oil and, to a degree, on tallow and sugar beet as domestic supplies of feedstock. Some of their plants are working at well below capacity. Every now and again we are told that there are great hopes for second generation biofuels, which somehow will put all this right, even though in the Government’s view, the primary agriculture market does not seem able to perform. I am very sceptical about second generation feedstocks. It is freely said that they are waste materials, but the great majority of them do not have no use at present. Do we have a United Kingdom policy on biofuels? If we do, what is it, or are we just waiting to be told by Brussels what to do next?